Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[ammulder]

Actually, deep in the money calls don't really beat just buying shares on margin (depending on values of "deep"). For example, ETrade's margin rate on TSLA is 40% currently. (Do all the brokers use the same margin rate for particular stocks? I don't actually know.)

So suppose I have $100k to invest in TSLA at close today. I can buy approximately 200 shares without margin, or 500 shares with margin. Note: 100% cash needed for options.

The point of "deep in the money" is that the option will move approximately dollar-for-dollar with the stock. I'm too inebriated to do deep research (that means spreadsheets) but here are some data points.

Jan 15 '21 $200 calls last trade was $288.05. So I could buy 3 of them (since they trade in 100-share lots), for $86,000 and still have cash left over. But that's fewer share-equivalents than just buying the stock. OK, need a higher strike.

(I actually do this. I decide how much I have to spend, then find options that fit my recipe. There are many variables. But let's keep using Jan 15 '21, since that is the first full-month date after the S&P inclusion.) I need to buy at least 5 contracts to beat just buying the stock on margin. (Have to look at bid-ask since many possibilities are not liquid.) $290 strike bid-ask is $198-202.65. So those are roughly equivalent to a $490ish stock price (strike plus option cost). The time value (theta) is only about $3.

So to get more leverage but still be wading-in-the-money, let's try $400 strike: last trade $106.90 (between bid and ask, quite liquid). I can get 9 of these, and the theta is about $10 per contract.

Time to cook dinner, but my takeaway (not a recommendation, just what is mostly working for me) is to go for close-to-at-the-money. You would be spending $52.5 for $500 strike, but expecting the stock to go up at least $60 in the next two months for this to pay off. It just went up $80 in two days...

So, over the past two days, a Jan 15 '21 $800 Call is up 147%. I think there have been other examples posted of similar out of the money calls up big over that time.

The question, I guess, is what you're trying to accomplish. So far, I've only wanted to put small amounts of money into options, and I'd rather get a handful of these far out of the money calls than at most one in or near the money call. On the one hand, I've had a couple expire worthless (including an $800 heading that way this Friday). On the other hand, the ones that don't expire worthless show pretty impressive returns.

I assume the advantage to in-the-money is a lesser loss if things don't go as planned, though Jan 15 '21 still doesn't leave a lot of time to react if the stock price tanks. I just can't convince myself to do it. If I feel conservative, I'll buy more shares. If I feel confident in an IV/stock price boost, I'd prefer the return on the out of the money calls. I haven't yet found the middle ground.

 

[c041v]

They have 2 big and 3, I think, small retention ponds already, they just have to route the water to them.

But yeah, that storm toward the beginning made a mess of things and it isn't like you can just throw a tarp over it.

They also appear to build temporary berms around all of the large excavations so that if it does rain most of the water is directed away from them.

The thing with Storm water design is that it captures a set event, typically a "1 in 100 year" storm, but it depends on the local code/requirements. It's incredibly wasteful to design a storm water system that captures a "1 in 1,000 year" storm as it is essentially an order of magnitude larger and would be over-designed for the majority, if not the entire lifecycle of the factory.

I won't spend too much more time on Austin today but they are certainly still exposed right now and has been for the past few months. Not much than can be done other than wait to dry the site out with wind and sun should it rain. The way we typically schedule rain events in my field is to install a few extra schedule days in an activity's duration based on the historical number of "rain days" that region sees in a year.

Take some solace in this though;

There are steady material deliveries to site and a lot of footings are ready for columns/girders. This work is unaffected by rain, so they don't actually need to get the roof on to continue progressing at a good clip. Rain will make the site a mess, but if they are will to spend some money to place gravel on the access roads to that see a lot of traffic, deliveries can continue. I would bank on at least one rain event that slows down some of the prep work, but I think they are largely out of the worst part of the woods.

 

[ByeByeJohnny]

And another reason i was caught off-guard when I read how much they paid for that cesspit. If ALL the groundwork and then some wasn't done by the seller then for the life of me I can't understand why they purchased it.
And save all the "close to the airport" half-baked" reasons. The only thing I haven't factored in is what Elon might think about..like how in the world is he going to play with the Boring machine? Is he going to mine a tunnel to the nearest decent port through what is supposedly a preferred substrate? Time will tell. I trust what Elon did was right. I just can't see it.

Well. 120 days say 200 people a day at $300 a day average including machines and fuel is $7 million. even if it costs twice that it would be less than $15 million. And any land you buy is gonna need some ground work. I think the land cost like $100 million total so in the grand scheme of things the cost of ground work is probably not that important. They've spent four months on it which seems like a month or two longer than some higher quality ground would have needed though.

 

[AudubonB]

Bad, Bad, BAD Audie! Tsk tsk. I had no memory of being so irresponsible. Sorry, Dad!

 

[Artful Dodger]

After-action Report: Wed, Nov 18, 2020: (Full-Day's Trading)

Headline: "TSLA Adds 20% over 2 Days on S&P Addition"

Traded: $37,146,242,982.76 ($37.16B)
Volume: 78,135,400
VWAP: $475.41

Close: $486.64 / VWAP: 102.41%
TSLA closed ABOVE today's Avg SP
TSLA MaxPain: $410

Mkt Cap: TSLA / TM $461.287B / $197.443B = 233.63%
Note: Yahoo Finance updated TSLA Mkt Cap for shares issued Sep 9th (per 10-Q)
​

CEO Comp. Status:

TSLA 30-day Moving Avg Market Cap: $396.56B
TSLA 6-mth Moving Avg Market Cap: $311.71B
Nota Bene: Mkt Cap for 5th tranche ($300B) likely achieved Nov 09, 2020​

'Short' Report:

FINRA Volume / Total NASDAQ Vol = 54.6% (54th Percentile rank FINRA Reporting)
FINRA Short / Total Volume = 55.6% (54th Percentile rank Shorting)
FINRA Short Exempt Volume ratio was 0.87% of Short Volume (49th Percentile Rank)​

Comment: "Good volume; Amenable volatility"

QOTD: @KevinR "this was expectable"

View all Lodger's After-Action Reports

Cheers!

 

[AudubonB]

This one can never be repeated too often:

 

[c041v]

so in the grand scheme of things the cost of ground work is probably not that important.

Correct. And they are doing all the right things right now to speed up the phase that will benefit from added shifts/equipment. There are some phases of work where it really doesn't make sense to throw cubic dollars at a problem as you just end up with a bunch of machines running into each other or massively humbled by mother nature.

They actually did all this hard work at the best possible time of the year - summer. Like I said earlier, I think there was a bit of a miss in terms of how hard some of the development work was going to be and they got nailed by a few rain events which made this challenging.

I could have sworn Shanghai had some similar issues earlier on? Seems so long ago.

 

[MC3OZ]

Correct. And they are doing all the right things right now to speed up the phase that will benefit from added shifts/equipment. There are some phases of work where it really doesn't make sense to throw cubic dollars at a problem as you just end up with a bunch of machines running into each other or massively humbled by mother nature.

They actually did all this hard work at the best possible time of the year - summer. Like I said earlier, I think there was a bit of a miss in terms of how hard some of the development work was going to be and they got nailed by a few rain events which made this challenging.

I could have sworn Shanghai had some similar issues earlier on? Seems so long ago.

The Shanghai site is similar it lots of ways, it started out muddy and s lot of piling work was needed.

Climate wise Berlin is very different, but Shanghai and Austin are similar.

There was a storm in Shanghai that knocked down a wall around the site at one stage, I think building works were well progressed and it didn't have a major impact.

My hunch here, the schedule is optimized for the expected seasonal weather patterns, mother nature doesn't always play along.

 

[Prunesquallor]

The location is great and the size and shape are good,

There seems to be some deal with the seller on ground work and concrete.

The downside is the amount of groundwork/geo-pier needed, it is a site that has taken a lot of work to get to this phase.

But Real Estate is all about Location, Location, Location, the great location persists long after groundwork and geo-pier are a distant memory. We don't know what other properties they looked at but I really like a lot of the aspects of this site, access to highways, proximity
to Austin and the airport.

The Boring tunnel will probably just link significant parts of Austin to the site/airport, cars produced are mainly for the North American market, so I don't think port access is critical.

It’s still a straight shot to the Port of Houston when CyberTrucks and Semis go international.

edit: best of both worlds. Access to the Port without the weather challenges of Houston.

 

[Navin]

One year ago today - I was standing in front of this guy on stage who literally threw a metal ball at a car windshield and saw the ball roll off the stage and onto the floor in front of me. Should have kept it vs give it back to one of the stage hands. One year later - same company put lots of money in my pocket. Gotta love it.

 

[generalenthu]

Could Berkshire be buying TSLA? Sure. But to me it doesn’t seem to fit Buffett’s style, and AAPL (when he bought it) is not really a fitting comparison.

Let's not forget that among other names Berkshire owns Amazon and snowflake. Not exactly value.

So frankly it would not be that surprising, but if they did pickup 25 million or, that's a good chunk, and would certainly be somewhat of a departure. But like it was noted, Buffet knows stuff, as he got early into the EV game via BYD, and had a ringside seat viewing how Tesla, a later entrant crushed it.

 

[PeterJA]

Possible future upgrade to Tesla's Autopilot sensors:

Upgraded radar can enable self-driving cars to see clearly no matter the weather

A new kind of radar could make it possible for self-driving cars to navigate safely in bad weather. Electrical engineers at the University of California San Diego developed a clever way to improve the imaging capability of [doubled] existing radar sensors so that they accurately predict the shape and size of objects in the scene. The system worked well when tested at night and in foggy conditions.

The team will present their work at the Sensys conference Nov. 16 to 19....

The system consists of two radar sensors placed on the hood and spaced an average car's width apart (1.5 meters). Having two radar sensors arranged this way is key -- they enable the system to see more space and detail than a single radar sensor.

During test drives on clear days and nights, the system performed as well as a LiDAR sensor at determining the dimensions of cars moving in traffic. Its performance did not change in tests simulating foggy weather. The team "hid" another vehicle using a fog machine and their system accurately predicted its 3D geometry. The LiDAR sensor essentially failed the test....

The team is now working with Toyota to fuse the new radar technology with cameras. The researchers say this could potentially replace LiDAR.​

 

[OrthoSurg]

Yes, I believe it was, because that was before their recent run up. AAPL did not used to have a high, tech-like PE multiple, and for a while has also had huge cash pile on their balance sheet. Prior to then, which I believe was around when Berkshire bought in, people were worried about AAPL starting to pay dividends with their cash (meaning they didn’t know how to spend it on new growth opportunities), and also that iPhone sales were going to stall as smartphone market became saturated.

Probably Buffett also liked that AAPL was paying dividends. TSLA is nowhere close to paying a dividend.

Could Berkshire be buying TSLA? Sure. But to me it doesn’t seem to fit Buffett’s style, and AAPL (when he bought it) is not really a fitting comparison.

That’s exactly when I started buying AAPL too.
2 years ago.
But for TSLA to have a descent entry point for Berkshire-Hattaway from a value investing perspective, it would have to go back to $400, pre-split.

 

[Robocop]

Possible future upgrade to Tesla's Autopilot sensors:

Upgraded radar can enable self-driving cars to see clearly no matter the weather

A new kind of radar could make it possible for self-driving cars to navigate safely in bad weather. Electrical engineers at the University of California San Diego developed a clever way to improve the imaging capability of [doubled] existing radar sensors so that they accurately predict the shape and size of objects in the scene. The system worked well when tested at night and in foggy conditions.

The team will present their work at the Sensys conference Nov. 16 to 19....

The system consists of two radar sensors placed on the hood and spaced an average car's width apart (1.5 meters). Having two radar sensors arranged this way is key -- they enable the system to see more space and detail than a single radar sensor.

During test drives on clear days and nights, the system performed as well as a LiDAR sensor at determining the dimensions of cars moving in traffic. Its performance did not change in tests simulating foggy weather. The team "hid" another vehicle using a fog machine and their system accurately predicted its 3D geometry. The LiDAR sensor essentially failed the test....

The team is now working with Toyota to fuse the new radar technology with cameras. The researchers say this could potentially replace LiDAR.​

How is this different from what Tesla already does with radar? Or do they use a single sensor?

 

[OrthoSurg]

Tesla stock: Shares rise on Morgan Stanley upgrade, citing 'internet of cars' is real opportunity

Finally the big boys are starting to catch it and joining the smart boys

 

[FrankSG]

Possible future upgrade to Tesla's Autopilot sensors:

Upgraded radar can enable self-driving cars to see clearly no matter the weather

A new kind of radar could make it possible for self-driving cars to navigate safely in bad weather. Electrical engineers at the University of California San Diego developed a clever way to improve the imaging capability of [doubled] existing radar sensors so that they accurately predict the shape and size of objects in the scene. The system worked well when tested at night and in foggy conditions.

The team will present their work at the Sensys conference Nov. 16 to 19....

The system consists of two radar sensors placed on the hood and spaced an average car's width apart (1.5 meters). Having two radar sensors arranged this way is key -- they enable the system to see more space and detail than a single radar sensor.

During test drives on clear days and nights, the system performed as well as a LiDAR sensor at determining the dimensions of cars moving in traffic. Its performance did not change in tests simulating foggy weather. The team "hid" another vehicle using a fog machine and their system accurately predicted its 3D geometry. The LiDAR sensor essentially failed the test....

The team is now working with Toyota to fuse the new radar technology with cameras. The researchers say this could potentially replace LiDAR.​

TBH, this sounds like Crutch 2.0 to me. It just sounds like front facing LIDAR that also works in bad weather.

Tesla pretty much already does all this through vision. Tesla only uses the radar to help detect the distance of objects in the direction in which the car is traveling the fastest.

 

[OrthoSurg]

One year ago today - I was standing in front of this guy on stage who literally threw a metal ball at a car windshield and saw the ball roll off the stage and onto the floor in front of me. Should have kept it vs give it back to one of the stage hands. One year later - same company put lots of money in my pocket. Gotta love it.

View attachment 609733 View attachment 609733 View attachment 609735 View attachment 609736

That ball would probably sell for couple dozen of TSLA shares on eBay.

 

[MP3Mike]

Tesla pretty much already does all this through vision. Tesla only uses the radar to help detect the distance of objects in the direction in which the car is traveling the fastest.

No, they use radar to help see through rain, snow, dust, fog, etc. as well. They just don't use two of them.

 

[Prunesquallor]

OT

Elon feels better.

 

[JustMe]

Fun fact: According to supercharge.info, Tesla just opened the northernmost supercharger in the world in Varangerbotn Norway 70.1 degrees north latitude. It’s at the extreme tip of Norway - so it seems that the supercharger network effectively covers that entire country now.

It’s amazing to witness the inexorable expansion of the SC network to some of the most remote parts of the world. There are vast gaps left of course, where Tesla does not have a presence. It’ll be great to see those distant roads gradually light up.

I wonder how many people are aware of the supercharger network. It wouldn’t surprise me if 95% of the US population never heard of it. When someone asks me about long-distance travel I show them the National SC map and they are blown away.

Has Tesla disclosed how much of the SC network’s running costs are is covered by use charges?