Tesla, the investment

[Nysoz]

You have to apply for options privileges with your broker. Then you just buy a put option with your chosen strike/expiration of/when approved.

Options around TSLA are expensive and if even if it goes down, if it doesn’t go down enough or by the right time frame then you lose all the money you pay. This is why buying options sometimes is just gambling.

The longer out you place your bet, the more expensive it is.

If you predict a small drop then the price you pay will be more expensive.

If you predict a large drop then the price you pay will be less expensive but also more unlikely to happen.

[Tim]

Retirement accounts also have restrictions on the options strategies. This can create problems in managing positions.

Much actually depends on the individual investor. Ben Carlson has a post today that discussed finding the appropriate strategy for yourself.

https://awealthofcommonsense.com/2021/01/its-ok-to-build-wealth-slowly/

[BCBiker]

You have to apply for options privileges with your broker. Then you just buy a put option with your chosen strike/expiration of/when approved.

Options around TSLA are expensive and if even if it goes down, if it doesn’t go down enough or by the right time frame then you lose all the money you pay. This is why buying options sometimes is just gambling.

The longer out you place your bet, the more expensive it is.

If you predict a small drop then the price you pay will be more expensive.

If you predict a large drop then the price you pay will be less expensive but also more unlikely to happen.

yes buying to open on TSLA whether put or call is not going to be a good return and easy to lose it all.

Right now I feel like I am robbing people with bullish covered calls expiring early 2022 for around $700K premium. I see Max $1200 on horizon but not $1600 before the time premium decays significantly. If I don’t roll up these sells and the stock does to $1600 I will be looking at $15M sold at ltcg. Better than a kick in teeth. Also if these expire worthless I will completely avoid margin to get to my 10,000 shares.

as per forum rules, I’m not advocating for this but it is a possible outcome of trading $3000 in options (3% of portfolio in 2019). I did not technically break any WCI dictums to get here aside from now I’m not rebalancing. Maybe Jim would hesitate to have me on podcast because I don’t want to create FoMO but I think everyone would at minimum be entertained. Lol!

[Brains428]

Novice traders tend to trade the underlying and trends in delta. More experienced and professional traders trade on IV and a combination of the gammas. Options in things like TSLA are expensive because the IV is so high (open interest is ridiculously high, with a lot of it on the call side, since shorts have been shredded).

If you read anything about the bearish side of TSLA (like fancy accounting, miscounting sales, and being an overall bad product with bad customer service), then it makes you want to short it. But... for now the contrarians are on the losing side of the trade, and it's an expensive one to lose.

FWIW- I broke even on TSLA trades because of poor positioning and a trigger finger when things weren't going well. I actually would've made a significant sum (like 20k) if I just sat on it. As with anything, opening more books, read more, trying to figure out strategies, and maybe trade something less volatile.

BCBiker and Nysoz are in much better positioning because they can sell calls to make money on premium. Also, it's easier to lose 5-10k when you have 5-10MM sitting in the trade.

[Zaphod]

yes buying to open on TSLA whether put or call is not going to be a good return and easy to lose it all.

Right now I feel like I am robbing people with bullish covered calls expiring early 2022 for around $700K premium. I see Max $1200 on horizon but not $1600 before the time premium decays significantly. If I don’t roll up these sells and the stock does to $1600 I will be looking at $15M sold at ltcg. Better than a kick in teeth. Also if these expire worthless I will completely avoid margin to get to my 10,000 shares.

as per forum rules, I’m not advocating for this but it is a possible outcome of trading $3000 in options (3% of portfolio in 2019). I did not technically break any WCI dictums to get here aside from now I’m not rebalancing. Maybe Jim would hesitate to have me on podcast because I don’t want to create FoMO but I think everyone would at minimum be entertained. Lol!

LOL, this is great, I love it. With IV this incredibly high its a very good bet, different than certainty but we dont get that, its a very smart play at this time.

[BCBiker]

LOL, this is great, I love it. With IV this incredibly high its a very good bet, different than certainty but we dont get that, its a very smart play at this time.

Thanks. Want to make everyone knows I’m not insane.

I missed a similar opportunity before Labor Day to sell $500K in covers. I had order in but was greedy. I had one day $1M paper loss.

Recovered quickly so not a huge deal. I think I’m up double from prior peak. But premiums now are even more crazy high now. And I think it is hard to believe it will double again in next 6 months.

If it does I’m willing to sell $2000 calls for Jan 2023 for $200 per share. Nothing off my back. Higher minimum return.

[xraygoggles]

as per forum rules, I’m not advocating for this but it is a possible outcome of trading $3000 in options (3% of portfolio in 2019). I did not technically break any WCI dictums to get here aside from now I’m not rebalancing. Maybe Jim would hesitate to have me on podcast because I don’t want to create FoMO but I think everyone would at minimum be entertained. Lol!

You have a lot of options strategies which sound well thought out and intelligent. A blog or twitter account would be a good alternative. I doubt Jim would have you on, simply because it may tempt some of the listeners to do the same thing.

[Nysoz]

So Tesla had their q4 earnings and call on Wednesday. Beat on revenue but missed on earnings. I was expecting a beat on both, but looking into their slides, their margins decreased significantly from expected which is what caused the earnings miss. During the call, they explained that this abnormality was a one time expense from retooling and adding various things to the model 3 like the heat pump and switching the model y to the mega casting. They claim that going forward, margins should continue to be industry leading. Also something about paying down debt early which did something to the interest.

To be honest, I was disappointed at their margins and can understand their explanation. So we'll have to see in forward quarters to see if that holds true or not. Definitely warranted the selloff as it was already up 15-20% from production/delivery numbers and was priced for perfection now and forward already.

Also, still significant regulatory credits as a part of their revenue. People continue to point out this isn't going to be around forever as other auto makers make more EVs. The others are still producing a significant amount of ICE cars, the industry is a big ship to turn around, and scaling EVs is hard. So regulatory credits will still probably be around for 2021 and 2022, although less so.

Otherwise, good growth on production and deliveries despite the pandemic/factory shut down. They expect to average 50% growth over the next few years. 2021 should be more as fremont can make around 550-600k cars total, shanghai can make 250-300k model 3s and their model y line is now picking up and starting deliveries.I don't expect much production/deliveries from berlin/austin by the end of the year despite good progress on their factories. I wouldn't be surprised if they ended up with closer to 800-850k or so total or a 60% growth for 2021.

During the earnings call, Elon kept pointing out how potential FSD is still not being realized to justify the company value and says that they'll be capable of level 5 autonomy by the end of the year. He bases this off his current alpha build and progression from subsequent improvements from each beta build. This is one point where I don't agree with him. I think it'll be good, but not level 5/robotaxi good by the end of the year.

They're still working on their dojo supercomputer/neural net training. That will help them train their FSD faster. Elon also mentioned that it may be a source of revenue in the future for use to other companies for neural net training.

They mentioned how they're going to deliver some semis by the end of the year. Reason they keep pushing it back is because they're still battery constrained and it's more revenue/profit for them to use the batteries in other vehicles than the semi. But they're going to try and keep their promise and deliver some anyways.

They're still buying as many batteries as possible from Panasonic/LG/CATL. Their pilot new battery line is still making progress and reportedly on target for their goals of production.

Solar and storage deployment saw pretty big growth, but it's interesting how this quarter they actually lost money from this side of the business when other quarters were slight profit. No one really explained this one.

They confirmed that the model S/X line closure was for a refresh. They kept the screen in front of the driver, changed the middle screen horizontal to be like the model 3/y. They're adding a 3rd screen for the back passengers. The most controversial thing is the steering 'yoke'. So not a wheel anymore and no PRNDL/turning stalks. This is probably solving a problem that doesn't need to be solved. There's some 'buttons' near the scroll wheels for signals/lights/horn/windshield wipers/microphone but I don't see how you're supposed to change gears. Apparently Elon tweeted that the car will sense from surroundings and figure out what gear you want to be in?

"No more stalks. Car guesses drive direction based on what obstacles it sees, context & nav map. You can override on touchscreen."

Not a fan. Not sure if it'll pass any potential regulations? But they're also releasing their plaid power train for delivery march and their plaid+ model s late 2021. Supposed to be the fastest production car currently (until the roadster which is now delayed until 2022 elon time). Model S plaid+ 0-60 < 1.99s, 1/4 mile < 9s, 1100+ hp, 520 mile range. $139,000 base price

Still invested, but the decrease in profit margin was slightly worrisome. If they pick up their margins in the next few quarters, then still very bullish for the future. If their margins decline then it'll be another story.

[CordMcNally]

I have zero experience with any vehicle manufacturer's earning calls but in the oil and gas world it seems like there's always a large 'one-time' expense, year after year after year.

I'm not sure I buy the semi thing. I just don't think they're even close yet. Didn't they always talk about taking over the land transportation and shipping business? You'd think that would be incredibly profitable in the long run. It would probably behoove them to keep their lofty goals out of public.

Did it go like every other earnings call where any questions were all softballs?

[Nysoz]

I have zero experience with any vehicle manufacturer's earning calls but in the oil and gas world it seems like there's always a large 'one-time' expense, year after year after year.

I'm not sure I buy the semi thing. I just don't think they're even close yet. Didn't they always talk about taking over the land transportation and shipping business? You'd think that would be incredibly profitable in the long run. It would probably behoove them to keep their lofty goals out of public.

Did it go like every other earnings call where any questions were all softballs?

Yeah well have to see what future margins are like to see if this was true or not. Last few quarters were increasing nicely then dropped.

they’re still barely making any prototypes of the semi. They just made 4 more for additional testing in like Alaska and other areas. Unfortunately a lot of things run on Elon time.

yeah questions weren’t tough. Nothing really stood out. One point of contention is how fsd stays with the car and not to an account which makes it harder to buy a new car if you want to keep fsd. Tesla didn’t value fsd as any trade in value previously but Elon said they would now? Also probably going to start a fsd subscription service soon.

[Peds]

just trying to keep car vs stock separate.

[fatlittlepig]

The endless overpromising and underdelivering with self driving is a joke

[Lordosis]

Got to start somewhere.

Funding the R&D with dreams may or may not work out for them. Time will tell.

[Tim]

Might be worth looking at some marketing data. Sweden for example has a fairly large EV component. Competitors market share and the potential impact of government subsidies are available.

https://cleantechnica.com/2020/12/02/swedens-ev-sales-hit-new-record-in-november-37-8-market-share/

Model changes are a substantial and continuing cost in the automotive industry. Change over is expected in any industry. Something has changed, deal with it. Shutting down the production lines at the end of the quarter has never been explained. There are standard manufacturing issues that Tesla seems to deflect. New product and change overs are designed to take advantage of seasonal opportunities.

No knock on Tesla or EV's, it is still in a maturation process.

[Zaphod]

I have zero experience with any vehicle manufacturer's earning calls but in the oil and gas world it seems like there's always a large 'one-time' expense, year after year after year.

I'm not sure I buy the semi thing. I just don't think they're even close yet. Didn't they always talk about taking over the land transportation and shipping business? You'd think that would be incredibly profitable in the long run. It would probably behoove them to keep their lofty goals out of public.

Did it go like every other earnings call where any questions were all softballs?

This is true in every category, even our lives right, "one time expenses" are recurring only the category assigned to them change.