TSLA Investor Discussions

[bmek]

Based on today's prices, here's a play … sell a Oct19$27 Put for $0.50 and then, after exercise, write a Nov16$29 Call for $0.90.

If your Put doesn’t get exercised this Friday, you pocket $0.50.

If the Put gets exercised and the stock price is in the same range, you get another $0.90. Your investment is then $25.60.

Then, if TSLA goes above $29 on Nov 16 you close the entire position for a gain of $3.40.

Alternatively, if TSLA continues to drop then your cost is at a maximum of $26.50.

 

[kenliles]

A123 files for bankruptcy

Tech Currents - Seeking Alpha

 

[Doug_G]

A123 files for bankruptcy

Tech Currents - Seeking Alpha

That's only half the story. They've sold most of their assets to Johnson Controls. The A123 battery technology has found a better home.

 

[bmek]

What would be a good options buy today as a strategy to insure against further losses in case there is more trouble on the horizon short term?

My average purchase price for the TSLA shares I currently own is $30. I was going to sell to pay for my Model S which now looks like will be delivered Jan/Feb '13. I'm considering getting a car loan instead and holding for another year, but I'm risk averse.

Disclosure: I've never done options trading before, and not sure I quite understand it.

Could be a good time to sell some Dec21$32 covered calls for $0.90 ...

 

[Zzzz...]

Could be a good time to sell some Dec21$32 covered calls for $0.90 ...

If you sell it, you most likely make that $0.90.

But how about buying instead of selling? Imagine the possibility of price reaching $34 - $35 level! Yes, risky, but reward... And exactly month ago price was $32.50. So it is not totally unreasonable to expect share price going north of $32.90 in more then two months from now...

So I'm not sure what is better :biggrin:

 

[bmek]

If you sell it, you most likely make that $0.90.

But how about buying instead of selling? Imagine the possibility of price reaching $34 - $35 level! Yes, risky, but reward... And exactly month ago price was $32.50. So it is not totally unreasonable to expect share price going north of $32.90 in more then two months from now...

So I'm not sure what is better :biggrin:

Here is my thinking (please forgive the complexity)...

According to mulder1231, he requires liquidity at the end of January/beginning of February and his cost base is ~$30. He was asking how to use options. If he sells some covered calls at $32.00 then, if exercised, he gets $32.90 and realizes a gain.

Alternatively, if TSLA is 'in-the-money' as the option expiry date (12/21/12) approaches and he wants to take advantage of more upside, he could buy the Dec21$32 call to close his position and write (sell) another covered call that expires on January 18. If TSLA is around $32.00 (in-the-money) then the January18 calls will have a premium to the December price and he could raise the strike above $32 and probably sell a covered call for more than he pays for his December $32 call (to close the position).

On the other hand, if TSLA doesn't go above $32 then mulder1231 pockets his $0.90 and he is in the same position he is in now (i.e., he is long on TSLA and underwater, and he has to pay for his Model S).

 

[earthling]

If you sell it, you most likely make that $0.90.

But how about buying instead of selling? Imagine the possibility of price reaching $34 - $35 level! Yes, risky, but reward... And exactly month ago price was $32.50. So it is not totally unreasonable to expect share price going north of $32.90 in more then two months from now...

So I'm not sure what is better :biggrin:

Well they are two entirely different risks. And I'll be the first to admit that buying calls can be an exciting game to play, but just be aware that there is a pretty high likelihood of the stock not reaching that price in a short time frame. And if you hold your position up to expiration, you could possibly lose your entire investment.

Now with that being said, I'm taking advantage of the trading range of TSLA and planning on earning my Model X with slow and steady incremental trades of both puts and calls.

Cheers =)

 

[Zzzz...]

Here is my thinking (please forgive the complexity)...

According to mulder1231, he requires liquidity at the end of January/beginning of February and his cost base is ~$30. He was asking how to use options. If he sells some covered calls at $32.00 then, if exercised, he gets $32.90 and realizes a gain.

Alternatively, if TSLA is 'in-the-money' as the option expiry date (12/21/12) approaches and he wants to take advantage of more upside, he could buy the Dec21$32 call to close his position and write (sell) another covered call that expires on January 18. If TSLA is around $32.00 (in-the-money) then the January18 calls will have a premium to the December price and he could raise the strike above $32 and probably sell a covered call for more than he pays for his December $32 call (to close the position).

On the other hand, if TSLA doesn't go above $32 then mulder1231 pockets his $0.90 and he is in the same position he is in now (i.e., he is long on TSLA and underwater, and he has to pay for his Model S).

Makes perfect sense!

I was actually answering your post without thinking of mulder1231... Sort of pointed out possibility of what could have been as earthling said "an exciting game to play". And in fact there was someone around this thread who were looking for high reward but high risk plays...

 

[CyberDutchie]

Here is my thinking (please forgive the complexity)...

According to mulder1231, he requires liquidity at the end of January/beginning of February and his cost base is ~$30. He was asking how to use options. If he sells some covered calls at $32.00 then, if exercised, he gets $32.90 and realizes a gain.

Alternatively, if TSLA is 'in-the-money' as the option expiry date (12/21/12) approaches and he wants to take advantage of more upside, he could buy the Dec21$32 call to close his position and write (sell) another covered call that expires on January 18. If TSLA is around $32.00 (in-the-money) then the January18 calls will have a premium to the December price and he could raise the strike above $32 and probably sell a covered call for more than he pays for his December $32 call (to close the position).

On the other hand, if TSLA doesn't go above $32 then mulder1231 pockets his $0.90 and he is in the same position he is in now (i.e., he is long on TSLA and underwater, and he has to pay for his Model S).

Bmek, thanks for the advice, this is exactly what I was looking for--an insurance play against TSLA going further south and not recovering in time, forcing me to sell at a loss.

Actually, I was also lucky to improve my position a bit as I had a limit buy at $27 which executed yesterday. So my cost basis is now $29.25 :biggrin:

 

[earthling]

Actually, I was also lucky to improve my position a bit as I had a limit buy at $27 which executed yesterday. So my cost basis is now $29.25 :biggrin:

Congratulations on that dip to $27. It lasted less than 10 minutes. Nice catch.

Cheers =)

 

[CyberDutchie]

Here is my thinking (please forgive the complexity)...

According to mulder1231, he requires liquidity at the end of January/beginning of February and his cost base is ~$30. He was asking how to use options. If he sells some covered calls at $32.00 then, if exercised, he gets $32.90 and realizes a gain.

Alternatively, if TSLA is 'in-the-money' as the option expiry date (12/21/12) approaches and he wants to take advantage of more upside, he could buy the Dec21$32 call to close his position and write (sell) another covered call that expires on January 18. If TSLA is around $32.00 (in-the-money) then the January18 calls will have a premium to the December price and he could raise the strike above $32 and probably sell a covered call for more than he pays for his December $32 call (to close the position).

On the other hand, if TSLA doesn't go above $32 then mulder1231 pockets his $0.90 and he is in the same position he is in now (i.e., he is long on TSLA and underwater, and he has to pay for his Model S).

OK, so I did the first step and sold a TSLA Dec21$32 covered call today. I just sold 1 option contract (=100 shares) since I'm new to options and don't want to risk too much.

Now what I originally thought, that this would provide an insurance against my TSLA shares being underwater when I need to sell them in December to raise cash for my car, actually is not true. The person who bought my 1 call option is not obliged to buy the underlying 100 shares from me. He/she will only excersice if TSLA is above $32 (in-the-money). If it's lower, let's say $28, he/she can simply let the option expire. And I would still be underwater with my shares, but gained a little bit from the premium I received for the option contract. (Which is what you indicated in your last sentence--I just didn't read that carefully enough.)

Is there anything I could do with options trading to guarantee that come Dec21 I can sell my shares at a profit?

I guess there is no such thing as a guarantee in trading...

(Sorry, I'm a novice and this option trading stuff is pretty hard to grasp at first.)

 

[smorgasbord]

Here's where you're at:

1) If TSLA is above $32 on Dec 21, 100 shares will be called. You'll make $32 (strike price) - $30 (what you paid) + $0.90 (what you sold the call for) = $2.90/share
2) If TSLA is below $32 on Dec 21, then you've pocketed $0.90/share.

If TSLA drops to $25, all you've done is to reduce that drop by $0.90. So $25 is like $25.90, which is still a loss.


Nothing you have done is any sort of insurance. All you've really done is limit your upside to $2.90 by taking $0.90 up front. If TSLA goes to $40, you're still selling at $32.90. If TSLA goes to $20, you made that equivalent to $20.90.

Insurance costs money. The way to get insurance is to buy Puts, like I said earlier. But, it's not realistic to buy insurance for a price TSLA isn't achieving. Insurance will limit your losses, not guarantee a profit.

 

[bmek]

Is there anything I could do with options trading to guarantee that come Dec21 I can sell my shares at a profit?

I guess there is no such thing as a guarantee in trading...

It would be nice to take an underwater position and guarantee a profit but ...

What you need to do is trade on the volatility in the market and lower your cost base and/or generate cash to buy a put option.

To start with, buying a put option is expensive, but doable. You would pay ~$4.80 for a January18 $30 put. Doing this trade today would crystalize your loss at a lower price than simply selling TSLA today. For you to 'win' on this trade, TSLA would have to rise above $33.62 ($28.82 plus $4.80).

A better play, which I recommended, is to write a December21 covered call for $32, which gives you $0.90. If TSLA rises in price, you could either (1) buy a January 18 $30 put and that would give you the insurance that you're looking for, (2) sell a January 18 covered call, or (3) sell the stock.

Given you are long on TSLA today, your position is underwater, and you require liquidity in January you may as well try to trade your way into a better position.

Starting with one contract is a good way to go.

Let's see what happens.

- - - Updated - - -

I posted this in another thread and, given its relevance, I'm posting it here too ...

With the focus on production and deliveries, I built a model that shows a scenario where the customer deliveries in Q4 are 2,500 vehicles.

This model has the Signatures completed the week ending Sunday, Nov 11 and delivered before Sunday, Nov 25. Also, this scenario has the manufacturing run rate of 400 cars/week achieved by year end.

We wil, obviously, see what happens.

 

[Norbert]

For any option or share trade on the market, there has to be someone who thinks the opposite is a better proposition. So it always depends on what you consider the likelihood of certain outcomes. If you want to limit your potential loss independent of the likelihood of certain outcomes, you'll also have to limit your potential gain in some other way. As far as I understand. EDIT: Meant: limit or reduce.

 

[vfx]

View attachment 10738

Nice graph. John Petersen would be proud. Hi John!

 

[earthling]

Maybe this'll help

Here's a simple little example of locking in profits:

I bought one share of stock for $30.:smile: The price of the stock went down to $28.:scared: I got scared that I would lose some of my money if the price did not go back up to what I paid. The stock price rose back up to $30 and I breathed a huge sigh of relief.:frown: Then the stock price started to go up, first to $33, then to $36, then to $39. WooHoo!:love: I was going to be rich! I started thinking of all the things I would buy with my new found wealth.

But then the stock price started going down.:crying: It went down to $35. At that point in time, for a cost of $2, I purchased a "put" with a "strike price" of $33. So now my total investment is $32. And here is what will happen...

• If the stock price stays at $35, I will have a $3 gain when I sell.
• If the stock is at $33, I will have a $1 gain when I sell.
• If the stock is less than $32, I will have a loss on the stock IF I sell. However...
• If the stock is less than $33, I will have a GAIN on the option at expiration. Or I could exercise the option to "put" the stock to the seller of the option and that seller (the market maker) will have to pay me $33 regardless of what the stock price is.
• If the stock price shoots to $100, I have made no obligation that will limit my upside profit potential.

So you see there is a way to use options as insurance to lock in profits, but that is only if you are already in positive territory with the stock.

Cheers =)

 

[CyberDutchie]

Thanks guys, I'm slowly understanding the plays.

 

[nustada]

OK, so I did the first step and sold a TSLA Dec21$32 covered call today. I just sold 1 option contract (=100 shares) since I'm new to options and don't want to risk too much.


I guess there is no such thing as a guarantee in trading...

(Sorry, I'm a novice and this option trading stuff is pretty hard to grasp at first.)

Well there are guarantees, but it is at best zero sum game and really a negative sum game for the investor when you consider the infrastructure of the market, so you are really trading risk for reward. There have been many studies by mathematicians that support the net result on any bet in the markets are ultimately random, when knowledge (in my opinion belief of expressed knowledge) is equal. Any sane person knows, that concept of equal knowledge no matter how legislated is absurd, there will always be people who get news first. However so called "safe or guaranteed" investments guarantees loss when adjusted for inflation. You can blame the "Federal" Reserve and Rebubloodlican or DemiCripts for that.

So I think people should invest in stocks that the customers love or desperately need the product and you personally respect while on the flip side the company can make an honest profit with a competitive advantage. While weighing sentiment against your personal liquidity and risk profile. That way the numbers should "eventually" come out well.

But then again, I personally can't afford an s-series yet, so take my opinion with a grain of salt.

 

[charliestyr]

Hi everyone,

I am considering buying some shares in Tesla, a small amount - long - as I believe in the mission and the product.

I was just wondering what you think about buying before or after the upcoming quarterly report. I am not investing a huge amount, I'm a student but earned a little money over summer that I have set aside and want to put it to better use than sitting around in a current account.

Presumably there is normally a bit of a reaction to these reports? And judging by what Elon stated about 'cash flow positive' by the end of the month (or next month?), would that mean that the upcoming report will still show negative things or slowly becoming positive things?

A few possibly confused questions, I apologise. I have read quite a bit of this thread and hope this isn't too mundane to post here ;-)

Charlie -

 

[VolkerP]

The volatility of TSLA stock predicts exactly that: it is totally unpredictable. There have been ups and downs following such events.

Members on this forum claim an information advantage over traders that just do P/E evaluations and/or technical analysis. We speculated on major upswings following these events, e.g. "If every John Average gets the big picture from the supercharging event, stock will go ##!". But that never happened.

I for myself retreated to the opinion that the stock will move upwards in a sustained way only after a consecutive row of quarter results showing big profits for Tesla. And that might not happen for the years to come, since Elon is determined to throw every buck into R&D, expanding production, and EV infrastructure. Tesla's vast potential might be honored when Gen III cars hit the street in ten thousands a month.

My advice: Get in for the long term, with money you're not gonna need for the next 5-8 years. Potential is there to make a small fortune from $1k when you retire.