Tesla, the investment

[BCBiker]

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.

Some good points. My largest lack of discipline was in March when I had 1.5 years salary in cash and saw the crashing market as the best fire sale of all time. I kept a third in cash, put a third in index and a third in options. That turned out to be a very good decision. Returns are approximately 1% / 30% / 600%. These were very conservative options strike at previous highs with expiration in 2022. In theory I could have went all in then and I would be talking about 3-4M return instead or if I had bought contracts expiring in 2020 would be looking at $20M returns. These are situations where you can stick to a written financial plan or realize you are in a very amazing situation to make a large profit. Obvious opportunities like this have disappeared basically so don’t expect returns like this again but I’m very ready if it does as cash position is now doubled. I’m putting about 5% of cash into index funds per month so rebalance will take a while.

i think to some level being detached from the magnitude of these gains helps one to make less emotional decisions. Panicking would have been disaster in March. I think I did whatever the opposite of panicking is.

[BCBiker]

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.

Ya. There are not many people to turn to for advice in this situation. I must say In my options trading I always have more confidence in buying than I do in selling because once you are up 5-10X do you lock some of that in or let it ride. Having >1000X gain one time makes one unreasonably optimistic for sure. Getting back to TSLA the company itself is basically all tailwind as the market is broadly ignorant of what is to come in next 18 months. The broader market risk is my main concern as the pathway back to normal is long yet market is trading as if normal. I’m happy with current level of risk at the moment in my long dated options.

[BCBiker]

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.

my volatility tolerance is 100% built on holding a nominal amount of tsla shares during residency and paying vague attention to it and knowing I would never sell. Options volatility is whole different game because you cannot hold forever. I completely understand that my positive results are largely luck driven, not attributable to greatness. Lol!

[Zaphod]

my volatility tolerance is 100% built on holding a nominal amount of tsla shares during residency and paying vague attention to it and knowing I would never sell. Options volatility is whole different game because you cannot hold forever. I completely understand that my positive results are largely luck driven, not attributable to greatness. Lol!

Spends the same, long as you dont burn it up thinking you're brilliant, its great.

[Nysoz]

I bought a fair amount of calls in preparation for q2 delivery numbers and have done well, but apparently not well enough lol.

i plan on holding my options through earnings and the possibility of s&p inclusion and battery day. I know statistically there’s no long term effect on share price, but no company as large as Tesla has joined before.

Top 5 s&p funds hold $1T, about $11T follows the index. Tesla would make up around 0.8% of the s&p and if they have to buy shares, that’s at around $8B to $80B worth of shares the indexes have to buy. Short interest is lower than it was before but could be another short squeeze.

Also Tesla is selling red short shorts on their website for $69.420 (yep all 3 decimal points).

[BCBiker]

Crossed 2M

[Zaphod]

Crossed 2M

Was looking at selling a weekly backspread to pay for 1400 calls, omg, just an hour and a half later and dang, missed out.

[BCBiker]

Was looking at selling a weekly backspread to pay for 1400 calls, omg, just an hour and a half later and dang, missed out.

I was going to buy some short shorts yesterday but they sold out of my wife’s size before I found out. ?

[burritos]

The FOMO force here is strong here young jedis.

[Dont_know_mind]

I wonder if the Tesla indicator marks a relative top.
I was going to allocate 50k To market this week but I’m really tempted to hold off.

[CordMcNally]

I wonder if the Tesla indicator marks a relative top.
I was going to allocate 50k To market this week but I’m really tempted to hold off.

I just put a large chunk in the market without thinking about it. Feels good and short term market fluctuations won't change that feeling for me.

[Dont_know_mind]

Yeah, I shouldn’t be superstitious.

But I used my EF last month on stocks. I should be patient and get that back before allocating.

[Tim]

Yeah, I shouldn’t be superstitious.

But I used my EF last month on stocks. I should be patient and get that back before allocating.

You just made my day. Gotta go clean up the coffee that’s dripping out of my nose.

[Nysoz]

I was going to buy some short shorts yesterday but they sold out of my wife’s size before I found out. ?

Short shorts back in stock last night. Picked up a pair lol

[BCBiker]

Short shorts back in stock last night. Picked up a pair lol

Yep. Signed up for warning of stock. Best $69.420 ever spent