May 7, 2013
kenliles A roll up to J14 $45 would credit you about $4 per allowing some profit taking but leaving you nicely long and still relatively ITM. Volume on the $45s isn't bad. Otherwise if you're ready to move out, you get about half that by rolling to J15 $50 and even J15 $55 would produce the same profit taking (about $4 per) while nicely out in time. I've moved all my long dated calls to J15 and if $60 holds after earnings I'll role those from $40-$45 to $50-$60 and probably throw in a few higher strikes�
May 8, 2013
PureAmps Did CBOE add TSLA weekly options when I wasn't looking? I'm just looking at some potential post earnings trades and noticed weeklys are now available with expiration this Friday.�
May 8, 2013
kenliles yep - added about a week ago; caught me by surprise as well- my broker had told me to expect them up sometime in June�
May 8, 2013
Citizen-T Alright guys, I need help. I bought May '13 $60 (did I say it right that time?) calls on Wednesday for $2.05 ea. I would like to lock in some of these gains, but keep some exposure in case this is the epic short squeeze. Seems like I should roll-up to a higher strike price. I suspect things are going to be crazy tomorrow morning. How do I tell what to buy and at what price?
- - - Updated - - -
Never mind. I just noticed there is a discussion on this going on in the newbie thread. I probably belong over there. =)�
May 9, 2013
smorgasbord I don't know that rolling calls is a Newbie thing, but yeah, you sell your $60 calls and use some of the proceeds to buy new calls at a higher strike. Considering you're already in May, there isn't much time value left in the calls, but also not a lot of time for the newly bought calls to appreciate. So, you may want to choose a new expiration date that's further in the future.
Depending on your broker, you may be able to do the buy and the sell as one transaction and save some money on fees.�
May 9, 2013
smorgasbord OK, does anyone here think that $70 is the new norm for TSLA? I didn't think so. Many think the price is going to Mars, some think the price will blow out.
A couple of typical strategies for taking advantage of expected stock price movement are the Straddle and Strangle. They consist of buying both a Put and a Call, either at the same strike price (Straddle) or split strikes (Strangle). Your loss is limited to the price you pay for the options, but your profits are virtually unlimited. The more the stock price moves away from the strike, the more you make.
Has anyone looked into these for Tesla? I would think that since Puts have been expensive these haven't been good plays, but if you think a short squeeze is coming, then buying Calls is one way to profit. If you also think a big drop might be coming, then buying Puts would protect you. Combine these and the worst thing that happens is that Tesla stays at $70 (or whatever strike you choose) until expiration. That seems the most unlikely.
Anyone got any other ideas? I'm pretty fully invested in TSLA, thankfully, but do have some dry powder. A drop in price would have led me to selling Puts, but that's out for now. Playing the momentum can be profitable, but I'm not a momentum player. Any other ideas?�
May 9, 2013
toastypasta Would anyone suggest rolling Jan15 $35 calls to JAN 15 $50 calls?
Could take some profit and stay long.�
May 9, 2013
DonPedro One thought about May 13: Quite possibly some shorts have insured their positions by buying May13 calls. Let us assume many of these were sold as covered. Shorts exercise to cover their position, and let's assume they have had enough. Then the sellers of the covered longs go out in the stock market to get back into their positions. Could this lead to a little price spike in the stock on the 13th? Is the open interest in relevant calls sufficient for that?�
May 9, 2013
kenliles smorg- my thoughts are 60s are the new norm but not yet 70s; I think they could drop to upper 50s, but may ride in the 60s for a while. Without some real short covering I'm not feeling the 70s holding. The other piece to remember is with declining credits, Q-over-Q comparisons will be tough. I see $58-$75 range for a while.
I did some put selling a while back - worked well due to high put price (from shorting); At these levels though I like the straddle better; I'm going to watch for a pull back though and do some put selling along with call adding (LEAP stuff likely)
toasty- depending on your investment situation of course- but on the surface yes I would roll those up myself. Take some profit and reload the time value potential. At this point those are essentially tracking the stock; One of the moves I like to make on LEAPS is to buy in the money, then roll them up as the price move, taking the profit (adding if it drops), but at the higher strike you'll initially be at a lower delta tracking, so if a pullback occurs it's less of a hit
Don- looks like significant OI at the $60 strike - could be enough to pull up the price if your thesis is correct seems to me�
May 9, 2013
hershey101 Thanks for the great information.
What do you think about the $75 June calls and the $80 Sept calls? I was thinking of those for a speculative play, and am sitting on a bunch of cash from the sale of the Jan '14 $45s I just sold for a entry into more Jan '14 and Jan '15 if the price drops back down to the low $60s. I think that the price is definitely over-inflated and will come down in the next month or two, but Elon's twitter tease about the next two announcements, now just around the corner, as well as the high short interest leads me to believe we might see $85-$90 before we see $55-$60�
May 9, 2013
toastypasta Thank you sir. I rolled them to JAN14 $80 calls. netted 300% after the roll. Leaves me the ability to stay long very happily.�
May 9, 2013
kenliles yeah, those could be interesting as a spec play (smallish play imo)- the June calls in $75 have decent volume; for Sept either $75 or $80 are a little thin but workable. His announcements should happen for either one. Also Sept would include next report or at least a runup into it- I'm still thinking today was a big day that will see some cool down; I like your thought of watching for J14, J15 opportunity, especially balanced to favor the J15s; Also, keep in back of mind the J16 will become available toward year end. If LEAPS is part of your game plan for that
- - - Updated - - -
yep- nice; you'll have the cash and as it pulls back, you'll see lees of a drop due to lower delta; and if by some reason we get massive short squeeze that moves those into the money you'll still participate and the closer they get to ITM the better they will track. I've stuck with $60 strike for now as a base position, but my J15 adds on pullbacks will be at higher strikes�
May 11, 2013
DonPedro I'm thinking that if there is a further upside to the stock, it is either fairly short term (squeeze) or long term (business success). Thinking 3-4 months ahead, I think it may be harder to sustain these levels. One good reason may be that the Q2 earnings - guided to be in the red - may be a harder sell. So I am playing with the idea of selling covered Sep 13 calls, 80-90 strikes. Any thoughts?�
May 11, 2013
Johan Yes, some thought on this in my post in the Newbie thread:
Newbie Options Trading - Page 13�
May 11, 2013
kenliles I'm in complete agreement on this scenario. Q2 earnings less the Q1 will be a knee jerk sell and won't hold current levels which anticipate rising EPS from here along with short covering. I see a return to 50 and 60 levels before the next up lift hat will require 30,000 unit S and model X 2014 deployment progress. A covered call sell can work; I'll likely balance my minimum long position with some put protection and on pull back sell puts and add long calls�
May 11, 2013
bhuwan Thanks for the info all.�
May 12, 2013
smorgasbord I picked up my Roadster after its annual service this weekend in Menlo Park. The Menlo Park store is usually pretty quiet, but it was hopping with activity at 5:30 on a Saturday. The Tesla people there said that ever since the Consumer Reports review came out that they've seen a big jump in traffic.
Tesla is going to have to balance improving gross margin against increasing production to meet demand. I wouldn't be surprised to see wait times for Model S start increasing again.�
May 12, 2013
kenliles Great feedback... Thx smorg�
May 13, 2013
smorgasbord I've got some Jan 2014 $40 Calls that are up 965% right now. Any suggestions for rolling?�
May 13, 2013
Causalien Wait for extrinsic value to become negative. Then exercise and buy the actual stock.... but honestly, by now they just move like a normal stock. No point in selling due to bid ask spread. It depends on what you want to do with the money. Do you want more delta? Tax reasons? It's a very complicated decision.�
Jul 15, 2013
Acmykguy Long Calendar Call Spread | Calendar Spreads - The Options Playbook
- - - Updated - - -
http://www.optionsplaybook.com/option-strategies/long-straddle/
This is what I am playing today, just too many unknowns and the price swing up or down will be large and violent.�
Jul 15, 2013
Jonathan Hewitt That play involves selling the near term, buying the longer term one, same strike? I can the one you described working, too. You'd basically hold onto both as IV goes up into the earnings report and then close them out before the earnings report? The AUG 135 should go up in value from IV going up more than the SEP 145, but I'm not sure about how the stock price going up or down would affect each call in conjunction with the IV change...�
Jul 15, 2013
Acmykguy To help you understand how stock price effects the IV , you need to understand the Greeks. Here is a link to explain it better. Every option has them and need to be looked at prior to buying an option.
Option Greeks Explained In Simple Language�
Jul 15, 2013
Jonathan Hewitt Right, but depending on how much change you have in each area the overall effect could work for you or against you, which is hard to predict, IMHO. The AUG call has the higher theta and will lose value faster as time goes by (works against you) but also has a lower vega, so won't go up in value as quick as IV goes up as the SEP call (works against you). So if you buy the AUG call it's going to depreciate faster than the SEP call as time goes by, assuming no change in stock price and assuming IV stays the same or goes up. It looks to me like the only way you can win is if the stock price stays under the SEP call strike? If that is what you think is going to happen then it would be a good play.
Or did you mean to sell the AUG call and buy the SEP call?
I guess what I'm trying to ask is what you expect the stock to do and how you would play thorugh the play once you initate the position depending on if you were right or wrong.�
Jul 15, 2013
smorgasbord Yeah, typically on a Long Calendar Call Spread you sell the close to expiration call and buy the further call. However, note that typically those Calls have the same strike, which means it's most suitable for stocks whose prices you expect to remain stable. What Acmykguy's talking about is a mix of strike prices and expirations. So, you get some of the Bull Call Spread behavior (limited risk and limited upside) and some of the Calendar Spread behavior. That might work for TSLA, but it's pretty darn complicated, and I don't see Tesla as the kind of stock you invest in to make some money off of Time Value.
With both spreads, if you think the stock is going to shoot up, you simply buy back the sold call and then you have a purchased call with unlimited upside. However, to really profit from that, you need to make that decision when the stock dips because that's when the sold call can be bought back for less than you sold it for. Thats exactly the opposite of what your instinct will tell you to do, so it'll take guts. If you wait until the stock starts to rise before buying back the call, you'll pay more to buy it back than you sold it for, in which case you'd have been better off only buying a call in the first place.
EDIT: Just a note to those not familiar with a Bull Call Spread. It's roughly equivalent to buying the stock and then selling a Covered Call. Selling Covered Calls are considered a "safe" strategy since you can only lose money you've already spent (no margin calls). With the Bull Call Spread you've spent less money than if you were to buy shares, so it's even less risky. With Tesla pushing all time highs and some people having fear of it dropping below $100 (or lower), then a BCS will let you enjoy some run up from here without the risk of the stock tanking to half it's current value.�
Jul 15, 2013
Acmykguy Predictions for tomorrow price movement?�
Jul 15, 2013
Jonathan Hewitt Ah, thanks! I'll stay away from that trade...Any thoughts on the "calendar put spread" I posted on the last page? If I'm missing something and it's really stupid please someone tell me. I'd rather be called stupid then lose lots of money, haha.�
Jul 17, 2013
deonb I'm trying to plan a play for the earnings release. I expect a movement of at least 10% either way the day after, but betting mostly on the upside.
My intent is to create the setup a little while before close on the 7th, using August 10th options. I would like it so that on 10% downside, I'm dead even, and on the upside I have exponential potential.
Let's say I play with ~$10k.
And let's suppose next Wednesday before closing the stock price is at $120 (but this really works for any price). Using today's options prices and premiums and doubling it for buy, but keeping it the same for sell (expecting more volatility that week until the point of announcement, and then rapid dropoff after), I get:
Buy 40 x $108 puts at $0.65 each = $2600.
Buy 10 x $125 calls at $2.00 each = $2000.
Buy 50 x $130 calls at $0.70 each = $3500.
Buy 200 x $140 calls at $0.10 each = $2000.
A 10% drop to $108 will yield back the $10k
A 10% raise to $132 will yield about $25k
Of course any movement more than 10% is gravy. Repeat of Q1's 20% up will yield $125k. Repeat of yesterdays crash will yield $30k.
Of course the risk is the price will stay dead even at $120 and I'd have lost part or all of the initial $10k (ok with that).
Does anybody else have a better strategy than this that you care to share?�
Jul 17, 2013
mershaw2001 Hi Deonb, I like your setup. I won't be betting on the same occurrence as you, as I think the move will be significant but smaller in magnitude. Has your experience been that prices will only be double what the current friday prices are now? I was looking over other stocks that are equally volatile (nflx) and trying to get a sense of the value of forward (normal) week prices to earnings week prices. My take is that you'll actually see a 5-7 fold increase in the price of these options, not a 2 fold increase, and I think this will drastically change your strategy.�
Jul 18, 2013
Norse
thanks for the setup, I think we can all be say that it will move that day, hopefully up
�
Jul 18, 2013
Realist As I have said in another thread, this is how the Instis make money.
You are paying huge premiums and anything between 105-130 will cost you almost all the money you invested. I�
Jul 18, 2013
deonb
Yeah, I remember that post:
All I can say to that is that I'm very glad I ignored you, and I hope most other people did as well. I realized the biggest one-day % gain in my overall portfolio since Q1 in the 12 hours directly following your post. All due to the "worst thing you can do now".�
Jul 18, 2013
Realist Have you realized your gains yet?
I guess not. With that kind of strategies you will loose most of your invested money in the long term.�
Jul 18, 2013
deonb Of course I have.
I changed the majority of it back to shares yesterday at $116 which means I now have 50% more actual TSLA shares than I had on Friday.
I've also taken out 30 times more cash than I've initially invested in Tesla (in order to pay for my Model S). Which I feel ok about, since I'm up 8000% since April.
All due to those evil evil volatile options... yeah. Got to avoid those.�
Jul 18, 2013
Realist Well congrats. Just don't get too greedy.�
Jul 18, 2013
Jonathan Hewitt Agreed. Bought 10 AUG $105 calls when stock was around $109.50 on Tuesday and sold them yesterday at EOD for a 55% gain on them in only 24 hours time. Not a huge move compared to the rest of my portfolio and definitely not as good as a move as it sounds like you made but I was being a little cautious in choice of strike price and how much I wanted to put on the line. Either way, my portfolio is worth more now than the last time TSLA was at $120.
Please post any further thoughts on options plays as we get closer to the earnings report! Like you said, as long as it's not a large % of your overall portfolio it can be worth trying a play like the one you mentioned.�
Jul 18, 2013
Acmykguy Here is an interesting read. Something to consider if you follow technical anyalisis.
Tesla (TSLA): Technicals in Charge Here�
Jul 18, 2013
Causalien Next fib level is at 150. One thing to notice is that the premiums for a call spread for 2014 and 2015 is the same.and is only slightly higer than the August spread. Which means all the premiums are only pricing in q2. It might make more sense to buy 2015 spreads.�
Jul 18, 2013
toastypasta I need to learn how to do these crazy options trades.�
Jul 18, 2013
ggr Doing crazy options trades is actually quite easy! ;-)�
Jul 18, 2013
Liz G @Causalien
What is a fib level?
Sorry, total novice investor here just trying to follow you guys.�
Jul 18, 2013
DonPedro Lol yes. A favorite of mine is to enter a Sell To Close order when I really meant to add to a position (easy to do because that is the default trade that shows up in the trading software). The really annoying thing is that the limit is then ofc totally off, and I end up costing my position the market maker's bid price.
Another good one is to do a completely different expiration date than intended, or a put when I wanted a call or vice versa.
Worst of all is of course the "momentary inspiration" trade, which happens after a particularly dramatic movement of the share price, whereupon a strong gut feeling says to hurry up and do a particularly clever move. It never is.�
Jul 18, 2013
fjm9898 God so many times have i done this haha.�
Jul 18, 2013
Causalien Fibonacci retracement level. It is from Technical analysis. The 150 level (rounded down from 151) is calculated by both me and another member on this forum in a previous discussion. So it's safe to say it is the right level. As to how to use it, everyone is different. I usually buy a call spread with the current price to the fib level and sell a put spread to fund it.�
Jul 18, 2013
Twiddler As performed by me today by placing a large Jul 120 call when the price hovered back around 120.00, thinking I would take it back off at 120.50. I then watched every tick down from there. Alas I am now holding into tomorrow (OPEX). Wondering how I will sleep tonight :-/�
Jul 18, 2013
Theshadows I have some TSLA on margin. Since I have level 2 options permissions would it be better to de-leverage my stock position a little so I can buy some calls? What about setting up another investment account and using it for options so I don't end up with short term tax gains?�
Jul 18, 2013
Nixx I was considering something like this or just playing a straddle with a few extra long calls. I am curious how you came up with those prices, though. Dd you just look at the prices of the July 27 options? I assume the options that include the aug 7 release will have a much higher volatility premium. I'm guessing they will be double that price until aug8th.
- - - Updated - - -
I love your contrarian comments,realist.... But claiming we shouldn't use options in the advanced option thread seems a bit too... Contrarian�
Jul 18, 2013
gym7rjm Hi deonb. I think we are in for a blowout earnings so I am looking into executing something similar to this. Will you adjust this play if the stock continues to climb significantly leading into the release? Lets say we are sitting at 135 as an ath the day of earnings, do you think this would dampen potential upside even with a killer earnings?�
Jul 18, 2013
austinEV I bought a put instead of a call exactly once. It immediately moved in my new "wrong direction". I quickly closed it for a profit and thanked the angel that watches over fools with option enabled accounts.�
Jul 18, 2013
sleepyhead Your prices are off by at least an order of magnitude. Let me know when $140 calls are selling at $0.10 and I will personally buy 1000 contracts. They will be trading at more like $2-$5 on the day of earnings if the stock is at $120. IV goes up significantly about a week before earnings.�
Jul 18, 2013
Acmykguy Going way above 120
- - - Updated - - -
Correct ....just bought a second one with delivery in 5-7 days.
- - - Updated - - -
Thanks smorgasbord......well said....My thoughts do not always make it to my fingers as well as I want.
- - - Updated - - -
....with a bottle of wine!
- - - Updated - - -
deonb, Can you tell us where you are finding price for the calls you are quoting? What month? I do not see anything remotely close in price to that.�
Jul 18, 2013
gym7rjm I check right after his post and I believe he was using the July 20th options as a model to find what prices might look like for the August 10th weekly option. He then doubled the price to account for increased volatility going into earnings.�
Jul 18, 2013
deonb Correct. The idea is to wait until the last day I could before buying options, and then buying ones that expire as soon as possible in order to minimize premiums.
That would mean August 10th options that have 2 days left on them. Extremely risky, but that's the point.�
Jul 19, 2013
retinadoc Simple Option Straddle for Earnings?
Telsa's earnings seems to be a very similar catalytic event to an FDA approval or ADCOM meeting for biotech stocks. The one scenario I can't see happening is that the stock remains stable through earnings which would make a straddle a very bad idea. In Biotech stocks this usually happens when the FDA suddenly decides to delay things another 90 days or a drug trial result is too convoluted for the Street to make sense of it.
Neither can happen with earnings. I personally think Elon will again take great pleasure in beating up the shorts and I will likely overweight on calls using puts as a hedge. Any thoughts?�
Jul 19, 2013
deonb Possible, but it won't be cheap. I think the premium for the call + put side of the straddle will probably be over 10% of the stock price. I agree that it's unlikely that the stock remains stable through earnings, UNLESS the stock price runs up to $140 by then.�
Jul 19, 2013
sleepyhead
No puts necessary, just buy more calls instead.�
Jul 19, 2013
austinEV Yeah I have never understood the notion of buying calls "with some puts as a hedge". Assuming that the time value is about the same, I feel like thats betting on Roulette "black" and betting a little bit on "red" as a hedge. Just bet less on black, it has the same effect, right?�
Jul 19, 2013
Nixx because if the stock moves heavily in the wrong direction you still can make money. Lightening your position will just make you lose less�
Jul 19, 2013
toastypasta Someone teach me the iron butterfly.�
Jul 19, 2013
kenliles In-A-Gadda-Da-Vida�
Jul 19, 2013
woof Funny! Good thing Toast isn't asking someone to teach the Venus Butterfly...�
Jul 22, 2013
toastypasta LOLZ. in all seriousness. i think i did it right. Basically stuff is up, stuff is down. but i'm practically even money.
I'm basically waiting for the stock to move to either 130+ or -110�
Jul 22, 2013
fjm9898 OK guys i am looking for a bit of help on a move to make before the Q2 report. I have much of my money already tied up in a Long position but I figured I could toss a bit at the Options side for Q2 which is the last of my cash that I would be willing to part with if things turn sour.
I have $2500 to spend on options and with the writings from Julian and Sleepyhead I am willing to put that last bit of cash on "Black" (buying calls)
Now I know, and I have been bit before, buying calls that are due shortly after an earnings report can turn into the titanic (thanks Bernanke for messing up my MU earnings call) but the premiums are so high I its hard to really buy any real amount of anything but these short term calls.
So i want to ask your opinions. I was going to grab up Aug17th $175 strikes at 75 cents but is that to bullish? Should I make a safer bet?
What are you guys planning on doing?�
Jul 22, 2013
Jonathan Hewitt If you treat it as a lottery ticket and don't load up on too many as a % of your portfolio then it's not too bullish! I might grab a couple myself...If a short squeeze happens then it's easily achievable. Posts from others think that $175 is possible without a squeeze effect.
I am interested in what others think, though.�
Jul 22, 2013
hershey101 Uhh... Lets not get carried away. TSLA is already sustaining a $15B mkt cap, up from <$5B not too long ago, and while it has gotten a lot more attention, we still don't have much clarity on the future of the business. Is tesla here to stay? Yes. But is GENIII going to take the market by storm and destroy everything that stands in its way? I'm not too sure. I think this quarter will be good, but won't amaze like last quarter did. Before last quarter, the price for TSLA was around $40, and it didn't take a lot for the results to "amaze" people. But today we are holding steady at $130, and I'm skeptical that we can run another $50+ on a good quarter. I'm looking for ~5100 manufactured and ~4700 sold. I'm not convinced thats enough to make this quarter profitable, and if we don't see a profit, the chances of going to $180 are very very slim.
I would be more comfortable with $150 calls, but I'm not sure how high the premiums are, and whether they would be worth it. I might just buy and sell during the run up next week into earnings.�
Jul 22, 2013
fjm9898 I dont think the price will hit 175 but i think taking the run up to earning and the day or two after then selling them back off might get some good returns.
$150 for Aug 17th is at $2.75
This is also why I am asking maybe its better to grab September Options which have higher premiums, but the safety of a bit extra time after the report. $175 was at $1.67 and $150 strike was at $4.60
But even as you said, getting them for the run up and then selling the day after (if positive) you get you gains, but then its up to the person to see if they want to hang around to see how high it will actually go. As Julian has pointed out, with that GS dip we may very well had alot of extra people jump on the short side bus which would only help the squeeze grow in size, if it were to actually happen.�
Jul 22, 2013
toastypasta I am in Aug 17th $150's as my earnings gamble play besides my LEAPS.
Do i think it will hit that, no, do i think they will surprise on earnings enough for a mini squeeze possibly yes.�
Jul 23, 2013
smorgasbord I've just started toying with the idea of a Long Strangle. The problem is the premiums: you buy both a Put and a Call. But, as long as the stock moves enough either way, you make money. If the stock stays put you lose the premium.
Back to more basics, if you're not bearish, there are some Puts worth considering on the sell side:
Aug $115's will fetch almost $7. That's over 90% annual return, or you buy stock at about $108. Yeah, it's risky as Tesla could drop below $100.
If you're willing to buy TSLA under $90 then there's:
Mar $105, fetching over $15. That a 22% annual return, or you buy stock just over $89.�
Jul 23, 2013
ShortSlaver I've been considering a similar strategy. I sold some covered calls last week when we hit 130 before it fell. Maybe should have bought them back then. Decided to buy some calls at a lower strike on the same expiration as well. But like you, also considering some way out of the money calls. I'm not convinced we will not fall a bit before earnings though so holding tight and not paying for the extra time premium right now.�
Jul 23, 2013
Causalien Buying strangle on TSLA is a bad idea due to premiums. It is best used on stocks that has volatility less than 0.4 but you know a huge disruptive move is coming up. Take BAC for example.�
Jul 23, 2013
sleepyhead If you buy Aug $175 calls, then you have a 90% chance of losing all of your money. That said, I actually bought some Aug $190 calls today, but only spent a couple hundred dollars on this lottery ticket. If you want to make a big gamble then wait till the day of earnings and buy the weekly call that is about 20% OTM; this will give you two days after earnings to reach this strike price.
The reason I bought today though is that IMO the stock will continue to go up slowly leading up to earnings. I envision a $140 - $150 stock price on the day of earnings. If it is anywhere near $120 or less, I will also load up on weekly Aug19 calls, if I don't get wiped out by then.
My $200 TSLA call, does not necessarily mean that it will reach that target the day after the earnings call. I am just saying that $200 is a small albeit realistic possibility and I see it happening in the near future, i.e. by the end of the year. For now, I can't find a flaw in my thinking but there are just so many things that we as investors don't know about that could have a significant financial impact on a company. E.g. Why did Tesla file a law suit against that machinery company? Did they lose $thousands, $millions, or $tens of millions; if it is the latter, then forget my $200 price target and get ready to start accumulating shares at $90 instead. Too many variables, but based on all public information my $200 price target is better than most analysts' opinions.�
Jul 23, 2013
Nixx This is basically what I'm thinking. I am planning on running something like a strangle, but have a few more calls outside of the play. However, my final play will be determined by the premiums. Although I think the stock will pop on earnings, it's too hard to tell what the street will see. They might come out and say "we sold an extra 1000 cars, but damn, we did so many leases our EPS is -30c..." the street freaks out and the stock is down 25%. Or maybe it goes up 25% lol. Either way, my play will be with money that I'm planning on throwing to the wind and it won't be a huge percentage of my account.
I do like your thought of selling the Mar 105, but I have only option level 3, so I have to secure it with something lower and the March options do not have anything low enough. I might do 105 Jan 2014 and secure it with a long $50.�
Aug 2, 2013
hershey101 What do you think of selling the Sept. $110 and $150 puts for a synthetic long position going into earnings.�
Aug 6, 2013
deonb Is the following a valid tax strategy using a vertical call spread?
BUY 1 TSLA AUG 9 125 CALL - $19.80
SELL 1 TSLA AUG 9 126 CALL - $18.80
There's no upside there, and $1 downside. So why do this?
Let's say TSLA on Friday is at $172.15 ($30 up from today).
Close to expiration that 125 long call will be $47.15 and the 126 short call will be -$46.15.
Now let's also say I have accumulated $17250 in other option profits, and I want to buy 100 TSLA shares with it on Friday. If I sell those options on Friday I have to pay $6037 in taxes on it.
However, if I instead exercise the 125 call, it would show no profit, and it would make the 126 call a complete short-term loss ($2735 loss). Now I only show $14515 in profit, so only have to pay $5080 in taxes. Eventually the exercised stock will be sold, but then it's at the capital gains tax rates from a base of 125 + initial premium of 19.80 = $144.80. At $172.50 that's another $415 extra in tax some ways down the road, once taxed at capital gains rates.
And if TSLA falls below 125 you're out max of $100.
This seems too easy... What am I missing?
Is there maybe an additional tax basis for the value remaining in an option at the time it's being used to exercise? I know the initially paid premium forms part of the cost basis, but what about the value at the point of exercise?�
Aug 6, 2013
DaveT Makes sense to me. Tax basis for your new 100 shares exercised would be the premium you paid for your option call (not market value), plus commission, plus cost to exercise. Hold for a year and pay just long-term capital gains.�
Aug 6, 2013
sahanim so glad im using a Canadian TSFA account for my options. no tax whatsoever. woohoo!�
Aug 6, 2013
DaveT The Canadian TSFA account is purely awesome. I researched about it a few months ago and was very impressed.�
Aug 7, 2013
sleepyhead If it seems too easy then it will probably not work. The tax code is very complicated and there are measures to close such loopholes. Although in your case you are risking $100, so maybe it just might work.
Example: if you bought TSLA a few months ago and wanted to sell at current price to lock in profits, but didn't you didn't want to pay short-term capital gains you could come up with this strategy:
Buy ATM put and sell ATM call. This will guarantee that you lock in profit at basically no cost to you, while you wait for your TSLA position to cross the LTCG threshold of one year. Such a strategy is disallowed by the IRS and you would end up paying STCG anyway even if you held for one year.
Tax code is very complicated. I have a masters in accounting and I can't even give you an answer to that question without doing some extensive research.�
Aug 8, 2013
smorgasbord OK, post Q2 2013 earnings, are there any good TSLA plays left? Or do we sit around and wait for some irrelevant piece of news to create an good re/additional entry point?�
Aug 8, 2013
sahanim if the trend is anything like q1 earnings (so far it's pretty damn accurate) you should be seeing crazy price movements and volume in first first hours of trading. I'll be looking to unload some aug calls that i bought pre-earnings. I am hoping there were a lot of margin calls made tonight which means shorts will be looking to close their position early morning.
I personally want to get rid of my aug calls asap. and the crazy volatility would create a sweet premium.
If there is no crazy volume when the market opens tomorrow morning... i dont know what to say.�
Aug 8, 2013
c041v Call me crazy, but I'm not sure we're going to see much more similarity to Q1 in the coming days. The short interest is down, the price is up (their is some psychology that comes into play for a share price this high) and their was some extremely bullish sentiment about this quarter. Q1 took most by surprise, I have a tough time believing that history will repeat itself, at least to the degree that we experienced post-Q1.
I'm still holding my calls, but today really brought me back to earth after the Q2 announcement yesterday. As much as I want to believe that we're mirroring the pattern, I just don't see the justification for it. Especially if the basis is "it happened before." This isn't some controlled experiment.�
Aug 8, 2013
sahanim Im not completely discounting a repeat of q1. I'd put it at 35-40% chance of it happening. As others have stated shorts still have a lot of skin in the game.
Not long before markets open and we find out.�
Aug 8, 2013
Johan I too have this gut feel assessment of a perhaps 30% chance of a significant gap-up today, with a squeeze progression during the day. That why I took all my lower strike calls off the table yesterday morning (got a bit lucky with my limits and looking back actually sold not very far from the peak in option premiums, looking back could have in theory gotten perhaps 20% more but we all know it's impossible to hit the peak) but keeping all my further out strikes in the game for today and next week. Of course if the stock just stabilizes here and then perhaps slowly falls back in to the 140's all those will soon be worthless, but it's absolutely something I am prepared for.�
Aug 9, 2013
DonPedro If volatility collapses post-earnings, maybe a straddle? I think that this stock will keep surprising with its volatility. I mean, nobody knows if the right market cap is $5bn or $50bn, so it is all about sentiment and momentum. Plus the potential for macro economic instability (that would add further volatility to a growth stock).�
Aug 11, 2013
Causalien You learn so much from controlling TSLA options that it's insane. I've learned as much trading TSLA than I do in my past 3 years. Simply because every movement in TSLA is pronounced. You see the effect that changes the option price by 20~30 cents instead of just 1 ~ 2 cents. So, what happened was that the short term volatility got entirely moved to the long term volatility. The increase in call option's price wasn't as much as I'd liked. So even if I guessed exactly right with a 120 ~150 verticle. The collapse in premium means that The correct guess only netted a 50% increase. What would've been better, is a short volatility strategy skewed to the call side. A calendar would've been the perfect play. But again, it is something that I don't suggest for anybody to do. The next fibonnacci level is $200. This one will need more than execution to achieve. We need real GAAP profit in my opinion.�
Aug 16, 2013
sullitf I've been looking into doing a diagonal call spread with the long being a Jan14 call in the 160-170 range.
My thoughts here are:
1. I expect the next few months of trading to be fairly flat with the potential to climb up to the 150s
2. There is potential for a Q3 earnings bump if it goes well, though I'm expecting a moderate increase if it does rather than another Q1
3. If TSLA stays flat or climbs slightly before Q3 earnings the Jan14 call could be in a very good spot. The IV will likely go back up before earnings and there's potential for me to have a Jan14 call for very cheap/free depending on how the calls I write turn out
Does anyone have opinions on this strategy? Particularly, does a diagonal fit right now and if so what strikes would you be looking at?�
Aug 16, 2013
Causalien This might help. Call diag + put diag
�
Aug 17, 2013
Jonathan Hewitt Any decision on your part? I'm interested in your conclusions.
Also, I'm looking at doing some medium term bull call spreads. I'm seeing that the factors I would think about for doing straight calls are somewhat different than the factors you are thinking of when setting up a spread. I may be jumping the gun as I initiated my first bull call spread this week (Sept 130/150) but I am liking the strategy so far and want to experiment with a medium term spread as well. Has anyone else been setting up spreads recently?�
Aug 17, 2013
ongba I have march 14 155 calls purchased right before earnings for around 20.50...looking to sell the march 14 175 calls when they get to 20.50, creating a zero cost bull call spread, with 100% gain if tsla expires above 175 in march. With the 20.50 that I receive from the sale of the 175s, I will be waiting for tsla to go on sale to initiate another delayed construct spread.�
Aug 17, 2013
sullitf I haven't decided yet, I'm planning to take some time tomorrow to plan it out and decide. The diagonal call spread Serena to fit my current expectations well though, neutral to slow growth in the short term with a bullish long-term outlook.
The real writings for me right now are (1) expiration/strike combinations and (2) adjustment strategy should it to wrong. I'm thinking Dec13 or Jan14 in the 150-165 range for the long but am not sure on what to write yet though, need to look at premiums and see what I'm with.�
Aug 19, 2013
DonPedro Here the other day I became aware that - speculating about potential investment strategies - I had more or less decided to do two things: (1) Buy puts and (2) sell puts.
As a consequence, my option strategy is now: Don't do options.�
Aug 19, 2013
sullitf I ended up deciding against a diagonal spread for now, the premiums on Dec13 and Jan14 calls are just too high for me to justify. To really eat away at the premium for the long call I would need to play too close to ATM with the short-term calls and I didn't want that much risk.�
Aug 20, 2013
sub Can you guys help with the pros/cons of selling puts? What about leaps, Jan14 or Jan15? This would lock up some funds in my account correct? However, I can close out my position if I need to remove them for any reason (Don't plan to)?�
Aug 20, 2013
johnnydop Pros:
Get income when you think a stock wont go below the strike you choose.
Cons:
Highly risky, especially with volatile stocks like TSLA. The stock could quickly move below your strike yielding losses and you'd then be at risk of getting assigned.
Like with all options, you can always close out your position at any time before expiration so in the event the stock starts to move downward you can cut your losses early and more importantly avoid getting assigned.
I have some decent success as of late selling Puts on AAPL, GOOG, NFLX, and TSLA. I especially like to sell puts just before earnings since the premiums are usually much higher (ie high implied vol). I did get burned with TSLA though. I got short some 100 Puts just before GS put out their note and boom i was rapidly in the red and the stock was quickly approaching the 100 mark. Since its a highly exposed position i quickly got out. Low and behold, the next day TSLA bounced back and i would have been fine but during that plunge it just looked like the bubble had burst and she was definately going to test 100. Oh well. Thats the risk for trying to make money by Selling Puts.�
Aug 20, 2013
sub Thanks. That is how I saw things just want to make sure i'm not missing anything. If you were long on TSLA, and were caught buying the stock at a higher price than it was currently selling, you could always just hang onto it. When weighing selling puts against covered calls, I like selling the put because I feel TSLA is heading up and I don't want to lose the upside potential.�
Aug 20, 2013
ongba There is no additional upside when selling puts outside of the credit initially received(unless you roll up). If tsla goes to 300, you will not be partaking in the outsized gain.�
Aug 20, 2013
clmason I am no pro but did sell Jan 15 puts recently. My strategy was sell puts at strike prices of 30-50% discount of share price. If I got put I was ok with it as I do want to acquire more shares and with the range of put I theorized I'd be getting shares at the low. This is kind of like a buy order but getting paid to place the order.
I redeployed the premiums I received for the puts and bought just Out of the money calls. Then Thursday after earnings when share prices popped I sold the calls and bought back the puts, which were then less expensive.
Likely it was beginners luck and the MS report dip was excellent opportunity. I made out with hefty gains. It is short term gains, I have some other stocks at a loss in my account I will sell before end of year to offset the taxes.
I'm holding steady for another opportunity to do this again.�
Aug 20, 2013
Johan Well you basically double leveraged yourself which is great so long as things go your way, but the risk is also double so to speak... Nice play.�
Aug 22, 2013
sub Would any one here write Jan15 puts for $110? Please share your opinion either way. I've done the math on this and worked out the worst case scenario (holding shares worth zero lol) and most likely bad scenario (caught purchasing shares above value, or buying back the puts at a loss). I'm very bullish on TSLA long term. I've thought about writing some OTM calls but I do not want to give up any upside, and writing them far enough OTM to make me feel comfortable isn't worth locking myself in. Thoughts?�
Aug 22, 2013
ongba Selling a jan 15 110 strike put will get you $21 of premium, so a return of 19% over the next 16-17 months (if the put is cash secured) with 30% downside protection from closing price of 157 and break even of $89. The downside protection and break even are good, but the return of 19% on a potential thoroughbred stock such as tsla is a little low, especially as you appear to be very bullish on tsla for the long term. May I recommend a risk reversal strategy. Use the proceeds of the put sold to buy a jan 15 240 strike call, also trading for about $21, so net cost is zero. If tsla rises, the call will appreciate and the put will gradually lose value. If tsla tanks, the call will be worthless and you will get assigned at 110, with new break even of 110, still 30% below today's price. If tsla is in between 110 and 240 at expiration, you gain nothing, but lose nothing (ie a draw).�
Aug 22, 2013
blakegallagher I have been thinking about doing something very similar. I would then buy some jan 2015 leaps because I think that is a safe bet too (in my extremely bullish view) If it dips below 110 and I have to buy the shares I will most likely sell the newly acquired shares and buy some more leaps or shorter term stocks with them depending on the situation. Waiting to see what the stock does. I Think I am going to wait and execute this on the next pullback so I get a higher premium for the put I am willing to write and get my leap cheaper.�
Aug 22, 2013
sub Thanks to both. I'm new to the options thing so I don't quite understand how time and stock price affects options. For example, if I were to sell a put at 110 and for some reason the stock fell down to that level in say 6 months, approximately how much would it cost to close out the put before its exercised and maybe roll it down?
another thought I've had with similar questions. What if I sell my stock and replace it with jan 15 leaps, I think I was looking at the 110 strike as well. I'm bullish on the stock, I'm extremely optimistic the stock will be higher than it is today. If it is higher, can anyone compare what the returns would be roughly? Looking at the delta, I thought I would need approximately 25% more leaps to have the same return?�
Aug 23, 2013
DonPedro First of all, if you are new to options, many people would caution you strongly against writing options. A very important contributor to this forum, luvb2b [where have you gone to?], wrote this in a post here:
Second, if you do decide to write puts, I would strongly advise you to consider the very real risk of a strong correction (also called a "crash") in the general market. In my book, that is a scenario that could return TSLA to the $40-50 price level, in which case your puts would cost you 3x or more what you got for them. One way to work with this risk would be to use some of what you get for the puts to buy puts on QQQ, SPY or some other market indicator (QQQ is the one that has the highest correlation with TSLA, but has the disadvantage of a strong sensitivity to one stock - AAPL).
Thirds, the answers to your questions: You can use an options calculator to figure out how much a put would be worth under different scenarios. To get a rough idea of the first scenario you mentioned, you could look at the cost today of 150 puts with about one year to expiry. The one thing that is unpredictable is the volatility that the market will be pricing the TSLA options at in 6 months. Personally, I think it will remain high (i.e. expensive options).
Fourth: 17 months is a loooong time. You will be writing a put which consists solely of time value. You will see that it erodes very slowly, and that there is almost no limit to how different the world and the stock can look in those 17 months. Just think about how different TSLA is now than 17 months ago! There is every reason to think that everything will change in the next 17 months as well. Writing puts is not the easy money it looks like when you have the trading console up.�
Aug 23, 2013
smorgasbord Might I suggest that this thread isn't for you yet? There is a Newbie Options Trading thread which might be a better read for you at this time.�
Aug 23, 2013
Gtoffo Hey guys, here's my situation:
I've got a September Bull Call Spread with strikes at 140$ and 160$. It's actually the first time I try this strategy and since we just surpassed 160$ I was wondering what I should do with those.
Does it make sense to roll the 160$ option upwards? Or should I roll/close both options to bag some profits?
Anyone doing similar strategies?�
Aug 23, 2013
sub i laughed out loud after reading this the day you posted it. I appreciate the help and education. I'm in the learning phase, no where near actually buying or selling an option. My conclusion so far is don't do it! I posted in this thread because I thought the more advanced traders would be in here and they could slap some sense into me.
question, I am currently using scotrade. What are you guys using and what are the benefits if not scottrade including costs? Also, is there a way to setup a "loop" so that scotrade or whatever brokerage you use will purchase and sell a stock at a given strike price multiple times if the price is bouncing above and below? So, for example, if I only wanted to own tesla above $160 because I think it will run, but I want to sell at 159.99 if it drops, then repeat as many times as necessary until stock sticks above $160 and continues up?
im aware of the fees on this and potential small losses on the sale side. Anyone know if this is possible? Looking at advanced orders on scottrade I cant figure out a way for it to repeat after first time. The better way to make this work is a trailing stop after a $160 purchase, sale when it hits stop but that action then triggers a rebuy as the stock passes back by the trailing stop and then the stop moves up again, process repeats. Am I an idiot or living in fantasy world, or both?�
Aug 23, 2013
mershaw2001 gtoffo- If you don't feel like you can see the future, and you don't have a strong feeling about where tesla is going to go before options expiration, your best bet is to do nothing with your spread. Each time you move in and out of it, each time you adjust it, you lose a large amount in bid ask and transaction fees. Each time you second guess yourself you will be eating heavily into your profits. Right now, the time decay on the 160 contract (9 dollars extrinsic) is probably pretty large and that should get eaten away faster than the time decay on the 140 (3 dollars extrinsic). If you can't predict the future, and up is as likely as down as sideways, you can at least be guaranteed that time will pass and your option position will appreciate in value.�
Aug 23, 2013
smorgasbord Actually, there are two reasonable strategies involving BOTH the buying and selling of Puts:
1) Bull Put Spread: Sell a high strike put and buy a low strike put.
For example, you could Sell a TSLA $170 Sept Put for $15.50 and Buy a TSLA $140 Sept Put for $2.60. If TSLA is above $170 next month, you keep the $1290. If TSLA is below $140, you lose $1710 ($3000-$1290).
2) Bear Put Spread: Sell a low strike put and buy a high strike put.
For example, you could Buy a TSLA $160 Sept Put for $9.25 and Sell a TSLA $150 Sept Put for $5.13. If TSLA is below $150 next month, you make $578 ($1000-$422). If TSLA is above $160, you lose the $422 it cost you to get into the position.
Either way, you Buy the Put you think will make you money, and then you Sell the Put you think will expire worthless to finance it. What's nice about these positions in uncertain times is that your risk is limited. What's a bummer is that your reward is similarly limited. But, it's a cheaper way to bet the direction of the stock than just buying a Put or buying a Call.�
Aug 23, 2013
Causalien A bull put spread is best used in a very scary >15% drop. When the premium is highest and you want to limit the potential downside of selling a put.
Bear put spread are more traditional unidirectional bet.I don't usually use it with stocks of low price due to the commission cost. But it is a better option when stock price is high and when combined with a price prediction model. Such as fibs or elliot wave.�
Aug 24, 2013
Gtoffo Thanks for the advise mershaw. I agree the time value on the 160 contact is way high... I guess the stock went up a bit faster than what I had imagined and I'm now getting nervous about a possible pullback. I would hate to see the nice profits I'm sitting on go down the drain because of too much greed....�
Aug 25, 2013
sleepyhead Your Sep 140/160 bull call spread is now worth about $13.50. Your maximum gain will be $20 if stock finishes above $160 and you will lose everything if stock goes below $140. Therefore from this point you can gain another 50% or you can lose up to 100%. Your break even is if the stock finishes at $153.50 on Sep 21.
It is up to you on when to sell, but if TSLA goes up to $170 this week and your spread is worth $16, then I would sell it immediately at that point for sure since the risk is not worth the reward anymore.
How much did you pay for the spread initially? If you paid $6-$7, then I would sell half of it to get all of your initial capital and let the other half ride out for a possible "risk-free" gain.�
Aug 25, 2013
Gtoffo Yes I paid around 6$ for those. I like both of your advices. I will definitely sell if it gets that high and will consider selling half on monday. So you also agree it's better not to roll in any way with this kind of strategy?�
Aug 25, 2013
sleepyhead I don't like the idea of rolling, because if you keep doing it, eventually you are going to lose all of that money when things turn south.
Instead I would cash in some gains and wait for a pullback to establish a new position.�
Aug 25, 2013
Johan Gtoffo: With regards to rolling, whether you're rolling some type of spread or just a simple call or put what you are really doing is just exiting one position and taking up a new position simoultaneusly, right? So if you are selling/exiting your spread because you think it is coming to a point where the risk/reward ratio (for your particular spread) when it comes to waiting for an even higher price in the underlying is not worth it but you think TSLA is still on the rise then it would make sense to roll, if you want continued exposure. If you think TSLA is nearing a short-term peak then of course there is noe sense in rolling, just exit and sit with the cash and wait for a better day to get back in.�
Aug 26, 2013
Gtoffo Well that was fast.....and I don't feel like selling anymore. After all I have 12$ of margin for my position to appreciate thanks to time decay.�
Aug 26, 2013
smorgasbord With TSLA at new (again) all time highs, I've been thinking of doing some hedging on my stock gains. I've sold the calls I purchased and rolled, and so option-wise have only some sold Puts that will expire worthless in the next couple of months (they're in the $30's).
What do you-all recommend for hedging? I've got TSLA stock in 3 different accounts, and so thinking of selling the ones in an IRA to buy back later (no tax implications). But, I'm mostly interesting in what hedging plays I should consider.�
Aug 26, 2013
Gtoffo +1. I'm also trying to find a way to hedge my gains. I've been making fun of the shorts for so long I'm worried karma will bite back if I buy puts.....�
Aug 26, 2013
sleepyhead And 2 hours later your "$12 of margin" went down to $0.25. That is why I said that once your spread reaches $16 of value (or 80% of max gain) that you should be selling it. I looked earlier and you could have gotten just about that $16 price had you sold earlier in the day.
Too much risk for too little reward.�
Aug 26, 2013
Gtoffo Well we are above 165 AH. So to sell those options above 16$ I still have 9$ of margin. At close the spread was worth around 14$ and the day high was slightly above 15$. I was about to pull the trigger on a 16$ LIMIT order but stopped: that 25% extra gain made me greedy... but I still have some time if things go south during Tesla Tuesday (and time is sort of on my side with this strategy).
I sold a chunk of my stock today (was a few minutes slow and missed the top but still averaged out at around 169$)... so I still feel like I capitalized on the run up after all.
So did you buy puts sleepy? I still need to figure out a good way of hedging my stock.... I hate selling it.�
Aug 26, 2013
Jonathan Hewitt He did, he talked about it over in the short term thread.�
Không có nhận xét nào:
Đăng nhận xét