Conservative option strategies, what did you buy or sell today?

[fenders53]

(03-25-2019, 03:50 PM)NilesMike Wrote: I was considering doing an extensive study on TSLA and see if I could just trade the underlying profitably. It does move plenty, anybody watching it that closely?

I used to trade the underlying stock, but not recently.  I preferred shorting it.  I still follow it for entertainment purposes, and to a lesser extent education.  They are going to study this one for decades.  TSLA is outside my risk tolerance so I stopped.  I'd make $3-500 and run scared, leaving big moves on the table.  The stock has been in a fairly reliable trading range for a long time now and it is heavily gambled both shares and options.  The option premiums are nuts.  

I do regret I didn't trade it some the past year because it was easy money if you weren't greedy.  A heavy dose of my opinion but here is why I am pretty sure the old support is not going to hold, at least in the short-term.  

The brilliant lunatic is too unhinged.  Sure he is playing with fire with the SEC and judiciary, but that isn't what concerns me so much.  The monthly (I am being kind) changes in business strategy smell like panic.  I've been following the sales # drama and this QTR could be real bad.  They need to make a real profit some quarter soon or the debt is going to eat them up.  About two years ago they said  they would never discount.  Now they are discounting heavily and they aren't even profitable on an annual basis yet.  I'm not saying they are going BK, but I don't see how they remain at 500% valuation of a normal car manufacturer if they are forced to dilute shares, or dump product and destroy their margins just to pay the notes.  It's the mother of all cult stocks though.  I thought they would be forced to become profitable years ago to survive and clearly they did not.

[crimsonghost747]

(03-25-2019, 03:50 PM)NilesMike Wrote: I was considering doing an extensive study on TSLA and see if I could just trade the underlying profitably. It does move plenty, anybody watching it that closely?

The problem with the whole stock is that literally anything can happen.

First there is the thing that Fender mentioned about a lot of gamblers... both long and short. That definitely sparks up a lot of volatility and results in some pretty crazy moves due to people getting scared. I'd say that with Tesla it's more about psychology than anything else.

Maybe related to the point above... but I see that there is always people digging up bad news. ANYTHING they say or do has a lot of very negative press around it. Again, more volatility, probably done intentionally by some of the bigger shorters. 

Related to the point above. Musk having a twitter account is not a good thing. 

So yeah, it moves plenty but I'd say that those moves are pretty hard to predict as they are mainly due to news/stories or tweets and people over reacting to them. You can't possibly predict when Elon will open his twitter account and send the stock down 5% or 10%. Or maybe someone publishes an article and it does the same thing. 

The company itself isn't too bad, though I am also worried about the changing strategies. They might make it a profitable year in 2019 or 2020... and they certainly are the #1 electric car manufacturer right now but that could change. 

But by all means have a look and give it a try. It's definitely more gambling than investing but gambling can be profitable too.

[fenders53]

Sounds like we mostly agree.  Whether investing or gambling, I think it's best you invest yourself in the story enough to form a base premise.  For me it would be something like this....

-They are the leader in a future tech the world thinks is important.  They do survive in one form or another.  At some point they do not avoid all the "rules" of the auto business.  If automaker or industrial valuation rules were applied at all, they are years from growing into today's price.  Their margin for error is fading fast now that debt demands profitability in the foreseeable future.  For now it still has the aura of crypto-currency in the minds of many.  For now it's my assumption the bad news will dominate the good news for 2019.  They really need to make the international expansion work, and they don't have forever to make that happen.

I say support is not going to hold past the next earnings report.  That doesn't mean this trading game ends.  It just finds a new trading range.  From $200 to 250 perhaps?    This is NOT a long-term hold from this level IMO.  Unless of course you are OK with waiting 5+ years to be even because that scenario is probable if any sort of recession occurs during the next few years.  To my knowledge no car maker has been immune from a recession, ever.  This is not basic transportation for the poor.  It was a rich guys toy, and now they try to be a mainstream car at lower margins.  We are at the wrong end of the economic cycle for TSLA's current finances.

[fenders53]

I'm all in on CVS. I fail to see any significant risk from here. Down on the news of a competitive Centene-Wellmark merger. Sold an APR 18 Strike 52.50 put for $1.30. That's over 2% for three weeks. Expires right before the dividend X date. A lot of analysts are going to be very wrong if CVS is bad from here. CVS already downgraded 2019 outlook. Hopefully they sandbagged it some if they are smart. PE is about 8 in any event. Big debt from merger and very profitable. We'll see how it goes.

[ChadR]

Fenders, did you sell the strike price at 52.50 or 53.50? Can't find the $1.30 price for 52.50 only at 53.50. Like the trade, I think CVS is undervalued currently.

[fenders53]

(03-27-2019, 02:14 PM)ChadR Wrote: Fenders, did you sell the strike price at 52.50 or 53.50?  Can't find the $1.30 price for 52.50 only at 53.50.  Like the trade, I think CVS is undervalued currently.

Yes I sold the 52.50 at about 10A this morning.  I think it topped out at about $1.35 very briefly.  I saw CVS stock was getting hit pre-market.   Got the trade entered then waited for some sign it might stop falling.  I try to resist the temptation to trade right at the open because it's a fool's game so often.  In the end a buck won't matter with CVS.  The option premiums should remain good for CVS for a while.

[fenders53]

A couple more put sales. It was airline stock day. They've been on my watch list for years and I have never owned a share. In fact I own no transports outside of my mutuals.

AAL 18 APR Strike 30.50 for .84

AAL 17 May Strike 30 for 1.33

ALK 17 May Strike 52.50 for 1.55

Those are pretty close to the money as I am trying to get long soon rather than an income play of the month. I can't say that I want to be long 300 shares of airline stocks forever. We'll see how it goes. American DIV is 1.3% and Alaskan is 2.6%

[NilesMike]

Monday I'll try to get $1.00 on 18APR19 NUE 57.50 P

Looking for 1.5% in a week-week and a half.

[fenders53]

Trade deal or not is putting a nice premium on that one.

[NilesMike]

NUE ship has sailed, nowhere near able to get $1.00 today

[crimsonghost747]

This week:
started selling calls against that disastrous WBA position. Very conservative ones but at least I get some income.
BAC covered call

[fenders53]

Not a bad plan, but don't get too close to the money on WBA calls. Yeah the premiums won't be so good. Or be like me and fight to keep shares by rolling calls forward. The stuff I am doing to keep my HD and AAPL shares is a hassle. No money lost yet but a real hassle. BAC should work out for you. I have long shares and constantly straddling it with put and call sales. I got stuck with some overpriced BAC shares via put sale in DEC, but I am squirming out of it just fine because it is less volatile.