TSLA Trading Strategies

[GoTslaGo]

In response to the recent requests for an update on our thinking:

I explained the above to my wife before she left for Vancouver on Thursday morning and she disagreed. I probably won't have a chance to find out in more detail exactly what she thinks until she returns on Monday.

I believe that a TSLA SP of over $400 is possible soon. Michael Jenkins believes that a market correction is coming by the beginning of the week of September 25. If that happens it's possible that Tesla won't take a huge hit.

My plan is to be able to either repurchase TSLA LEAPS with an SP of under $320, or to make up the difference shorting other stocks or the S&P, or (oops) just repurchase TSLA LEAPS at a higher price.

In any case I'd like to end up with J20 $400's, not available until the end of November. I'd love to be able to buy over a hundred of them, we'll see....

Here's the link to Michael Jenkins Friday phone call (the last one I am planning to post):
SCF-2017-09-15-Fri.m4a

Much Love and Best Wishes to my dear friend @Lump.

Hirsch in his Almanac indicated that historically the past week would be bullish. Sept triple witching with the dow up 10 of last 14, well, guess 11 of last 15 now.

Next week, Monday historically is a bullish day (for SP500). The rest of the week historically is more mixed, and Friday is down across the board. Interestingly sounds similar to the Friday phone call!

 

[neroden]

I believe that there is an excellent chance that the market will either have, or start a substantial decline (10%-20% for 2-3 months) by the end of October. Possibly starting as soon as next week. If that happens it will present huge opportunities.

MitchJi, you gave me a lot to think about with the discussion of people who've successfully called market drops.

My plan with TSLA is to hold onto my existing stock and J19 calls (much of it isn't even long-term yet, and I certainly intend to get long-term capital gains treatment); and to continue selling relatively short-duration DOTM puts, which will either expire or buy stock at prices I am comfortable with. But for my *other* investments, this is worth pondering.

For me, the possible strategies are different from you: I don't short-sell, for one thing. Looking through my investments, there is about 10% which I would want to change in anticipation of a stock market crash or bear market (perhaps clear out of these stocks at a potential top, and "dry out my powder" so I can buy at the bottom) and another 5% if it was also a rental real estate bear market (which I am *not* currently expecting, but there are some signs that it's possible).

There's another 21% in Berkshire Hathaway where I'd have to think about it -- but the cost basis is low enough that probably doesn't make sense to sell even in anticipation of a major short-term dip. Effectively, in the US, a long-term stockholding in a taxable account is an indefinite-duration 0% loan from the government in the amount of the capital gains taxes which will eventually be oweable. I lose at least 15% permanent free leverage if I sell and buy back! As a result, once you've accumulated a large unrealized capital gain, you usually only want to sell such a long-term holding if you expect it to go down for years running (you no longer think it's a good company), not if it's going to bounce back in a year or three. The free leverage is a solid reason to stay in an OK stock, even if you would put your money in a different stock if you started with cash.

This is, of course, another reason why I have never sold any of my TSLA shares -- the government is effectively giving me 12% free leverage (and growing) by letting me put off taxation until the gains are realized.

Since I've done most of my investing in taxable accounts, I've never quite adjusted to the different dynamics of tax-deferred and Roth accounts, which don't have the same disincentive to trade. I've probably lost out on a bit due to that, but I'm still going to avoid most market timing because market timing is still very hard to get right.

 

[MitchJi]

twitter question:
Option_Sniper‏ @option_snipper Sep 19
folks, tons of people asking what is my 20/80 rule and HOW i actually do it in actions. let me use some "practical" examples to explain it.

I did a twitter search for "option_sniper 20/80 rule" and got the tweet above. How can I find the associated examples?

 

[ZenMan]

twitter question:
Option_Sniper‏ @option_snipper Sep 19
folks, tons of people asking what is my 20/80 rule and HOW i actually do it in actions. let me use some "practical" examples to explain it.

I did a twitter search for "option_sniper 20/80 rule" and got the tweet above. How can I find the associated examples?

Here are his rules. Read from bottom up.

1. Option_Sniper‏ @option_snipper Sep 19
   Option_Sniper Retweeted Option_Sniper
   
   (15/15) IF/WHEN u can give up idea of making quick & great $$ trading options, u r one step closer to trading RIGHT & making $ consistently.
   
   Option_Sniper added,
   
   Option_Sniper @option_snipper
   (14/n) my 20/80 rule is based on many many VERY EXPENSIVE lessons i've learned on myself over a few years. if u can relate to it, ACT TODAY. Option_Sniper on Twitter …
   2 replies2 retweets26 likes
   
2. 
   Option_Sniper‏ @option_snipper Sep 19
   Option_Sniper Retweeted Option_Sniper
   
   (14/n) my 20/80 rule is based on many many VERY EXPENSIVE lessons i've learned on myself over a few years. if u can relate to it, ACT TODAY.
   
   Option_Sniper added,
   
   Option_Sniper @option_snipper
   (13/n) if u dream turning several thoughts into 100k pretty quick and trade overly aggressive, u won't have $$ for walmart shopping one day Option_Sniper on Twitter …
   4 replies1 retweet25 likes
   
3. 
   Option_Sniper‏ @option_snipper Sep 19
   Option_Sniper Retweeted Option_Sniper
   
   (13/n) if u dream turning several thoughts into 100k pretty quick and trade overly aggressive, u won't have $$ for walmart shopping one day
   
   Option_Sniper added,
   
   Option_Sniper @option_snipper
   (12/n) as far as i know BEST trader are always ones who profit PROGRESSIVELY, STEP BY STEP, not overnight or all in a sudden. NO WAY. Option_Sniper on Twitter …
   3 replies0 retweets21 likes
   
4. 
   Option_Sniper‏ @option_snipper Sep 19
   Option_Sniper Retweeted Option_Sniper
   
   (12/n) as far as i know BEST trader are always ones who profit PROGRESSIVELY, STEP BY STEP, not overnight or all in a sudden. NO WAY.
   
   Option_Sniper added,
   
   Option_Sniper @option_snipper
   (11/n) yes there's difference in terms of gains from itm and otm calls when stock rockets up. BUT that does NOT mean u should be GREEDY. Option_Sniper on Twitter …
   0 replies0 retweets19 likes
   
5. 
   Option_Sniper‏ @option_snipper Sep 19
   Option_Sniper Retweeted Option_Sniper
   
   (11/n) yes there's difference in terms of gains from itm and otm calls when stock rockets up. BUT that does NOT mean u should be GREEDY.
   
   Option_Sniper added,
   
   Option_Sniper @option_snipper
   (9/n) also, whenever trading options, people so greedy chasing OTM calls. NOT right to do most of time. ITM calls or near-strike otm SAFER. Option_Sniper on Twitter …
   0 replies0 retweets19 likes
   
6. 
   Option_Sniper‏ @option_snipper Sep 19
   Option_Sniper Retweeted Option_Sniper
   
   (10/n) if u don't understand the meaning of this term "SAFER", u will get a life-time-unforgettable lesson sooner or later. live, or die.
   
   Option_Sniper added,
   
   Option_Sniper @option_snipper
   (9/n) also, whenever trading options, people so greedy chasing OTM calls. NOT right to do most of time. ITM calls or near-strike otm SAFER. Option_Sniper on Twitter …
   0 replies0 retweets21 likes
   
7. 
   Option_Sniper‏ @option_snipper Sep 19
   Option_Sniper Retweeted Option_Sniper
   
   (9/n) also, whenever trading options, people so greedy chasing OTM calls. NOT right to do most of time. ITM calls or near-strike otm SAFER.
   
   Option_Sniper added,
   
   Option_Sniper @option_snipper
   (8/n) ... and u use 80% of this 20k which is 16k for (far) monthlies like Oct/Nov/Dec/Jan calls. that's the RIGHT way doing it. Option_Sniper on Twitter …
   2 replies0 retweets15 likes
   
8. 
   Option_Sniper‏ @option_snipper Sep 19
   Option_Sniper Retweeted Option_Sniper
   
   (8/n) ... and u use 80% of this 20k which is 16k for (far) monthlies like Oct/Nov/Dec/Jan calls. that's the RIGHT way doing it.
   
   Option_Sniper added,
   
   Option_Sniper @option_snipper
   (7/n) based on my 20/80 rule, MAX amount $$ u should use for $fb is 20k. then u use 20% of 20k which is 4k for weeklies & oct20... Option_Sniper on Twitter …
   1 reply0 retweets27 likes
   
9. 
   Option_Sniper‏ @option_snipper Sep 19
   Option_Sniper Retweeted Option_Sniper
   
   (7/n) based on my 20/80 rule, MAX amount $$ u should use for $fb is 20k. then u use 20% of 20k which is 4k for weeklies & oct20...
   
   Option_Sniper added,
   
   Option_Sniper @option_snipper
   (6/n) people just don't get it. then think about this: if u have 100k in ur acct, u dare use 20K trading $fb sep22 170c now? if u do, u fool Option_Sniper on Twitter …
   2 replies0 retweets21 likes
   
10. 
    Option_Sniper‏ @option_snipper Sep 19
    Option_Sniper Retweeted Option_Sniper
    
    (6/n) people just don't get it. then think about this: if u have 100k in ur acct, u dare use 20K trading $fb sep22 170c now? if u do, u fool
    
    Option_Sniper added,
    
    Option_Sniper @option_snipper
    (5/n) so ur 20% $$ trading short-term that's NOT overly aggressive at all. 80% trading (far) monthlies much much more SAFER Option_Sniper on Twitter …
    3 replies0 retweets16 likes
    
11. 
    Option_Sniper‏ @option_snipper Sep 19
    Option_Sniper Retweeted Option_Sniper
    
    (5/n) so ur 20% $$ trading short-term that's NOT overly aggressive at all. 80% trading (far) monthlies much much more SAFER
    
    Option_Sniper added,
    
    Option_Sniper @option_snipper
    (2/n) basic rule is use only 20% of ur acct trading weeklies & near-term monthlies, 80% on monthlies. play aggressive weekly is pure GAMBLE. Option_Sniper on Twitter …
    0 replies0 retweets14 likes
    
12. 
    Option_Sniper‏ @option_snipper Sep 19
    Option_Sniper Retweeted Option_Sniper
    
    (4/n) my 20/80 rule is NOT saying any time u should use ALL of ur $$ trading. DEFINITELY NOT!! totally depends on mkt conditions & timing.
    
    Option_Sniper added,
    
    Option_Sniper @option_snipper
    (3/n) further, for any stock, no matter how good it is (e.g., $nvda $tsla), use 20% of ur acct MAX for that name. don't get emotional. Option_Sniper on Twitter …
    0 replies0 retweets16 likes
    
13. 
    Option_Sniper‏ @option_snipper Sep 19
    Option_Sniper Retweeted Option_Sniper
    
    (3/n) further, for any stock, no matter how good it is (e.g., $nvda $tsla), use 20% of ur acct MAX for that name. don't get emotional.
    
    Option_Sniper added,
    
    Option_Sniper @option_snipper
    (2/n) basic rule is use only 20% of ur acct trading weeklies & near-term monthlies, 80% on monthlies. play aggressive weekly is pure GAMBLE. Option_Sniper on Twitter …
    0 replies0 retweets17 likes
    
14. 
    Option_Sniper‏ @option_snipper Sep 19
    Option_Sniper Retweeted Option_Sniper
    
    (2/n) basic rule is use only 20% of ur acct trading weeklies & near-term monthlies, 80% on monthlies. play aggressive weekly is pure GAMBLE.
    
    Option_Sniper added,
    
    Option_Sniper @option_snipper
    (1/n) using 20/80 is NOT about getting rich overnight - it's about survival and thriving in this mkt LONG-TERM. it tells u HOW to allocate $ Option_Sniper on Twitter …
    0 replies0 retweets18 likes
    
15. 
    Option_Sniper‏ @option_snipper Sep 19
    Option_Sniper Retweeted Option_Sniper
    
    (1/n) using 20/80 is NOT about getting rich overnight - it's about survival and thriving in this mkt LONG-TERM. it tells u HOW to allocate $
    
    Option_Sniper added,
    
    

 

[MitchJi]

Thanks @ZenMan!

I just tried this twitter search, "option_snipper (*/n)" which goes up to at least (58/n).

I love his 2030 prediction!

(15/n) so Jobs and Musk create GREAT things. They know what you WILL need 10 yrs 20 yrs from now. In other words, They create DEMANDS.

(16/n) ok let me stop here. But mark my words folks, $tsla will reach $6,000 by year 2030. Holding shares since $46 and damn proud of myself

 

[neroden]

Great to read. Well, I guess I violate his 20% name concentration rule some. (My rule was don't put in more than 25%, but I've broken that in a very small way too. My other rule was take profits when it grows to exceed 50%, which I am going to stick to.) But I haven't been finding other things I'm comfortable investing in, which would make it easier to stick to the 25% rule.

All my option trades are at *least* as long term as his, I'm not really leveraged -- I think he's talking to people with a much more short term attitude.

 

[zdriver]

All my option trades are at *least* as long term as his, I'm not really leveraged -- I think he's talking to people with a much more short term attitude.

Very much so. He frequently summarizes it as <=20% in weeklies (2-14 days out) and <=80% in long term, described as minimum 2-3 months out, sometimes 6-8 months. He somewhat rarely uses LEAPs.

I now follow the rule pretty closely, typically try to stay <10% though instead of 20%. Every time I've had massive draw down happened when I had too much in short term calls. (<1 month)

 

[MitchJi]

Very much so. He frequently summarizes it as <=20% in weeklies (2-14 days out) and <=80% in long term, described as minimum 2-3 months out, sometimes 6-8 months. He somewhat rarely uses LEAPs.

I now follow the rule pretty closely, typically try to stay <10% though instead of 20%. Every time I've had massive draw down happened when I had too much in short term calls. (<1 month)

It's his short term options trading portfolio.

It's not his complete portfolio because he mentioned holding Tesla shares since the price was $46.

 

[bdy0627]

Very much so. He frequently summarizes it as <=20% in weeklies (2-14 days out) and <=80% in long term, described as minimum 2-3 months out, sometimes 6-8 months. He somewhat rarely uses LEAPs.

I now follow the rule pretty closely, typically try to stay <10% though instead of 20%. Every time I've had massive draw down happened when I had too much in short term calls. (<1 month)

Do you actually do better in the long run having the short term trading to augment the long term? Or is it primarily for entertainment and you would actually be better off or no worse just going 100% long term?

 

[AlMc]

@MitchJi : Does your wife work at Jeffries? While I did not think you listening to her may pan out well, she may turn out to be our new @Causalien and we will all wait for the 'crystal ball' announcements.

 

[zdriver]

It's his short term options trading portfolio.
It's not his complete portfolio because he mentioned holding Tesla shares since the price was $46.

Right, he almost never speaks of anything other than his options trading, so that's what the rule applies to.

Do you actually do better in the long run having the short term trading to augment the long term? Or is it primarily for entertainment and you would actually be better off or no worse just going 100% long term?

Hah, definitely not. I'd be way better off if I had just stuck with the J18 LEAPs I bought after selling shares just before Q3 2016 ER...
I've been paying my tuition to the market this year. With any luck, I'm hoping to turn that around next year.

Protip - don't try to learn to trade in summer. Chop day in, day out is a great way to frustrate yourself and bleed capital.

 

[Lump]

@MitchJi : Does your wife work at Jeffries?

So @MitchJi & Wifey are to blame for the painful $30 selloff just as TSLA was about to breakout & cause another short squeeze? Thats a bannable offense for sure .

Maybe she works for the DOJ that investigated SCTY or maybe she is hiding all the M3' VIN's?....Fess up Mitch!!!!!

 

[bdy0627]

Right, he almost never speaks of anything other than his options trading, so that's what the rule applies to.



Hah, definitely not. I'd be way better off if I had just stuck with the J18 LEAPs I bought after selling shares just before Q3 2016 ER...
I've been paying my tuition to the market this year. With any luck, I'm hoping to turn that around next year.

Protip - don't try to learn to trade in summer. Chop day in, day out is a great way to frustrate yourself and bleed capital.

Oh yeah, know what you mean there. Just when I think my tuition payments are done, I get another one. Maybe this ratio should be 95/5 so as not to screw up too badly!

 

[MitchJi]

Today's SCF phone call:
SCF-2017-09-25_Mon.wav

 

[Nate the Great]

Today's SCF phone call:
SCF-2017-09-25_Mon.wav

@MitchJi

What are your wife's thoughts on not breaking out for at least a little while?

With Tesla, big movement has always been linked with a larger entity buying in combined with short covering. Daimler, Tencent ect..

Previously we were range bound 2.5 years 280 as ATH, until Tencent happened, not on are own.

Obviously not a popular thought.

And yes, I understand Tesla 2017 is way different Tesla 2009, i'm more concerned with history not optimism.

My take if Tencent increases it's holding or an equivalent buys in we will get though 400, not on are own.

Is 385 the new 280?

 

[AlMc]

Having sold my $330/350 protective puts on Friday and Monday (too early but a profit is a profit) I decided that with my 'option money' I would buy some very short term lotto ticket calls for the Solar Farm event.

Got 80, Sept 28, $360 calls in the 33-39 cent range.

May all go to '0' but they are lottos.

Will sell half st .60 cents. Let the others ride (for now)

 

[AlMc]

Having sold my $330/350 protective puts on Friday and Monday (too early but a profit is a profit) I decided that with my 'option money' I would buy some very short term lotto ticket calls for the Solar Farm event.

Got 80, Sept 28, $360 calls in the 33-39 cent range.

May all go to '0' but they are lottos.

Will sell half st .60 cents. Let the others ride (for now)

Well, that strategy does NOT look good right now. Last 15 minutes of trading I added 3 more J19 $300s and a strangle with my 'put profits' for Oct 6th. The SP has to be 5-10% higher or lower in 10 days...hopefully higher. Not advice

 

[MitchJi]

Michael believes that the big institutions are pumping the market so that they can buy cheap puts before they pull their support. He believes that they are going to set the high on Tuesday.

How is the easiest way to monitor the total numbers of puts and calls on a stock or index?

If he's correct we can not only confirm that but we can determine the specific stiocks and indexes to buy puts on, but also the timing and approximate strike prices to purchase. Maximum pain would be perfect if we knew which expirations to check.
Edit Addition:
I just found this:
Exploring the Rare Action in the S&P 500 Put / Call Ratio
Yesterday, astute market observer and Options Institute Instructor Kevin Davitt pointed out that the SPX Put Call Ratio had closed under 1.00 three days this month (Dec 7th, Dec 8th, and Dec 13th). I knew this was a rarity, but didn’t realized how rare it was for this ratio to close below 1.00. In fact, it has only happened sixteen times since July 2010 (which is how far back the data goes back on CBOE’s website). Five of those sixteen occurrences happened in 2016 – twice in July and the recent three occurrences.

Before moving forward, a quick explanation about the SPX Put Call ratio. This figure is determined by dividing the number of SPX put options divided by the SPX call option volume in a single day. Because SPX options are a preferred method of hedging by institutions we almost always see more Put volume than Call volume each day in that arena. In fact, an average about 1.6 puts trade for each SPX call each day. The chart below shows the put call ratio for 2016.
<Snip>

And I got this in response from Michael:

there is no easy way unless you are very computer savvy. I watch the top 10 big cap names that manipulate the markets i.e the FANG's and big Dow names and have separate stock list pages with the options strikes three above and three below each current price on all the names. I watch these every 30 seconds for the 'blocks' like 10,000 calls or puts and by 10:20 am each day you always know what is in the programs.

I believe he uses that for day trading. I just asked him if he gathers that information for the market tops. I'll post his reply.

 

[D-egg-O]

Purchased another jan19 600C. The premium seemed to have dropped recently with the stagnating SP.

 

[kenliles]

Purchased another jan19 600C. The premium seemed to have dropped recently with the stagnating SP.

IVs on all TSLA call strikes have been falling in Oct - most pronounced over last week;