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  • Word on the short sellers has been that forever.   He's certainly not helping with his antics.    You get the bad with the good.  Genius is one step away from madness.

    I still love my Tesla 3

    Comment


    •  







      put options
      Click to expand…


      The IV is insanely high, so its still tough to make money, especially if you’re trying for bankruptcy style puts. I was super bummed when I woke up yesterday as I was going to re up to 250 for next week as my news drop strikes in near term.

      If my nearer term puts go up dramatically I’ve been taking a percentage off the table and then letting the rest go just in case. Its been somewhat a consistent and orderly drop so its not great for puts in nearer expiries, and longer term you have to watch IV, etc…

      I’ve sold call spreads as well against the positions.

      That the price was for so long over 300 and offering an insane r/r is just amazing. Its still pretty amazing.
      Click to expand...


      @Zaphod.  I like your options strategy on this volatile stock.  There is an enormous amount of value to be extracted.  The religious fervor of $TSLA bulls and bears is perhaps a once in a lifetime opportunity for a smart, grounded options trader.

      I'm long on Tesla as I have posted about before in a very small portion of the otherwise WCI compatible portfolio.

      Put options on $TSLA are insane! The cost of $145 Strike (55% below current value) contract for June 2020 is >$2000.  You could also argue that it is equally crazy that a $700 strike contract for Jan 2010 has been hovering at around $1000. This can purchased at quite a discount today for <$400 if you have the stomach for it.

      Comment






      •  







        put options
        Click to expand…


        The IV is insanely high, so its still tough to make money, especially if you’re trying for bankruptcy style puts. I was super bummed when I woke up yesterday as I was going to re up to 250 for next week as my news drop strikes in near term.

        If my nearer term puts go up dramatically I’ve been taking a percentage off the table and then letting the rest go just in case. Its been somewhat a consistent and orderly drop so its not great for puts in nearer expiries, and longer term you have to watch IV, etc…

        I’ve sold call spreads as well against the positions.

        That the price was for so long over 300 and offering an insane r/r is just amazing. Its still pretty amazing.
        Click to expand…


        @zaphod.  I like your options strategy on this volatile stock.  There is an enormous amount of value to be extracted.  The religious fervor of $TSLA bulls and bears is perhaps a once in a lifetime opportunity for a smart, grounded options trader. ?

        I’m long on Tesla as I have posted about before in a very small portion of the otherwise WCI compatible portfolio.

        Put options on $TSLA are insane! The cost of $145 Strike (55% below current value) contract for June 2020 is >$2000.  You could also argue that it is equally crazy that a $700 strike contract for Jan 2010 has been hovering at around $1000. This can purchased at quite a discount today for <$400 if you have the stomach for it.
        Click to expand...


        I've tried selling some of the calls that are egregrious, actually the halt the first day really hurt me, I was orchestrating a pretty sweet longer term call spread with premium>max loss and something like 515/520 in december, amongst some other plays. I hit send and it turns out it had been halted for like 10 seconds. The bid was no longer there afterwards for such a premium.

        Sometimes it looks like theres a nice bid on some OOTM plays, but I've not got anyone to actually purchse them, they are pretty thin and you have to reach toward the bid which isnt ideal. But yes overall, lots of premium to be extracted, its all in the setup.

        Comment


        • The short sellers views are just largely finally coming to fruition and validation. Things always take forever. Theranos just now is closing, theyve been a known absolute fraud for years. It never happens quickly.

          I assumed it was going to take a recession and demand drop to reveal Teslas precarious position, but it turns out execution errors and ego have done it earlier. Musk is a great visionary, but not a very good chief executive. The financials can only be ignored so long and combined with something like manufacturing efficiency/volume which just cant change 100s of % overnight, it was inevitable.

          I mean this is literally going down exactly as expected and for all the exact reasons that have been pointed our for literally years. Taking on debt and converts when they should have issued equity (thats what you do with overvalued share prices!), projecting production goals in excess of their factory build out and factory capacity even when run as the most efficient in the country (this is like face palm obvious), bailing out Solar City which was just bad and a self dealing endeavor which they have just folded as an operation quietly.

          His increasing erratic behavior is simply the result of the pressure of holding this massive production and the likely increasing frauds within, and realizing its coming to the point where it can no longer be sustained. His interviews, words, reasoning, etc...are basically indistinguishable from those of Skilling near the end of Enrons collapse. That NYT and blog yesterday are seriously hard to tell between the two, look it up.

          The board is incompetent and should be trying to cover themselves more, they hold a lot of responsibility and it will be interesting to see how they try to get out of it. For the record, companies that complain about short sellers and especially those that become obsessed with them have a tendency to turn out badly.

          Comment









          •  







            put options
            Click to expand…


            The IV is insanely high, so its still tough to make money, especially if you’re trying for bankruptcy style puts. I was super bummed when I woke up yesterday as I was going to re up to 250 for next week as my news drop strikes in near term.

            If my nearer term puts go up dramatically I’ve been taking a percentage off the table and then letting the rest go just in case. Its been somewhat a consistent and orderly drop so its not great for puts in nearer expiries, and longer term you have to watch IV, etc…

            I’ve sold call spreads as well against the positions.

            That the price was for so long over 300 and offering an insane r/r is just amazing. Its still pretty amazing.
            Click to expand…


            @zaphod.  I like your options strategy on this volatile stock.  There is an enormous amount of value to be extracted.  The religious fervor of $TSLA bulls and bears is perhaps a once in a lifetime opportunity for a smart, grounded options trader. ?

            I’m long on Tesla as I have posted about before in a very small portion of the otherwise WCI compatible portfolio.

            Put options on $TSLA are insane! The cost of $145 Strike (55% below current value) contract for June 2020 is >$2000.  You could also argue that it is equally crazy that a $700 strike contract for Jan 2010 has been hovering at around $1000. This can purchased at quite a discount today for <$400 if you have the stomach for it.
            Click to expand…


            I’ve tried selling some of the calls that are egregrious, actually the halt the first day really hurt me, I was orchestrating a pretty sweet longer term call spread with premium>max loss and something like 515/520 in december, amongst some other plays. I hit send and it turns out it had been halted for like 10 seconds. The bid was no longer there afterwards for such a premium.

            Sometimes it looks like theres a nice bid on some OOTM plays, but I’ve not got anyone to actually purchse them, they are pretty thin and you have to reach toward the bid which isnt ideal. But yes overall, lots of premium to be extracted, its all in the setup.
            Click to expand...


            Do you think Jim would be horrified if we created an 'Options' category in this forum?

            I installed Robinhood a few months ago and put $200 in expecting to lose it all, get scared, and never do such a stupid thing again.

            I was just waiting for an opportunity to buy something.  Then Genomic Health released their results of a clinical trial at ASCO.  The options traders didn't appear to see the value immediately. I bought a OOTM Call with expiration 3 months out for $175 that quadrupled in value before the end of the following day. Since then I have been buying very cheap OOTM on tech companies that have exploded.  Now I am annoyingly addicted.

            I invested another $1500 in cash that I have more than tripled in last 2 months returning my initial investment to my taxable index fund portfolio.

            So now I am just playing with gains.  It is almost exclusively on calls so I know I'm vulnerable to a major negative correction. I haven't touched Tesla because it is expensive and I'm playing with small money. I've considered putting say 5% of taxable in options but I may be suffering from beginners luck in a bull market.

             

            Comment












            •  







              put options
              Click to expand…


              The IV is insanely high, so its still tough to make money, especially if you’re trying for bankruptcy style puts. I was super bummed when I woke up yesterday as I was going to re up to 250 for next week as my news drop strikes in near term.

              If my nearer term puts go up dramatically I’ve been taking a percentage off the table and then letting the rest go just in case. Its been somewhat a consistent and orderly drop so its not great for puts in nearer expiries, and longer term you have to watch IV, etc…

              I’ve sold call spreads as well against the positions.

              That the price was for so long over 300 and offering an insane r/r is just amazing. Its still pretty amazing.
              Click to expand…


              @zaphod.  I like your options strategy on this volatile stock.  There is an enormous amount of value to be extracted.  The religious fervor of $TSLA bulls and bears is perhaps a once in a lifetime opportunity for a smart, grounded options trader. ?

              I’m long on Tesla as I have posted about before in a very small portion of the otherwise WCI compatible portfolio.

              Put options on $TSLA are insane! The cost of $145 Strike (55% below current value) contract for June 2020 is >$2000.  You could also argue that it is equally crazy that a $700 strike contract for Jan 2010 has been hovering at around $1000. This can purchased at quite a discount today for <$400 if you have the stomach for it.
              Click to expand…


              I’ve tried selling some of the calls that are egregrious, actually the halt the first day really hurt me, I was orchestrating a pretty sweet longer term call spread with premium>max loss and something like 515/520 in december, amongst some other plays. I hit send and it turns out it had been halted for like 10 seconds. The bid was no longer there afterwards for such a premium.

              Sometimes it looks like theres a nice bid on some OOTM plays, but I’ve not got anyone to actually purchse them, they are pretty thin and you have to reach toward the bid which isnt ideal. But yes overall, lots of premium to be extracted, its all in the setup.
              Click to expand…


              Do you think Jim would be horrified if we created an ‘Options’ category in this forum?

              I installed Robinhood a few months ago and put $200 in expecting to lose it all, get scared, and never do such a stupid thing again.

              I was just waiting for an opportunity to buy something.  Then Genomic Health released their results of a clinical trial at ASCO.  The options traders didn’t appear to see the value immediately. I bought a OOTM Call with expiration 3 months out for $175 that quadrupled in value before the end of the following day. Since then I have been buying very cheap OOTM on tech companies that have exploded.  Now I am annoyingly addicted.

              I invested another $1500 in cash that I have more than tripled in last 2 months returning my initial investment to my taxable index fund portfolio.

              So now I am just playing with gains.  It is almost exclusively on calls so I know I’m vulnerable to a major negative correction. I haven’t touched Tesla because it is expensive and I’m playing with small money. I’ve considered putting say 5% of taxable in options but I may be suffering from beginners luck in a bull market.

               
              Click to expand...


              Options are very dangerous. Nothing worse than making money almost immediately.

              OTM calls and puts appear cheap, but are actually super expensive. Sure, at times skew gets out of whack and they can be relatively under priced, but for the most part you're going to be burning that cash. ATM and near options are nominally more expensive but far more likely to gain or retain some value. Some of the best/easiest money to make is to sell high IV otm calls/puts to gamblers.

              Though a low probability is not a zero probability. So even though you may win 90+% of the time (its possible), that 10% of the time will more than wipe you out. So you have to protect yourself by structure etc...For example, I never (anymore) sell naked options, this is one of the fastest ways to bankruptcy (futures are probably better for that). I only do spreads with a defined loss up front, and most importantly I never lie to myself that the max loss isnt a very real possibility and have some kind of position management or rules to exit far ahead of time.

              I would want as full as possible an understanding of the important greeks as you can (takes several reads and trades, repeated) delta, gamma, vega, theta. You really have to understand the convexity and exponential way they can influence each other and the price. Liquidity can be a total killer and your broker may fail when most needed. For example I was long UVXY calls and SVXY puts on Feb 2nd-5th when volatility exploded. I was huge in profit on paper, but I couldnt get the options sold anywhere near the price, and then the platform froze and I had no idea what was going on and was freaking out (I was also long VIX futures). In the end, I made some money, but due to those issues and the intense fear after that experience (not knowing whether or not I was long/short VIX futures) I came up way way way short of what my positions should have produced. Painful.

              Comment






              • The short sellers views are just largely finally coming to fruition and validation. Things always take forever. Theranos just now is closing, theyve been a known absolute fraud for years. It never happens quickly.

                I assumed it was going to take a recession and demand drop to reveal Teslas precarious position, but it turns out execution errors and ego have done it earlier. Musk is a great visionary, but not a very good chief executive. The financials can only be ignored so long and combined with something like manufacturing efficiency/volume which just cant change 100s of % overnight, it was inevitable.

                I mean this is literally going down exactly as expected and for all the exact reasons that have been pointed our for literally years. Taking on debt and converts when they should have issued equity (thats what you do with overvalued share prices!), projecting production goals in excess of their factory build out and factory capacity even when run as the most efficient in the country (this is like face palm obvious), bailing out Solar City which was just bad and a self dealing endeavor which they have just folded as an operation quietly.

                His increasing erratic behavior is simply the result of the pressure of holding this massive production and the likely increasing frauds within, and realizing its coming to the point where it can no longer be sustained. His interviews, words, reasoning, etc…are basically indistinguishable from those of Skilling near the end of Enrons collapse. That NYT and blog yesterday are seriously hard to tell between the two, look it up.

                The board is incompetent and should be trying to cover themselves more, they hold a lot of responsibility and it will be interesting to see how they try to get out of it. For the record, companies that complain about short sellers and especially those that become obsessed with them have a tendency to turn out badly.
                Click to expand...


                Maybe but I will believe it when I see it.  I place a probability of Tesla bankruptcy in the next 5 years a <1%.

                Theranos is a completely different story given they claimed they had a functional product but didn't. Every bit of business they did was based on a lie and required complete incompetence about laboratory regs.

                Enron was essentially a shady finance company.  They did not build novel products.  Also in contrast to Enron, we are seeing all/most of the losses on Tesla's balance sheets and these losses are expected based on major investments in future production. It is possible to speculate that the books are worse than they are reporting but that is just conspiracy, not worth betting the farm on.

                Elon also has many other resources to call upon before Tesla would collapse (eg. SpaceX <<< the vast wealth of other Silicon Valley tycoons << Saudi Arabia Sovereign Wealth Fund). Neither Theranos or Enron could pull these emergency maneuvers if required.

                Bears also underestimate the value of Tesla property even if you ignore future sales of Tesla cars.  They own enormously valuable factories and intellectual property that could be liquidated to >30% of current market cap. Apple or Google or Facebook all have the cash and incentive to buy that.

                 

                Comment















                •  







                  put options
                  Click to expand…


                  The IV is insanely high, so its still tough to make money, especially if you’re trying for bankruptcy style puts. I was super bummed when I woke up yesterday as I was going to re up to 250 for next week as my news drop strikes in near term.

                  If my nearer term puts go up dramatically I’ve been taking a percentage off the table and then letting the rest go just in case. Its been somewhat a consistent and orderly drop so its not great for puts in nearer expiries, and longer term you have to watch IV, etc…

                  I’ve sold call spreads as well against the positions.

                  That the price was for so long over 300 and offering an insane r/r is just amazing. Its still pretty amazing.
                  Click to expand…


                  @zaphod.  I like your options strategy on this volatile stock.  There is an enormous amount of value to be extracted.  The religious fervor of $TSLA bulls and bears is perhaps a once in a lifetime opportunity for a smart, grounded options trader. ?

                  I’m long on Tesla as I have posted about before in a very small portion of the otherwise WCI compatible portfolio.

                  Put options on $TSLA are insane! The cost of $145 Strike (55% below current value) contract for June 2020 is >$2000.  You could also argue that it is equally crazy that a $700 strike contract for Jan 2010 has been hovering at around $1000. This can purchased at quite a discount today for <$400 if you have the stomach for it.
                  Click to expand…


                  I’ve tried selling some of the calls that are egregrious, actually the halt the first day really hurt me, I was orchestrating a pretty sweet longer term call spread with premium>max loss and something like 515/520 in december, amongst some other plays. I hit send and it turns out it had been halted for like 10 seconds. The bid was no longer there afterwards for such a premium.

                  Sometimes it looks like theres a nice bid on some OOTM plays, but I’ve not got anyone to actually purchse them, they are pretty thin and you have to reach toward the bid which isnt ideal. But yes overall, lots of premium to be extracted, its all in the setup.
                  Click to expand…


                  Do you think Jim would be horrified if we created an ‘Options’ category in this forum?

                  I installed Robinhood a few months ago and put $200 in expecting to lose it all, get scared, and never do such a stupid thing again.

                  I was just waiting for an opportunity to buy something.  Then Genomic Health released their results of a clinical trial at ASCO.  The options traders didn’t appear to see the value immediately. I bought a OOTM Call with expiration 3 months out for $175 that quadrupled in value before the end of the following day. Since then I have been buying very cheap OOTM on tech companies that have exploded.  Now I am annoyingly addicted.

                  I invested another $1500 in cash that I have more than tripled in last 2 months returning my initial investment to my taxable index fund portfolio.

                  So now I am just playing with gains.  It is almost exclusively on calls so I know I’m vulnerable to a major negative correction. I haven’t touched Tesla because it is expensive and I’m playing with small money. I’ve considered putting say 5% of taxable in options but I may be suffering from beginners luck in a bull market.

                   
                  Click to expand…


                  Options are very dangerous. Nothing worse than making money almost immediately.

                  OTM calls and puts appear cheap, but are actually super expensive. Sure, at times skew gets out of whack and they can be relatively under priced, but for the most part you’re going to be burning that cash. ATM and near options are nominally more expensive but far more likely to gain or retain some value. Some of the best/easiest money to make is to sell high IV otm calls/puts to gamblers.

                  Though a low probability is not a zero probability. So even though you may win 90+% of the time (its possible), that 10% of the time will more than wipe you out. So you have to protect yourself by structure etc…For example, I never (anymore) sell naked options, this is one of the fastest ways to bankruptcy (futures are probably better for that). I only do spreads with a defined loss up front, and most importantly I never lie to myself that the max loss isnt a very real possibility and have some kind of position management or rules to exit far ahead of time.

                  I would want as full as possible an understanding of the important greeks as you can (takes several reads and trades, repeated) delta, gamma, vega, theta. You really have to understand the convexity and exponential way they can influence each other and the price. Liquidity can be a total killer and your broker may fail when most needed. For example I was long UVXY calls and SVXY puts on Feb 2nd-5th when volatility exploded. I was huge in profit on paper, but I couldnt get the options sold anywhere near the price, and then the platform froze and I had no idea what was going on and was freaking out (I was also long VIX futures). In the end, I made some money, but due to those issues and the intense fear after that experience (not knowing whether or not I was long/short VIX futures) I came up way way way short of what my positions should have produced. Painful.
                  Click to expand...


                  Yes. I reminds me of when I was young and went to an old fashion slot machine casino in Colorado. I told myself, I'll play $20. I lost $19 in an hour and on my last dollar I won around $120. I cashed out that night but the next time I went to a casino I thought why not raise my max loss to $50. I'll never see that again and I refuse to gamble more than the cost of a beer now, even for kicks.

                  I like NN Taleb, probably the most famous options trader.  The barbell strategy he describes makes sense to me. My proposed structure is 95% safe portfolio (standard WCI compatible); 5% crazy risky naked options. If I lose 100% of that 5%, I'm not bankrupt. If I return 300% over 3 months on that 5% and rebalance, I am supra alpha.

                  I might invest in reading about more sophisticated options trading since I think I have a pretty good mathematical mind.  In the short time I've carried options and watched the fluctuations, it appears one could make a crazy return just buying and selling options on noise. In the short time I held the genomic health option, the trajectory was clearly a gain because of the market advantage from their clinical trial but there were days with huge discounts and days it exploded and with no news whatsoever since it is a small cap.

                  Comment









                  • The short sellers views are just largely finally coming to fruition and validation. Things always take forever. Theranos just now is closing, theyve been a known absolute fraud for years. It never happens quickly.

                    I assumed it was going to take a recession and demand drop to reveal Teslas precarious position, but it turns out execution errors and ego have done it earlier. Musk is a great visionary, but not a very good chief executive. The financials can only be ignored so long and combined with something like manufacturing efficiency/volume which just cant change 100s of % overnight, it was inevitable.

                    I mean this is literally going down exactly as expected and for all the exact reasons that have been pointed our for literally years. Taking on debt and converts when they should have issued equity (thats what you do with overvalued share prices!), projecting production goals in excess of their factory build out and factory capacity even when run as the most efficient in the country (this is like face palm obvious), bailing out Solar City which was just bad and a self dealing endeavor which they have just folded as an operation quietly.

                    His increasing erratic behavior is simply the result of the pressure of holding this massive production and the likely increasing frauds within, and realizing its coming to the point where it can no longer be sustained. His interviews, words, reasoning, etc…are basically indistinguishable from those of Skilling near the end of Enrons collapse. That NYT and blog yesterday are seriously hard to tell between the two, look it up.

                    The board is incompetent and should be trying to cover themselves more, they hold a lot of responsibility and it will be interesting to see how they try to get out of it. For the record, companies that complain about short sellers and especially those that become obsessed with them have a tendency to turn out badly.
                    Click to expand…


                    Maybe but I will believe it when I see it.  I place a probability of Tesla bankruptcy in the next 5 years a <1%.

                    Theranos is a completely different story given they claimed they had a functional product but didn’t. Every bit of business they did was based on a lie and required complete incompetence about laboratory regs.

                    Enron was essentially a shady finance company.  They did not build novel products.  Also in contrast to Enron, we are seeing all/most of the losses on Tesla’s balance sheets and these losses are expected based on major investments in future production. It is possible to speculate that the books are worse than they are reporting but that is just conspiracy, not worth betting the farm on.

                    Elon also has many other resources to call upon before Tesla would collapse (eg. SpaceX <<< the vast wealth of other Silicon Valley tycoons << Saudi Arabia Sovereign Wealth Fund). Neither Theranos or Enron could pull these emergency maneuvers if required.

                    Bears also underestimate the value of Tesla property even if you ignore future sales of Tesla cars.  They own enormously valuable factories and intellectual property that could be liquidated to >30% of current market cap. Apple or Google or Facebook all have the cash and incentive to buy that.

                     
                    Click to expand...


                    Thats the point. A 100% fake of everything fraud company went on for years and years. Think about that. Its nuts. Now tell me how long a struggling company with real products and demand that maybe are in a bit of a financial bind beyond their means can go on. It can go on a very very long time.

                    The books are horrendous, this has been the bears point for years but it hasnt mattered because the narrative has been more important, and thats now over. They likely have almost no day to day cash on hand, and they are acting like it. Its highly likely you are not seeing the absolute truth in the books, its just the usual case in all companies even apple. In tesla you are seeing them not pay their bills to make their cash on hand look better, its deliberate and obvious but its there. Their losses are not based on future investment and production, but cash burn due to board/executive pay and poor manufacturing processes and past mistakes (solar city), etc...

                    Bears do not underestimate the value of those things at all. Tesla no longer owns almost any of their prior property. They have mortgaged or had liens placed against everything they owned (seriously, look it up), due to needing cash and not paying said suppliers. Their position is critical.

                    I get it, most people on here just like their products (which is warranted) and then casually assess the business and say things like the above. Teslas position is critical, and has been on this road to critical for some time. Remember, as the share price drops their leverage increases, and even at all time highs they were one of the most leveraged large caps around. This has implications for their debt, ABLs, etc...etc...at some point the piper gets paid.

                    Elon has leveraged himself and said companies to the hilt. The latest form I've seen shows he's somewhere in the 60-66% margined on his owned shares of tesla. If you think SpaceX is somehow run better, thats a stretch since its him and his ways are persistent, and hes intertwined his companies to keep them afloat, and given what we know after the Solar City debacle he will try anything to keep them going even if it means sacrificing their future. As the pillars come out from underneath it will get ugly quickly.

                    What this means is at some share price in the future he will get a margin call and be forced to sell, which will absolutely crater tsla share price given the amount that is margined and his share in the company (20%ish). This happens, and it happened to Mike Pearson at Valeant, which is a very similarly loved and crashed company. Lots of parallels.

                    The company is effectively bankrupt already, if you doubt that look at the bonds, why are they trading with a yield above Valeants bonds and other bankrupt companies? Those 2025 bonds are reg 144A and cant be held by retail, so no dumb money is in their clouding the institutional view. Dont over look this.

                    Elon isnt acting out or erratically. All the above he knows and he doesnt see a way out like hes been able to engineer before and you're just seeing the stress bubble out into his life.

                    Comment


















                    •  







                      put options
                      Click to expand…


                      The IV is insanely high, so its still tough to make money, especially if you’re trying for bankruptcy style puts. I was super bummed when I woke up yesterday as I was going to re up to 250 for next week as my news drop strikes in near term.

                      If my nearer term puts go up dramatically I’ve been taking a percentage off the table and then letting the rest go just in case. Its been somewhat a consistent and orderly drop so its not great for puts in nearer expiries, and longer term you have to watch IV, etc…

                      I’ve sold call spreads as well against the positions.

                      That the price was for so long over 300 and offering an insane r/r is just amazing. Its still pretty amazing.
                      Click to expand…


                      @zaphod.  I like your options strategy on this volatile stock.  There is an enormous amount of value to be extracted.  The religious fervor of $TSLA bulls and bears is perhaps a once in a lifetime opportunity for a smart, grounded options trader. ?

                      I’m long on Tesla as I have posted about before in a very small portion of the otherwise WCI compatible portfolio.

                      Put options on $TSLA are insane! The cost of $145 Strike (55% below current value) contract for June 2020 is >$2000.  You could also argue that it is equally crazy that a $700 strike contract for Jan 2010 has been hovering at around $1000. This can purchased at quite a discount today for <$400 if you have the stomach for it.
                      Click to expand…


                      I’ve tried selling some of the calls that are egregrious, actually the halt the first day really hurt me, I was orchestrating a pretty sweet longer term call spread with premium>max loss and something like 515/520 in december, amongst some other plays. I hit send and it turns out it had been halted for like 10 seconds. The bid was no longer there afterwards for such a premium.

                      Sometimes it looks like theres a nice bid on some OOTM plays, but I’ve not got anyone to actually purchse them, they are pretty thin and you have to reach toward the bid which isnt ideal. But yes overall, lots of premium to be extracted, its all in the setup.
                      Click to expand…


                      Do you think Jim would be horrified if we created an ‘Options’ category in this forum?

                      I installed Robinhood a few months ago and put $200 in expecting to lose it all, get scared, and never do such a stupid thing again.

                      I was just waiting for an opportunity to buy something.  Then Genomic Health released their results of a clinical trial at ASCO.  The options traders didn’t appear to see the value immediately. I bought a OOTM Call with expiration 3 months out for $175 that quadrupled in value before the end of the following day. Since then I have been buying very cheap OOTM on tech companies that have exploded.  Now I am annoyingly addicted.

                      I invested another $1500 in cash that I have more than tripled in last 2 months returning my initial investment to my taxable index fund portfolio.

                      So now I am just playing with gains.  It is almost exclusively on calls so I know I’m vulnerable to a major negative correction. I haven’t touched Tesla because it is expensive and I’m playing with small money. I’ve considered putting say 5% of taxable in options but I may be suffering from beginners luck in a bull market.

                       
                      Click to expand…


                      Options are very dangerous. Nothing worse than making money almost immediately.

                      OTM calls and puts appear cheap, but are actually super expensive. Sure, at times skew gets out of whack and they can be relatively under priced, but for the most part you’re going to be burning that cash. ATM and near options are nominally more expensive but far more likely to gain or retain some value. Some of the best/easiest money to make is to sell high IV otm calls/puts to gamblers.

                      Though a low probability is not a zero probability. So even though you may win 90+% of the time (its possible), that 10% of the time will more than wipe you out. So you have to protect yourself by structure etc…For example, I never (anymore) sell naked options, this is one of the fastest ways to bankruptcy (futures are probably better for that). I only do spreads with a defined loss up front, and most importantly I never lie to myself that the max loss isnt a very real possibility and have some kind of position management or rules to exit far ahead of time.

                      I would want as full as possible an understanding of the important greeks as you can (takes several reads and trades, repeated) delta, gamma, vega, theta. You really have to understand the convexity and exponential way they can influence each other and the price. Liquidity can be a total killer and your broker may fail when most needed. For example I was long UVXY calls and SVXY puts on Feb 2nd-5th when volatility exploded. I was huge in profit on paper, but I couldnt get the options sold anywhere near the price, and then the platform froze and I had no idea what was going on and was freaking out (I was also long VIX futures). In the end, I made some money, but due to those issues and the intense fear after that experience (not knowing whether or not I was long/short VIX futures) I came up way way way short of what my positions should have produced. Painful.
                      Click to expand…


                      Yes. I reminds me of when I was young and went to an old fashion slot machine casino in Colorado. I told myself, I’ll play $20. I lost $19 in an hour and on my last dollar I won around $120. I cashed out that night but the next time I went to a casino I thought why not raise my max loss to $50. I’ll never see that again and I refuse to gamble more than the cost of a beer now, even for kicks.

                      I like NN Taleb, probably the most famous options trader.  The barbell strategy he describes makes sense to me. My proposed structure is 95% safe portfolio (standard WCI compatible); 5% crazy risky naked options. If I lose 100% of that 5%, I’m not bankrupt. If I return 300% over 3 months on that 5% and rebalance, I am supra alpha.

                      I might invest in reading about more sophisticated options trading since I think I have a pretty good mathematical mind.  In the short time I’ve carried options and watched the fluctuations, it appears one could make a crazy return just buying and selling options on noise. In the short time I held the genomic health option, the trajectory was clearly a gain because of the market advantage from their clinical trial but there were days with huge discounts and days it exploded and with no news whatsoever since it is a small cap.
                      Click to expand...


                      As long as you're buying naked options thats fine. Dont sell them is all or that 5% can be 100%.

                      Trading options for edge-mark sebastian

                      trading volatility-colin bennet

                      volatility trading-euan sinclair

                      These books are great. Options, futures and derivatives by Hull is one of the 'bibles', but pretty dense and theory laden. The above have a lot of math but are still practical in scope.

                      Comment


                      • In defense of Tesla, their cash burn rate declined significantly this last quarter. If they maintained that same burn rate they’d still have a 6 quarter runway. Read an article about how this is the typical trend for them - to burn through a crap ton of cash, peaking around the time of a model launch, only to then turn back positive in a few quarters. Another round of funding is also possible. Interestingly, Musk, for all his apparent loathing of the public market, may just need the public market to stay afloat. Lord knows he’s needed taxpayer subsidies to get this far. What’s another few billion to prop him up some more?

                        Comment






                        • In defense of Tesla, their cash burn rate declined significantly this last quarter. If they maintained that same burn rate they’d still have a 6 quarter runway. Read an article about how this is the typical trend for them – to burn through a crap ton of cash, peaking around the time of a model launch, only to then turn back positive in a few quarters. Another round of funding is also possible. Interestingly, Musk, for all his apparent loathing of the public market, may just need the public market to stay afloat. Lord knows he’s needed taxpayer subsidies to get this far. What’s another few billion to prop him up some more?
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                          Their cash burn rate only declined because their AP swelled and they slashed capex which means they cant make money in the future ofc, so a pyhrric victory there. The converts due in March will cost them 920M and was likely the impetus behind the 420 tweet (needed to average over 360 for a lengthy time). They have been sending people home and such to either keep costs down, the demand isnt there, or suppliers arent giving them any more supplies until paid. None are good for their bottom line. They have to sell vehicles to stay afloat, or access capital markets which should have been done qtrs ago. They either cannot raise or will not given the amount of DD that is required, similar to what happened after the "take private" tweet. Died almost immediately amidst what every nay-saying FUDster would cite as "the obvious". Im not sure how seriously I believe their financials anyway since they cant keep an accountant on staff, they seem to leave 10s of millions on the table as they rush to the door, another terrible sign.

                          They may very well survive qtrs, but it wont be long before the shine is off and their precarious position is known to all and the share price reflects it. They just havent been able to sell/produce enough cars. S/X seem constrained (osborned themselves), and they cant produce enough 3s to make the necessary cash flow (and future capex cuts will exacerbate this issue). It may have been typical for them, but the cumulative effect of that over years without producing is getting to be more than they can deal with.

                          I dont know why they didnt raise or issue equity, either ego/stupidity or something much worse. Its possible that they no longer can given SEC investigation and the skeletons they dont want to reveal to get the funding. Now that its gone this far no one would give them anything other than death spiral terms anyways and it would be one of those vulture firms that gives you a few qtrs while guaranteeing your demise.

                          This has been the most fascinating story in capital markets, it will be very boring if it ends anytime soon. There will be lots of lessons I hope learned though.

                          Heres the bonds, of note they are like 8.3 now. Thats bad.

                          https://pbs.twimg.com/media/DmWGrwuUUAAlpBp.jpg:large

                          Comment


                          • Ego and Hubris has gotten them to this position, and cutting it too close on the timeline and ramp up expectations.   They pushed the design innovation of the car to the next level and thought it would also translate over into manufacturing innovation and financing.  That were there missteps and I blame both Musk and the leadership they hired away from Audi/BMW experts on this very thing.  Instead of replicating proven manufacturing processes, they pushed and envelope and got burnt.

                            NUMMI built 6000 cars a week back in 2010 without an outside 3rd line.  Tesla hasn't reached that quite yet.  They messed up they line builds with overreliance on robots and put the rampup behind by 6 months because of retooling needed.

                            The products are profitable as several breakdowns have verified for all three models.  The customers clearly remain present as backlog for all models and variants are 2+months.   The key remains sustained high volume delivery of the Model 3.  Large CapEx is mostly done for this round with Giga and Assembly lines mostly builtout.  Funding will probably come from private rounds I bet -- if needed.

                            They got through the worst headwinds and just need to sustain and incremental improvements on throughput at bottleneck points (paintshop is primary now).

                            Worst case.  I'll have a low serial# Model 3 collectible. 

                            Comment






                            • Ego and Hubris has gotten them to this position, and cutting it too close on the timeline and ramp up expectations.   They pushed the design innovation of the car to the next level and thought it would also translate over into manufacturing innovation and financing.  That were there missteps and I blame both Musk and the leadership they hired away from Audi/BMW experts on this very thing.  Instead of replicating proven manufacturing processes, they pushed and envelope and got burnt.

                              NUMMI built 6000 cars a week back in 2010 without an outside 3rd line.  Tesla hasn’t reached that quite yet.  They messed up they line builds with overreliance on robots and put the rampup behind by 6 months because of retooling needed.

                              The products are profitable as several breakdowns have verified for all three models.  The customers clearly remain present as backlog for all models and variants are 2+months.   The key remains sustained high volume delivery of the Model 3.  Large CapEx is mostly done for this round with Giga and Assembly lines mostly builtout.  Funding will probably come from private rounds I bet — if needed.

                              They got through the worst headwinds and just need to sustain and incremental improvements on throughput at bottleneck points (paintshop is primary now).

                              Worst case.  I’ll have a low serial# Model 3 collectible.  ?
                              Click to expand...


                              Its sad because a couple of different decisions (equity vs. debt, letting solar city die) and listening to a little bit of manufacturing wisdom and they could have already been crushing it.

                              Comment





















                              •  







                                put options
                                Click to expand…


                                The IV is insanely high, so its still tough to make money, especially if you’re trying for bankruptcy style puts. I was super bummed when I woke up yesterday as I was going to re up to 250 for next week as my news drop strikes in near term.

                                If my nearer term puts go up dramatically I’ve been taking a percentage off the table and then letting the rest go just in case. Its been somewhat a consistent and orderly drop so its not great for puts in nearer expiries, and longer term you have to watch IV, etc…

                                I’ve sold call spreads as well against the positions.

                                That the price was for so long over 300 and offering an insane r/r is just amazing. Its still pretty amazing.
                                Click to expand…


                                @zaphod.  I like your options strategy on this volatile stock.  There is an enormous amount of value to be extracted.  The religious fervor of $TSLA bulls and bears is perhaps a once in a lifetime opportunity for a smart, grounded options trader. ?

                                I’m long on Tesla as I have posted about before in a very small portion of the otherwise WCI compatible portfolio.

                                Put options on $TSLA are insane! The cost of $145 Strike (55% below current value) contract for June 2020 is >$2000.  You could also argue that it is equally crazy that a $700 strike contract for Jan 2010 has been hovering at around $1000. This can purchased at quite a discount today for <$400 if you have the stomach for it.
                                Click to expand…


                                I’ve tried selling some of the calls that are egregrious, actually the halt the first day really hurt me, I was orchestrating a pretty sweet longer term call spread with premium>max loss and something like 515/520 in december, amongst some other plays. I hit send and it turns out it had been halted for like 10 seconds. The bid was no longer there afterwards for such a premium.

                                Sometimes it looks like theres a nice bid on some OOTM plays, but I’ve not got anyone to actually purchse them, they are pretty thin and you have to reach toward the bid which isnt ideal. But yes overall, lots of premium to be extracted, its all in the setup.
                                Click to expand…


                                Do you think Jim would be horrified if we created an ‘Options’ category in this forum?

                                I installed Robinhood a few months ago and put $200 in expecting to lose it all, get scared, and never do such a stupid thing again.

                                I was just waiting for an opportunity to buy something.  Then Genomic Health released their results of a clinical trial at ASCO.  The options traders didn’t appear to see the value immediately. I bought a OOTM Call with expiration 3 months out for $175 that quadrupled in value before the end of the following day. Since then I have been buying very cheap OOTM on tech companies that have exploded.  Now I am annoyingly addicted.

                                I invested another $1500 in cash that I have more than tripled in last 2 months returning my initial investment to my taxable index fund portfolio.

                                So now I am just playing with gains.  It is almost exclusively on calls so I know I’m vulnerable to a major negative correction. I haven’t touched Tesla because it is expensive and I’m playing with small money. I’ve considered putting say 5% of taxable in options but I may be suffering from beginners luck in a bull market.

                                 
                                Click to expand…


                                Options are very dangerous. Nothing worse than making money almost immediately.

                                OTM calls and puts appear cheap, but are actually super expensive. Sure, at times skew gets out of whack and they can be relatively under priced, but for the most part you’re going to be burning that cash. ATM and near options are nominally more expensive but far more likely to gain or retain some value. Some of the best/easiest money to make is to sell high IV otm calls/puts to gamblers.

                                Though a low probability is not a zero probability. So even though you may win 90+% of the time (its possible), that 10% of the time will more than wipe you out. So you have to protect yourself by structure etc…For example, I never (anymore) sell naked options, this is one of the fastest ways to bankruptcy (futures are probably better for that). I only do spreads with a defined loss up front, and most importantly I never lie to myself that the max loss isnt a very real possibility and have some kind of position management or rules to exit far ahead of time.

                                I would want as full as possible an understanding of the important greeks as you can (takes several reads and trades, repeated) delta, gamma, vega, theta. You really have to understand the convexity and exponential way they can influence each other and the price. Liquidity can be a total killer and your broker may fail when most needed. For example I was long UVXY calls and SVXY puts on Feb 2nd-5th when volatility exploded. I was huge in profit on paper, but I couldnt get the options sold anywhere near the price, and then the platform froze and I had no idea what was going on and was freaking out (I was also long VIX futures). In the end, I made some money, but due to those issues and the intense fear after that experience (not knowing whether or not I was long/short VIX futures) I came up way way way short of what my positions should have produced. Painful.
                                Click to expand…


                                Yes. I reminds me of when I was young and went to an old fashion slot machine casino in Colorado. I told myself, I’ll play $20. I lost $19 in an hour and on my last dollar I won around $120. I cashed out that night but the next time I went to a casino I thought why not raise my max loss to $50. I’ll never see that again and I refuse to gamble more than the cost of a beer now, even for kicks.

                                I like NN Taleb, probably the most famous options trader.  The barbell strategy he describes makes sense to me. My proposed structure is 95% safe portfolio (standard WCI compatible); 5% crazy risky naked options. If I lose 100% of that 5%, I’m not bankrupt. If I return 300% over 3 months on that 5% and rebalance, I am supra alpha.

                                I might invest in reading about more sophisticated options trading since I think I have a pretty good mathematical mind.  In the short time I’ve carried options and watched the fluctuations, it appears one could make a crazy return just buying and selling options on noise. In the short time I held the genomic health option, the trajectory was clearly a gain because of the market advantage from their clinical trial but there were days with huge discounts and days it exploded and with no news whatsoever since it is a small cap.
                                Click to expand…


                                As long as you’re buying naked options thats fine. Dont sell them is all or that 5% can be 100%.

                                Trading options for edge-mark sebastian

                                trading volatility-colin bennet

                                volatility trading-euan sinclair

                                These books are great. Options, futures and derivatives by Hull is one of the ‘bibles’, but pretty dense and theory laden. The above have a lot of math but are still practical in scope.
                                Click to expand...


                                Thanks for references on options. Of course no selling/

                                Time will tell on Tesla as a company. Time is the best test for fragility.

                                Even if they have to rely on selling cars to make it, at the current rate of selling cars they have a lot of cash coming their way, even with Aug 2018 sales.

                                17800 model 3s at ~$60000 + 2675 model S at ~$90000 + 2750 model X at ~$100000 per month is ~$16B in yearly cash flow.

                                If they get to 6000 model 3s per week, that is >$15B yearly in a single model.

                                Comment

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