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TSLA Trading Strategies
- Thread starter Robert.Boston
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I think this is interesting as well. But where does the 15 come from? If you want to buy 1000 shares, shouldn't you be buying 10 calls?
If I own 10 calls my TSLA position will never be large enough to get 1,000 shares unless I have the cash to exercise them, which I don't. The extra 5 calls are so that I can sell those to actually exercise the other 10 at some point.
There is a time component to the options that isn't there for the shares. Theoretically there is otherwise no difference between a LEAP and a weekly option; he could have bought, this morning, $200 strike calls. This afternoon they would have been worth a couple of dollars more. Certainly not enough for buying 1000 shares after selling the 15 contracts. I just don't see a theoretical basis for the formula because the value of the options clearly depends on the time component.
Gtoffo
Member
I see what you mean. Definitely. For the formula to work a significant movement upwards of the stock is needed.
To work one must achieve:
Profit per option * 15 options = Price of exercising * 10 options = strike price * 10 options
So profit per option must be = strike price * 2 / 3. So if premiums were 0$ that would require a +66% movement in the stock. Since premiums exist, with LEAPS much more movement will be needed. Bull call spreads might be a good option to lower premium and required movement. Otherwise the ratio of calls entered to calls exercised must be changed.
If you select a deep ITM (50% og share price), the time premium is quite low. Jan17 120 stripe TSLA is priced 121.25/124.25 (bid/ask) when SP is 236.61. This gives a premium of 3.14 (middle price selected). Also note that the time decay is not linear. It accelerates at the end, so by rolling out the options to jan18 (when bid/ask is reasonable), the actual time-cost is probably lower than the bid/ask-risk.
Using deep ITM leaps is probably cheeper than borrowing money to give a 2x gearing, and some of the bid/ask risk + time decay can be further reduced by selling shorter time, higher strike calls as "covered calls" on the leaps.
Edit: Example: buy a Jan17 120 strike call and selling a Jan16 300 strik call (diagonal call spread), is priced 111.70/115.05 right now when SP is 236.61. Break even Jan 15. 2016 is 233.31. If the SP is 300 at this time, the profit is 6621.80, with a ROI of 57.56%.
Using deep ITM leaps is probably cheeper than borrowing money to give a 2x gearing, and some of the bid/ask risk + time decay can be further reduced by selling shorter time, higher strike calls as "covered calls" on the leaps.
Edit: Example: buy a Jan17 120 strike call and selling a Jan16 300 strik call (diagonal call spread), is priced 111.70/115.05 right now when SP is 236.61. Break even Jan 15. 2016 is 233.31. If the SP is 300 at this time, the profit is 6621.80, with a ROI of 57.56%.
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Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Yeah, buying these deep ITM leaps is basically like buying stock in the sense that the cost of the option is almost all intrinsic value and it moves with the stock dollar for dollar.
However you need to deploy a lot of cash, as you said you get about only twice as many LEAPs as stock for the same money. So it's about a x2 leveraging with very little risk. But going on 100% margin and just buying straight stock might be equally cheap, with today's interest rates, and will leverage you the same.
But if you take a little more risk with less deeply in the money LEAPS the payoff can be great. J17 150s I bought at the time when TSLA was about $200 2 months ago are now up 50% while the stock is up 15-20%.
I'll have to lay out some numbers later. Some key points are that the TSLA position at the time of rebalance is like 30% or less. The other one is that this is like a five year strategy depending on how fast TSLA goes up.
If you're looking for a thesis, an analyst from Stifel Nicolaus seemed bullish on Tesla due to growth, but doesn't have a comprehensive thesis. Regardless, he reiterated a Buy rating on the stock and has a 88% success rate recommending Tesla: https://www.tipranks.com/experts/james-albertine
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Thank you! Happy to be here
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Thank you! Happy to be here
Gtoffo
Member
So....does anyone here hold Junes? Did you/will you roll them? When how?
I still have my position. Am thinking of probably rolling to 17LEAPS when I get the chance.
I still have my position. Am thinking of probably rolling to 17LEAPS when I get the chance.
I rolled all my June positions out to September...except, some June 19 300s that I got as my Shareholder's meeting/white swan lotto ticket. Currently have stock, those June calls; Sept 240/280;
and J17 150/200
mejojo
Active Member
I closed out almost all my June calls which were mostly ITM/DITM and were not producing that well any more.
I still have about 8 contracts for 230/240 that look OK for the moment.
I went a little bit into Sept this morning, but am looking for a lull (perhaps first thing in the morning) to roll out some of my cash to Sept and beyond.
Please, no historic events tonight!!!!
I still have about 8 contracts for 230/240 that look OK for the moment.
I went a little bit into Sept this morning, but am looking for a lull (perhaps first thing in the morning) to roll out some of my cash to Sept and beyond.
Please, no historic events tonight!!!!
InTheShadows
Active Member
Elon is miffed about the quotes that have not been fact checked in the book.
My guess is to get even he releases "The Secret Weapon" tonight.
mejojo
Active Member
InTheShadows
Active Member
:scared: :cursing:
I'm kinda in the same boat. I sold my May calls today and left it sitting as cash. I didn't sell June's yet, however we are up quite a bit and I'm suspecting a breather soon. However we may also have started a bull run.
I'm still holding June 220 and 230 which are nicely in the green. I think I'm going to roll them out soon if we keep rising. The rest is sitting in September 230 - 265 sprinkled with some December 245 and the rest Jan 2017. Also sitting with a little cash after the restructuring that I did last week and not sure what to do with that. I'm leaning towards keeping that as ammo if we go down for whatever reason.
I'm sure I'm not alone here but it's damn nice to look at the trading account today, everything is green. Must have been more than 6 months since.
Maybe a bit off-topic, but does anybody have a Excel/Google spreadsheet to calculate option prices using Black-Scholes (and willing to share)?
What I'm looking for is a sheet to calculate prices/premiums for several different days and stock prices and/or strikes and lay them out in a table. I'm thinking SP on the X-axis and days to expiry on the Y-axis.
What I'm looking for is a sheet to calculate prices/premiums for several different days and stock prices and/or strikes and lay them out in a table. I'm thinking SP on the X-axis and days to expiry on the Y-axis.
FYI Max Pain tomorrow is 235, and many Fridays this year I feel like the market makers have shoved us near max pain if they can. Be careful with short term stuff.
If you use thinkorswim as a TD Ameritrade client, there are a great number of tools you can use.
Learning Center — Video
Price Calculator and Options Theoretical Price in ThinkorSwim
If you use thinkorswim as a TD Ameritrade client, there are a great number of tools you can use.
Learning Center — Video
Price Calculator and Options Theoretical Price in ThinkorSwim
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