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  • The plurality of cost and majority of gain are June expiration. Of those, I bought them for an average $26 per contract. Total cost for those were <$800. I have bought others that were more short term that I have sold with major gains, including buying some dips along the way. Taking those profits has allowed me to hold the big ones through the turbulence because I’ve cashed out 6X my total basis. I also have some that expire next year and in 2022 so I can still take some upside when I clear out the June contracts. All are relatively deep in the money now. Absolutely absurd. It is hard to stop a winning strategy. I would have sold a lot before earnings last week but there was a dip before closing so I was more than nervous. Right now there is no clear negative pressure aside from people thinking it is too hot. Of course I could be wrong.

    Comment


    • Of course winning options are fun to manage. Sit tight or roll them. All kinds of things to lock in some gains and still let them run. Until the momentum swings. The reality is a high leverage bet on price movement within time parameters.
      The math and strategies are fascinating. 2022 is a long time forecasting price movement. Glad to hear it’s a “game theory hobby”. ROT for a prop options trader is 1% of capital at risk. Good luck.

      Comment


      • Does Tesla have a flywheel ? Maybe someone knows what it is and can articulate it.

        I can’t say I understand it. But then I didn’t understand Amazon’s either. It also had a large short interest and PE.

        I still think Tesla is a good indicator of market liquidity. I think the last round of rate cuts by the fed was a mistake and it will be interesting to see whether they create an over-exuberant market state again. But I could be wrong. Or this could be as good as it gets in terms of liquidity. Who knows.

        I tend to think Tesla will experience an extinction event at some stage. But I wouldn’t put any money on it.

        https://youtu.be/P305CTi8_FQ

        https://youtu.be/_5VQPIeZhMc

        https://youtu.be/_MDbxGzgHzE

        Tesla isn’t in my circle of competence. It is beyond my skill set to evaluate. What I think about it doesn’t really matter as I am not tempted to swing. I don’t understand Coca Cola also btw.

        I think of 2 main things:
        1. Risk:return
        2. Probability of being right

        I reckon individual stocks are difficult to have a sufficiently high probability of being right except under some exceptional circumstances. But I’m a mug.

        Long/short Tesla : no thanks.

        BC Biker, why are you still in this ? What is your plan ? Hopefully you don’t lose. Prepare to have your head handed to you if you keep playing. I wouldn’t have the cognitive flexibility.
        Dont_know_mind
        Physician
        Last edited by Dont_know_mind; 02-04-2020, 04:50 AM.

        Comment


        • Originally posted by Zaphod View Post

          Start? Its been squeezing nice and slow for months, accelerating now, probably will get worse. I can imagine people holding on to straight shares short anymore.

          People have to remember that shorts hold the share price up at some point as they are a guaranteed bid, you cant make money until you cover, aka, buy back the stock. Same thing for getting out of a position. You need to get out because price is going up, your buying bids up price, others get hit at their sensitive/risk levels and it goes on. When shorts get a much smaller percentage...this stops and its just the regulars who want to hold.

          I honestly could not believe the level of short selling in the name as of the last couple weeks, this was always a risk in this name, but that risk has been nuclear and obvious for months now as realized. If the calls werent so expensive I would have bought some before earnings...but they were so expensive *checks notes* it would have been worth it.
          yeah I wish I played options. I bought as many shares as I felt comfortable in a single stock when it dipped below $200. If I bought calls instead, I might've been able to retire now, who knows. my shares are happy though

          Comment


          • Originally posted by Nysoz View Post

            yeah I wish I played options. I bought as many shares as I felt comfortable in a single stock when it dipped below $200. If I bought calls instead, I might've been able to retire now, who knows. my shares are happy though
            What are your plans for managing them right now through this short squeeze? Im sure you've noticed its accelerated (900$ in premarket right now), are you going to run a trailing stop or sell calls or anything?

            Comment


            • I’m in it for the long term. I wouldn’t be surprised if it dips a little but I think this still has legs to go. Someone was saying that yesterday’s 20% jump wasn’t actually shorts covering but institutional long term players buying in. Also saw this on a subreddit to make inclusion into s&p pretty much guaranteed sooner or later.
              ---
              Here is the prospectus they filed with the SEC last May, which includes all the key numbers:

              https://www.sec.gov/Archives/edgar/d...9086d424b5.htm
              • ⁠2.00% Convertible Senior Notes due 2024
              • ⁠Amount To Be Registered: $1,840,000,000
              • ⁠Common Stock, $0.001 par value per share
              "Includes an indeterminate number of shares of common stock issuable upon conversion of the convertible senior notes at the initial conversion price of approximately $309.83 per share of common stock. "
              "DESCRIPTION OF CONVERTIBLE NOTE HEDGE AND WARRANT TRANSACTIONS"
              "Concurrently with entering into the convertible note hedge transactions, we also entered into warrant transactions with the hedge counterparties relating to the same number of shares of our common stock, with a strike price of $607.50, subject to customary anti-dilution adjustments."
              We intend to use approximately $262.1 million of the net proceeds from this offering and our concurrent common stock offering to pay the cost of the convertible note hedge transactions (after such cost is partially offset by the proceeds to us from the warrant transactions).

              So they issued $1.84b worth of convertible notes cash debt with reduced interest payments, which may convert to 5,938,740 shares, but also opened up a bullish spread with matching size, of 59,387 contracts, for a cost of $261.1m - i.e. a bull spread cost basis of $43/share.

              Maximum returns from this bull spread, if it expires with TSLA above $607.50, is ($607.50-$309.83)*5,938,740 = $1,767,784,735 minus the $261.1m cost basis of the options position, i.e. $1,506,684,735 of profits.

              I.e. Tesla has created a leveraged options bet for 577% returns. These are after all costs have been subtracted.

              Note that this can be recognized as GAAP profits with a near 100% profit margin, but right now the hedges are on the balance sheet as anti-dilution hedges.

              Tesla would probably need a board decision, and a later vote on by shareholders, that re-classifying these hedges as "derivatives" on the balance sheet, taking the $261.1m as GAAP expenses, to be able to recognize additional $1.5b in GAAP profits.

              Also, because the hedges are expiring in 2024, right now they could recognize less than 100% of the profits - but more than $1b is a fair guess. So I don't think they'll do it.
              ---
              In a different comment below that one, they go on to say tesla also has 2 more convertible debt expiring in 2021 and 2022. by them doing the math, with current prices, tesla's cash position can improve by $6,947.6M over the next 4 years

              now that's above my head, but sounds positive
              Nysoz
              General Surgery
              Last edited by Nysoz; 02-04-2020, 07:04 AM.

              Comment


              • Originally posted by Tim View Post
                Of course winning options are fun to manage. Sit tight or roll them. All kinds of things to lock in some gains and still let them run. Until the momentum swings. The reality is a high leverage bet on price movement within time parameters.
                The math and strategies are fascinating. 2022 is a long time forecasting price movement. Glad to hear it’s a “game theory hobby”. ROT for a prop options trader is 1% of capital at risk. Good luck.
                Precisely. It was a very small portion of investments. What I have learned is that by having different expiration dates I was able to hold on as the gains came in because I knew I was locking in some gain all along. Definitely not trying to predict peak. Even if it crashes the returns will shorten my time to FI but years. Will definitely hold the ones I can until into long term capital gains territory.

                Comment


                • Originally posted by Nysoz View Post
                  I’m in it for the long term. I wouldn’t be surprised if it dips a little but I think this still has legs to go. Someone was saying that yesterday’s 20% jump wasn’t actually shorts covering but institutional long term players buying in. Also saw this on a subreddit to make inclusion into s&p pretty much guaranteed sooner or later.
                  ---
                  Here is the prospectus they filed with the SEC last May, which includes all the key numbers:

                  https://www.sec.gov/Archives/edgar/d...9086d424b5.htm
                  • ⁠2.00% Convertible Senior Notes due 2024
                  • ⁠Amount To Be Registered: $1,840,000,000
                  • ⁠Common Stock, $0.001 par value per share
                  "Includes an indeterminate number of shares of common stock issuable upon conversion of the convertible senior notes at the initial conversion price of approximately $309.83 per share of common stock. "
                  "DESCRIPTION OF CONVERTIBLE NOTE HEDGE AND WARRANT TRANSACTIONS"
                  "Concurrently with entering into the convertible note hedge transactions, we also entered into warrant transactions with the hedge counterparties relating to the same number of shares of our common stock, with a strike price of $607.50, subject to customary anti-dilution adjustments."
                  We intend to use approximately $262.1 million of the net proceeds from this offering and our concurrent common stock offering to pay the cost of the convertible note hedge transactions (after such cost is partially offset by the proceeds to us from the warrant transactions).

                  So they issued $1.84b worth of convertible notes cash debt with reduced interest payments, which may convert to 5,938,740 shares, but also opened up a bullish spread with matching size, of 59,387 contracts, for a cost of $261.1m - i.e. a bull spread cost basis of $43/share.

                  Maximum returns from this bull spread, if it expires with TSLA above $607.50, is ($607.50-$309.83)*5,938,740 = $1,767,784,735 minus the $261.1m cost basis of the options position, i.e. $1,506,684,735 of profits.

                  I.e. Tesla has created a leveraged options bet for 577% returns. These are after all costs have been subtracted.

                  Note that this can be recognized as GAAP profits with a near 100% profit margin, but right now the hedges are on the balance sheet as anti-dilution hedges.

                  Tesla would probably need a board decision, and a later vote on by shareholders, that re-classifying these hedges as "derivatives" on the balance sheet, taking the $261.1m as GAAP expenses, to be able to recognize additional $1.5b in GAAP profits.

                  Also, because the hedges are expiring in 2024, right now they could recognize less than 100% of the profits - but more than $1b is a fair guess. So I don't think they'll do it.
                  ---
                  In a different comment below that one, they go on to say tesla also has 2 more convertible debt expiring in 2021 and 2022. by them doing the math, with current prices, tesla's cash position can improve by $6,947.6M over the next 4 years

                  now that's above my head, but sounds positive
                  All good and well, yes the next two years dont have a lot of debt obligation, much in their favor. I just meant there is an extremely high likelihood this is a massive short squeeze, a la VW in 2008, and that means this could then crash quite spectacularly from here, even 400 is a crash from these levels...of course could hit 2k prior, anything can happen.

                  Nothing about this is fundamental, all technical shares/options/shorts and gamma exposure processes.

                  Comment


                  • http://shortsqueeze.com/?symbol=Tsla&submit=Short+Quote
                    “Nothing about this is fundamental, all technical shares/options/shorts and gamma exposure processes.”
                    And technical trading is dominated by program trading. It always works until it doesn’t. I sincerely hope it works.

                    Comment


                    • I can't believe I'm even saying this, but if it pulls back to 400, I would bet large (maybe 10% of my net worth) in the stock as a long term bet.

                      This run has been amazing to watch, i missed out on the bitcoin bubble, so this one makes up for it.
                      xraygoggles
                      Physician
                      Last edited by xraygoggles; 02-05-2020, 03:27 PM.

                      Comment


                      • Originally posted by Zaphod View Post

                        All good and well, yes the next two years dont have a lot of debt obligation, much in their favor. I just meant there is an extremely high likelihood this is a massive short squeeze, a la VW in 2008, and that means this could then crash quite spectacularly from here, even 400 is a crash from these levels...of course could hit 2k prior, anything can happen.

                        Nothing about this is fundamental, all technical shares/options/shorts and gamma exposure processes.
                        I don't know who this guy is, but ihor dusaniwsky yesterday on twitter said 'I'm not hear about short covering in size occurring on the street - looks like long buying is driving up #Tesla's stock price and not $TSLA short covering."

                        if that's true, big institutions/funds are buying tesla stock and the short squeeze hasn't even happened yet as of yesterday. although the extra 15% today could be shorts covering now? who knows. yesterday volume was 42M shares, so far today is already at 37M shares

                        Comment


                        • That is one ************************ of another day of gap open and some very strange parabolic stock behavior. It has all of the flashing signs and trumpeting warnings of classic irrationality.

                          I assume that every short position is throwing in the towel, and getting margin called.

                          Movements like this often end with a sputter at the top, followed by a crash down to earth.... but who knows.

                          The last example in memory was bitcoin. As the news hits the front pages of the popular press sites, and your waiter starts talking about Tesla stock, that should mark the top.

                          But as the old saying goes..... “Markets can stay irrational longer than you can stay solvent”.

                          Comment


                          • Definitely unlikely to be pure short squeeze. Too large of volume. This is most likely large funds betting long. This could have happened over 1 year but it happened disproportionately in 2 days. Probably sporadic pullbacks but I will not be surprised if it trends up now until next earnings. The difference here from other large tech stocks is the market has pretended it is an auto company until last week and the market is moving full force on that. Just my two cents.I have significant skin in game on that bet though.

                            Comment


                            • Originally posted by BCBiker View Post
                              Definitely unlikely to be pure short squeeze. Too large of volume. This is most likely large funds betting long. This could have happened over 1 year but it happened disproportionately in 2 days. Probably sporadic pullbacks but I will not be surprised if it trends up now until next earnings. The difference here from other large tech stocks is the market has pretended it is an auto company until last week and the market is moving full force on that. Just my two cents.I have significant skin in game
                              on that bet though.
                              Really? Large funds with experienced money managers and veteran traders chasing a parabolic run up like it’s never going to have a dip again? This is classic amateur behavior. But who knows? It is super interesting.

                              I will say congrats though. If I owned a big position, I’d be out in the middle of the street, giggling, doing an Irish jig like some sort of drunken leprechaun.

                              Comment


                              • Sometimes skin in the game never heals.
                                There is a point sometimes when the story disappears and you move on. Leverage (long or short) simply makes it more significant.
                                Check out Cisco, use the max time frame.
                                https://www.google.com/search?q=cisc...&client=safari

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