Tesla, the investment

[BCBiker]

BCbiker - I’m glad you’re still alive!

Hopefully the volatility and gains have not turned your brain to mush and you into a gambler.

Do you think perhaps you’ve fallen in love with the story/stock ?

Perhaps you should consider banking the gains and step away from the casino. Maybe take a break for a year or 2, or even permanently (if you made a lot).

Having 50% or more of your NW in Tesla options seems somewhat risky. Maybe it could
work out, but what if you’re wrong ?

Thank you for remembering me! I took hiatus from forums to focus on some important work. Today is holiday. I have plenty to keep me busy from options otherwise so wouldn’t call it gambling mindset with some exceptions. For example, I did have good feeling about this week so I bought some short dated way out of money calls with trivial cost basis and made enough for a year of mortgage payments.... Nbd.

It is hard to value time spent on this. I’m not day trading just long dated calls and rare situations where I predict major catalyst where the contracts prices are not reflective of potential. So aside from days when I actually am considering a sell trade I just peek in sporadically when taking break from work. In March I was cash heavy and bought a lot at bottom which basically gave my my portfolio a second leg up.

I have gains of over $1.7M (Half realized, remaining gains are on long dated calls deep in the money) since Oct 2019 on initial investment of around $2500.

My real financial plan is mainstream WCI. Max out all retirement accounts in index funds. Side hustles with individual 401(k). Live like resident until 3-5 years out from training, although did buy house a little earlier than planned due to having cash for large down payment.

I just had a 2% allocation to options for fun of it. Eventually will rebalance back to 2%. Current contracts are 2021/2022 expiration. I may roll a few of them forward as I hold for 1 year and lock in long term cap gains.

It is a bit of mental gymnastics to maintain these lottery like gains in context of a 95% index fund portfolio plan. I’m just fast tracking previous plan in windfall type situation with some routine maintenance. Approaching 2M nw 2 years out of training when was expecting to be here in 15 years.

I do strongly believe that the growth of Tesla has still not been fully realized. They are truly in a hypergrowth phase that is only partially appreciated by broader market. $2000 will come sooner than you expect, likely with some bumps along the road.

[Panscan]

Thank you for remembering me! I took hiatus from forums to focus on some important work. Today is holiday. I have plenty to keep me busy from options otherwise so wouldn’t call it gambling mindset with some exceptions. For example, I did have good feeling about this week so I bought some short dated way out of money calls with trivial cost basis and made enough for a year of mortgage payments.... Nbd.

It is hard to value time spent on this. I’m not day trading just long dated calls and rare situations where I predict major catalyst where the contracts prices are not reflective of potential. So aside from days when I actually am considering a sell trade I just peek in sporadically when taking break from work. In March I was cash heavy and bought a lot at bottom which basically gave my my portfolio a second leg up.

I have gains of over $1.7M (Half realized, remaining gains are on long dated calls deep in the money) since Oct 2019 on initial investment of around $2500.

My real financial plan is mainstream WCI. Max out all retirement accounts in index funds. Side hustles with individual 401(k). Live like resident until 3-5 years out from training, although did buy house a little earlier than planned due to having cash for large down payment.

I just had a 2% allocation to options for fun of it. Eventually will rebalance back to 2%. Current contracts are 2021/2022 expiration. I may roll a few of them forward as I hold for 1 year and lock in long term cap gains.

It is a bit of mental gymnastics to maintain these lottery like gains in context of a 95% index fund portfolio plan. I’m just fast tracking previous plan in windfall type situation with some routine maintenance. Approaching 2M nw 2 years out of training when was expecting to be here in 15 years.

I do strongly believe that the growth of Tesla has still not been fully realized. They are truly in a hypergrowth phase that is only partially appreciated by broader market. $2000 will come sooner than you expect, likely with some bumps along the road.

! JFC

[Zaphod]

Oof. Lol. Glad you didn’t figure out how to trade options.

sorry to troll. Quite funny to see how wrong Zappos was on this one. I never understood why the sad short argument was compelling to anyone. Having best product in a growing market with clear evidence of exponentially decreasing costs at scale. I have no sympathy for those so attached to their blinders.

Maybe people dont pay enough attention to the nuance or caveats. I said they were screwed UNLESS they raised money, which they were and they very nearly went under spring of 2019. They raised and stopped being dumb about waiting until the last minute to fill coffers. Earlier this year having passed several hurdles I said it looked like as smooth of sailing as they had ever seen for the next couple years.

Their valuation still is insanity, but that doesnt matter until it does. The stock is only somewhat tied to the reality of the car company, its a story/gambling stock. In the current environment it doesnt pay to bet against a bad company, money loser, or even fraud (look how long wirecard went on and how aggressive they were to shorts).

As long as people are willing to give them money, they can go on forever without turning a profit, and it seems the supply of that is endless thus far.

Not terribly surprised they were able to sell/deliver this many cars outside of people feeling good enough about dropping this much money in this environment. If you think about what happened in general and teslas model, they were actually perfectly set up and the pivot needed to reach customers here is just their SOP. Theyve no dealers, you order online, it gets delivered, etc...that was a big change for traditional companies but this is what they do anyway all the time and is basically fine for social distancing even.

And again, I could not be happier about your gains. Just be sure to take enough off the table to make any crazy event something you can stomach. Cap gains suck, but better than losses.

[CordMcNally]

I believe Ben Carlson made a great observation that Tesla has the highest price to WTF ratio in history.

[xraygoggles]

I have gains of over $1.7M (Half realized, remaining gains are on long dated calls deep in the money) since Oct 2019 on initial investment of around $2500.

Congrats, that is an amazing trade.

I was thinking of buying LEAPs when the covid crash occured and TSLA went to the 400s. I did not pull the trigger unfortunately, but glad someone was able to make bank from it.

[burritos]

I believe Ben Carlson made a great observation that Tesla has the highest price to WTF ratio in history.

Is WTF ratio what I think it means?

[CordMcNally]

Is WTF ratio what I think it means?

It’s exactly what you think it means.

[burritos]

It’s exactly what you think it means.

That's hilarious. Doesn't stop people from making money though.

[Dont_know_mind]

Thank you for remembering me! I took hiatus from forums to focus on some important work. Today is holiday. I have plenty to keep me busy from options otherwise so wouldn’t call it gambling mindset with some exceptions. For example, I did have good feeling about this week so I bought some short dated way out of money calls with trivial cost basis and made enough for a year of mortgage payments.... Nbd.

It is hard to value time spent on this. I’m not day trading just long dated calls and rare situations where I predict major catalyst where the contracts prices are not reflective of potential. So aside from days when I actually am considering a sell trade I just peek in sporadically when taking break from work. In March I was cash heavy and bought a lot at bottom which basically gave my my portfolio a second leg up.

I have gains of over $1.7M (Half realized, remaining gains are on long dated calls deep in the money) since Oct 2019 on initial investment of around $2500.

My real financial plan is mainstream WCI. Max out all retirement accounts in index funds. Side hustles with individual 401(k). Live like resident until 3-5 years out from training, although did buy house a little earlier than planned due to having cash for large down payment.

I just had a 2% allocation to options for fun of it. Eventually will rebalance back to 2%. Current contracts are 2021/2022 expiration. I may roll a few of them forward as I hold for 1 year and lock in long term cap gains.

It is a bit of mental gymnastics to maintain these lottery like gains in context of a 95% index fund portfolio plan. I’m just fast tracking previous plan in windfall type situation with some routine maintenance. Approaching 2M nw 2 years out of training when was expecting to be here in 15 years.

I do strongly believe that the growth of Tesla has still not been fully realized. They are truly in a hypergrowth phase that is only partially appreciated by broader market. $2000 will come sooner than you expect, likely with some bumps along the road.

Congrats on managing the volatility and surviving that. I can’t provide any useful input about Tesla. I’ve never been able to invest in that type of thing.

I think it is prudent that you have banked some of the gains. A problem might be if it falls again, do you access that cash to buy the dip ?

On large gains, I had 2 with this type of magnitude. The first, over around a year, I gave back due to behavioural errors. The second I was able to manage.

I think it is important to find and evolve a strategy or style of investing that fits one’s own character.

Something I always worried about is where the next good investment might come from. Would I be able to find an investment like this again ? This kept me holding onto an investment when the asymmetric risk:return profile had disappeared as it had moved a lot. Then tax considerations and cognitive biases that came in with large gains.

I think over time you develop your skills set if you persevere with it. I don’t worry that much about not being able to find investments now. I am also much more cautious than I used to be. Maybe that hinders my returns.

One thing you should be prepared for is large losses, being proved wrong and being humbled. After my first large loss, I spent a lot of time thinking about the difference between active investing and gambling. I think in many ways, successful active investing is gambling where the expected return is positive. Hopefully you are lucky enough never to have to deal with a large drawdown, but usually it happens.

Thanks for sharing your story!

[fatlittlepig]

You would have to be absolutely nuts not to cash out if you supposedly have 1.7 m in gains on a 2500 options trade.

[BCBiker]

Congrats on managing the volatility and surviving that. I can’t provide any useful input about Tesla. I’ve never been able to invest in that type of thing.

I think it is prudent that you have banked some of the gains. A problem might be if it falls again, do you access that cash to buy the dip ?

On large gains, I had 2 with this type of magnitude. The first, over around a year, I gave back due to behavioural errors. The second I was able to manage.

I think it is important to find and evolve a strategy or style of investing that fits one’s own character.

Something I always worried about is where the next good investment might come from. Would I be able to find an investment like this again ? This kept me holding onto an investment when the asymmetric risk:return profile had disappeared as it had moved a lot. Then tax considerations and cognitive biases that came in with large gains.

I think over time you develop your skills set if you persevere with it. I don’t worry that much about not being able to find investments now. I am also much more cautious than I used to be. Maybe that hinders my returns.

One thing you should be prepared for is large losses, being proved wrong and being humbled. After my first large loss, I spent a lot of time thinking about the difference between active investing and gambling. I think in many ways, successful active investing is gambling where the expected return is positive. Hopefully you are lucky enough never to have to deal with a large drawdown, but usually it happens.

Thanks for sharing your story!

Thank you for letting me know you’re experience. My saving grace is that I’m cheap so won’t buy expensive contracts or positions with unbounded losses (shorts, selling naked calls are the dumbest trades). I don’t trade momentum because you overpay and can lose a lot quickly. I just look at contracts that are selling for way less than they have before and there is no reason to believe that previous conditions will not return and I hold them past that time and have done well. I have locked in a large amount of profit. All current contracts will be held until I can sell with long term capital gains. Will roll ahead most likely to maintain similar exposure (number of long dated contracts with opportunity to pay long term cap gains on sale) over next few years but when you are 500-1000 in the money you can lock in a lot of gain and still maintain exposure. No plans to buy anything otherwise aside for little chicken s£1t trades where I think there is good catalyst and contracts are cheap. I also bought some other contracts in March in AAPL, SNAP, FB. Also have approaching 6 digit returns on those (combined). I also bought 253 contracts for HUYA with very nice return but I have fairly massive expectations for that one because I bought those for nothing and the stock could completely explode. Already up 600%. If the stock crumbles my loss is basically nothing. The asymmetric nature of options is what is appealing. Max $2500 loss for potential $1M+ gain. I’ll take that one every time. No called strikes too. I would say I’m quite conservative overall in nutball options trading.

like flp’s “supposedly” comment. I already said I have realized a large percentage of gain. Selling now would be silly because of tax implications. I held options through the dip. I had contracts selling for $33K in Feb that dipped below $1000 in March that I sold in June for $35K. I’m not afraid of a little volatility. Lols.

[Tim]

The only problem I see is the way you have defined your investments vs your gambling funds.
•” I just had a 2% allocation to options for fun of it. Eventually will rebalance back to 2%.”
•You have commingled your funds . You have demonstrated a lack of discipline to rebalance. •Either segregate the funds or rebalance. Otherwise, forget the term rebalance. Holding stocks and options in a trading account is position sizing, risk management.
•I doubt you are going to keep rolling 100% into options. You can, just like any hot streak. It works until it doesn’t. You think you can match the returns of the last 7 months?
•Realized and unrealized gains/losses only count considering death and taxes. That account balance is a real asset. Avoid thinking paper losses don’t count, they count as much as the gains.
You will figure it out. Sooner or later.

[fatlittlepig]

Thank you for letting me know you’re experience. My saving grace is that I’m cheap so won’t buy expensive contracts or positions with unbounded losses (shorts, selling naked calls are the dumbest trades). I don’t trade momentum because you overpay and can lose a lot quickly. I just look at contracts that are selling for way less than they have before and there is no reason to believe that previous conditions will not return and I hold them past that time and have done well. I have locked in a large amount of profit. All current contracts will be held until I can sell with long term capital gains. Will roll ahead most likely to maintain similar exposure (number of long dated contracts with opportunity to pay long term cap gains on sale) over next few years but when you are 500-1000 in the money you can lock in a lot of gain and still maintain exposure. No plans to buy anything otherwise aside for little chicken s£1t trades where I think there is good catalyst and contracts are cheap. I also bought some other contracts in March in AAPL, SNAP, FB. Also have approaching 6 digit returns on those (combined). I also bought 253 contracts for HUYA with very nice return but I have fairly massive expectations for that one because I bought those for nothing and the stock could completely explode. Already up 600%. If the stock crumbles my loss is basically nothing. The asymmetric nature of options is what is appealing. Max $2500 loss for potential $1M+ gain. I’ll take that one every time. No called strikes too. I would say I’m quite conservative overall in nutball options trading.

like flp’s “supposedly” comment. I already said I have realized a large percentage of gain. Selling now would be silly because of tax implications. I held options through the dip. I had contracts selling for $33K in Feb that dipped below $1000 in March that I sold in June for $35K. I’m not afraid of a little volatility. Lols.

If you are up 1.7 milliion on a 2500 investment (which means you bought a bunch of out of the money calls and got lucky) and you haven't cashed out completely, that's foolish. Those options could drop like a rock with any move downward in the stock plus time decay. LOL you are waiting until you can sell with long term capital gains rate. not smart.

[Dont_know_mind]

Thank you for letting me know you’re experience. My saving grace is that I’m cheap so won’t buy expensive contracts or positions with unbounded losses (shorts, selling naked calls are the dumbest trades). I don’t trade momentum because you overpay and can lose a lot quickly. I just look at contracts that are selling for way less than they have before and there is no reason to believe that previous conditions will not return and I hold them past that time and have done well. I have locked in a large amount of profit. All current contracts will be held until I can sell with long term capital gains. Will roll ahead most likely to maintain similar exposure (number of long dated contracts with opportunity to pay long term cap gains on sale) over next few years but when you are 500-1000 in the money you can lock in a lot of gain and still maintain exposure. No plans to buy anything otherwise aside for little chicken s£1t trades where I think there is good catalyst and contracts are cheap. I also bought some other contracts in March in AAPL, SNAP, FB. Also have approaching 6 digit returns on those (combined). I also bought 253 contracts for HUYA with very nice return but I have fairly massive expectations for that one because I bought those for nothing and the stock could completely explode. Already up 600%. If the stock crumbles my loss is basically nothing. The asymmetric nature of options is what is appealing. Max $2500 loss for potential $1M+ gain. I’ll take that one every time. No called strikes too. I would say I’m quite conservative overall in nutball options trading.

like flp’s “supposedly” comment. I already said I have realized a large percentage of gain. Selling now would be silly because of tax implications. I held options through the dip. I had contracts selling for $33K in Feb that dipped below $1000 in March that I sold in June for $35K. I’m not afraid of a little volatility. Lols.

Thank you, I was waiting for someone to raise this.
I think what you say about asymmetric risk is true.
The goal is to obtain a large position in a situation through asymmetric risk, then let the position compound and get off with the gain.
It boils down to having a large position that goes up a lot. Or a medium position that goes up a huge amount.

The problem is vaue at risk after a gain.
I had a problem when I was up around 1M on a position. I really didn't know what to do. It was beyond what I could cognitively cope with at the time. I went on a stock discussion forum, and was promptly banned from it as the numbers sounded implausible.
I didn't find that larger gains on real estate had a big effect on my cognition but the financial instruments gains did. I'm not sure why this was, probably as it happened more quickly.

The paradox is this: at a high income level you can take on more risk, but early on your net worth means you probably can't afford the loss.
After I lost the 1M gain, I made an unforced error in real estate, which cost me another 1M.
So the losses added and it was a bad year. My NW went down from 5M to 3M. I was also quite hard to live with during that year and I'm lucky my wife didn't kick me out.

How I look at it now : It's a long game. Don't let it get too intense that it affects your quality of life or family life.
Also through it all, I found the medical income is still probably the main thing in the first 15 years, so don't let anything affect your career.
Tallying things up, after 14 years out of training, over this period :
My income from medicine : 10M
My portion of brute savings over this period: 4M
Return from investments : 7M

I think the active investing of this type is much more comfortable when you have built up your NW. In the meantime, I would keep the position size manageable such that loss of the entire amount will not affect you too adversely.

My goal currently is to get retirement accounts to 2M in the next 2 years. This should throw off around 60k in income per year which I will use along with additional retirement contributions to speculate on.
I really would like to get a 10 bagger in the retirement account.

Ask yourself whether you can afford to lose the gains.
I think you were fortunate that buying the dip worked in March/April. I think setting aside 50% of gains as you have is a good idea, maybe index them and do not touch them in any circumstance. It would be very tempting to buy the dip again, but next time, it might not bounce back.
I now have a system where my wife overseas my investment buy-sell decisions and has right of veto. This is mainly to save me from myself in case I lose my brain under pressure again.

The knowledge you gain about investing compounds over time and markets will still be there tomorrow or in a decade.

[Zaphod]

like flp’s “supposedly” comment. I already said I have realized a large percentage of gain. Selling now would be silly because of tax implications. I held options through the dip. I had contracts selling for $33K in Feb that dipped below $1000 in March that I sold in June for $35K. I’m not afraid of a little volatility. Lols.

Your vol tolerance is pretty amazing. I would simply use the trade analyze or payout function of whatever broker you have or even some basic online sites to see what the value is at x dates/price. Compare that to LTCG and where it might go in price due to volatility and what you're comfortable with.

Round tripping is not very fun I tell you, though I agree usually worth it for the outsized/asymmetric gains, but dont want death from 1000 cuts. I made a bundle during the down turn and just looking at returns would be impressive, if you didnt know where it was prior and how much I'd given back. Its all up to you though.