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Fallback Thursday – Tesla (TSLA) Down 10% Already – Where Will Reality Strike Next?

Wheee, what a ride!  

Tesla stock hit peak stupidity Tuesday at $550 per share in mid-day action but it finished the day at $530 and, this morning, we're down to $500 after I ranted about it in our Weekly Webinar (we are short TSLA).  No, I don't think I caused it – I think Tesla, having kissed a $100Bn market cap, had a run-in with reality two weeks ahead of an earnings report that will theoretically show them making $150M for the Quarter (though I think they miss), which is still a run rate of $600M for 2020 or 1/166.6 of $100Bn.  

Even if you assume amazing growth on the top and bottom line, it will be 2025 before you could concievably be close to justifying $100Bn – even if every Musk fanboy's wildest fantasies come true.  I REALITY though, there ARE real, live other car companies and real, live other battery companies and real, live other solar panel makers who run real, live businesses with real, live profits and NONE of them come close to the kind of valuations given to TSLA who, so far, have proven to LOSE money in all 3 of those ventures. 

See – I'm still ranting.  These guys just annoy me!  

Related imageI mean, seriously, TSLA is delivering about 100,000 cars in Q4 and about 350,000 cars for the year while Nissan delivers 350,000 cares PER QUARTER – and they are in 5th place in US Sales (where Tesla only sold 36,000 cars as the rest are global sales).  This is part of the problem traders have as they don't differentiate numbers when they hear about Tesla's "amazing" market share.  It's not amazing at all – it's only slightly better than Volvo in the US and, internationally, Volvo kicks their ass!

Yet TSLA is now valued twice as high as all of them, except Toyota (TM) at $200Bn, perhaps because they sell more than 50 TIMES more cars than TSLA in the US and 100 TIMES more cars than TSLA world-wide or maybe it's because TM MAKES $20Bn a year while TSLA loses $1Bn.  JUST the Prius sold 500,00 units in 2019 – mostly to Uber drivers...

Nonetheless, TSLA is just our poster boy for what's wrong with the market these days.  Like the Dot Com Era, people are throwing money at stocks that are seriously overpriced and, ultimately, there will be Hell to pay somewhere along the line

One thing that is very much like 1999 is the very alarming number of IPOs that, like TSLA, don't actually make any money, about 80% of them at this point – rivaling the peak of the Dot Com madness.  We all know how that ended but here are traders, rushing in again, thowing money at all the momentum stocks which, like We Work, are flusing Billions of otherwise productive investment Dollars down the toilet – a process that sows the seeds of economic distruction down the line through a process called Malinvestment.  

Over-priced IPOs usually occur toward the end of a long bull run when stocks in general become very overpriced,” Brad Lamensdorf wrote. “Why does this happen? Generally because investors have lost their sense of reality. They are willing to buy stocks on hyped stories instead of the facts.”

We'll see if TSLA manages to hold the $500 line, that's still a hefty $90Bn valuation for their $1Bn loss vs GM's $50Bn valuation at $35 on $150Bn in sales and $9Bn in profits.  Rember, TSLA is just an example and it's not an IPO, it's a major company now, as is Netflix (NFLX), with a $150Bn valuation on $1.5Bn in earnings (100x) and Amazon (AMZN), with at $930Bn valuation and $10Bn in earnings (93x).  

When there are momentum companies trading at 100 times earnings, it does begin to seem OK to buy companies trading at the relatively low price of 30x earnings but the S&P historical average is 16.5x earnings.  Don't be fooled by the fact that we're still trading below the ONE time in history when people paid more for stocks than they are paying now – that certainly didn't end well…


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  1. Watching Lev Parnas was like watching a mob capo testifying against the mob boss – yeah, we killed that guy's wife and the boss is one who ordered it! 

  2. More about the China deal:

    The problem is few experts think such a phase two is possible. It’s much more likely the US settled because this is all it could get out of China — and for Trump, it was worth it to have something he could brag about ahead of the 2020 election.

    “This is not success, this is Donald Trump’s theater of success,” Matt Gold, a professor in international trade law at Fordham University, told me. That doesn’t mean China and the US won’t talk, or at least make an effort at negotiating. Indeed, the US and China just announced they’re holding semiannual talks to discuss reform and disputes.

    “Guess what?” Gold said. “We had that before Trump, and they were discontinued because of Trump. Almost everything Trump accomplishes is basically solving a problem that Trump created.”

  3. Phil/SQQQ

    Thank you for SQQQ as well as NAK from yesterday's post. For the SQQQ roll you had advised the below

    "~~SQQQ/Pat – Yes as you can salvage the net $1.30 by cashing out the March $20s at $1.75 – that's more than you started with.  Now the trick is you have to re-invest for the next 3 months and pick something sensible that still gives you a nice return, like the June $20s at $2.75 (+$1) or the $18s at $3.50 (+$1.75).  In either case, you are putting up $1-1.75 and waiting for the March $24s (0.80) to expire and, when they do, you can sell the June $24s ($1.75) for hopefully $1+ to recover all or most of your re-investment.  I'm usually willing to pay a bit more to keep in the money each quarter – the extra $1 is just my running insurance cost


    My dumb approach here would have been to load more on the long calls in the hope that when the market pulls down I will be at an advantage with more long calls. But there hope is the investment strategy and most are not able to comprehend that as we loss time, the decreasing time value of the BCS need to be compensated with more market drop. With your plan I will have the flexibility to roll the short calls to even higher strikes if the markets falls down sharply and if not then the short calls expire worthless and a chance to again sell short calls to cover the roll cost. Sorry I am just putting my thoughts here…sometimes it is easier to remember if you practice this way.

    thanks as always


  4. Phil

    As TSLA comes back to reality at what point would you consider bailing on the call spread I bought to hedge my short calls 

    -3 2021 480 calls hedged with

    2 2022 520/660 spreads

    or would it make sense to wait until earnings 


  5. Good Morning!

  6. Was looking at SIG yday incredible premium was going to sell puts guess I missed that one

  7. Morning All! 

    The webinar replay is now available!

  8. Reviewing Butterfly portfolio comments from yesterday. Is WHR good for new entry to start butterfly play with a Jan 22 $120/ 160 BCS?

  9. Also was confused as to what you would recommend for new AAPL Butterfly entry? of course with smaller size positions ????

  10. Phil/SIG

    What do you do when a stock runs away from you?  Do you just let it go?  I have 400 shares of SIG at $17 covered with 2 Jan’20 $19 calls ($3) and 2 Apr.16 $16 calls ($4),  4 Jan’21 $13 puts ($4.59).  What’s a move I can make to stay in SIG.  Pays nearly a 7% dividend.  Thanks.

  11. Shorted some SIG at $29.54.  Only risking $1.

  12. SIG – Covereed 1/2.  Stops to entry.

  13. Phil-I have a KEEPER play from last year. SIG-20x 2021 13.00(15.50)/(22.50(9.75).BCS. with the stock running up so fast, not sure what to do if anything.I was thinging of rolling longs to 2022.

  14. SIG smoking up 7$!!!!

  15. Sig has a horrendous short squeeze going on about of the a third of the shares and 11 days to cover. Similar to to BYND. Happens over and over again. Talk about quick trades being set up almost like it is coordinated!

  16. Good morning!  


    Washington Post
    White House hold on Ukraine aid violated federal law, congressional watchdog says
    The GAO decision comes as the Senate prepares for the impeachment … Last month, the Democratic-controlled House impeached Trump on …
    10 mins ago

    Will this matter?  The GOP is playing right into the Dems' hands as they know Trump won't be impeached but every single Congressman and Senator who votes in this sham is going to be on the defense in this election cycle.  As has been illustrated, it doesn't matter much who's President if the other party controls both houses.  

    Big Chart – Yawn.  Another day another record high.

    Image result for eeyore animated gif

    $38Bn/StJ – What happened to $200Bn?

    Great quote, StJ:

    “Guess what?” Gold said. “We had that before Trump, and they were discontinued because of Trump. Almost everything Trump accomplishes is basically solving a problem that Trump created.

    Sums up the last 3 years very nicely…

    You're welcome Pat.  Unfortunately, that's why it takes 10,000 hours to become an expert.  It's not just the practice or the technique but you need actual experience before you can internalize things like that but, once you do – they become intuitive.  

    TSLA/Coulter – I think that's a perfectly good position as 3 of the 2021 $480s are $103 ($30,900) and the 2022 $520 ($120)/660 ($73) bull call spread is net $47 ($9,400) so you should do very well if TSLA stays down so why give up the protection?  The net delta on the 2022 spread is just 0.17 so you don't lose 10% ($1,000) unless there's a $30 drop, while you'd pick up about $6,000 on the short calls (delta 0.63) PLUS the time decay, which is 2x your longs.   Of course, if you are now ahead or even and feel lucky they pulled back from $550, why risk 3 short into earnings, maybe cut back to 2?  

    SIG/Bert – That's the annoying thing with our system, sometimes things take off before we can build a bigger position.

    WHR/Millard – Yep, I still like them.  Nice and boring. 

    AAPL/Millard – Well, since you asked, as a Butterfly Play, I'd start with:

    • Buy 10 AAPL June 2022 $280 calls at $70 ($70,000)
    • Sell 10 AAPL June 2022 $360 calls at $35 ($35,000) 
    • Sell 5 AAPL June 20222 $250 puts at $20 ($10,000) 
    • Sell 4 AAPL April $320 calls at $14.50 ($5,800)

    That's net $19,200 to start and you are collecting $5,800 for your first quarter with 9 quarters to go so potentially $52,200 in premium sales against your $19,200 position means you can make $33,000 (171%) while waiting to see if your $80,000 spread ends up in the money.  That's a good way to start and then we make adjustments accordingly…

    SIG/DC – As I said above, that's kind of annoying but, if you want to stay in, I'd sell the stock at $30 ($12,000) and roll the Jan $19s at $10.50 ($2,100) and the April $16s at $13.50 ($2,700) to 10 short July $30s at $5.20 ($5,200) and buy back the 2021 $13 puts for $1 ($400) and cover it with 15 2022 $20 ($13)/35 ($7) bull call spreads at $6 ($9,000) and sell 5 2022 $20 puts for $5 ($2,500) so that's net $5,500 off the table (about what you paid in) and you have a $22,500 spread with a worst-case to the downside scenario that you own 500 shares again at $20.  If SIG goes higher, you should be prepared to buy another 15 longs and DD on the short calls (at higher strikes) but the $22,500 in the money should cushion that blow nicely.  

    Good way to make quick money, Albo.  Was a very logical rejection – even if it was going higher.  

  17. /NG with a nice little pop on inventory (not our premise but we'll take it):

    Natural gas inventory draw tops estimates

  18. SIG — Stopped out of remaining stock.  Fun trade.  Overall a small profit.  May try again.

  19. This is very interesting considering China has agreed to buy Soybeans, Cotton and Wheat is much greater quantities:

  20. What about a new Butterfly on WHR?

  21. Pat, Phil/practice – Very true. I've been studying karate-type martial arts for nigh on 50 years now. When I'm sparring, my partners, even the speedy high school kids, tell me I'm really fast, but they're wrong – I'm 74 years old fer cryin out loud! It's that I've been learning martial arts long enough that I usually have a pretty good idea what move my partner is about to do, and my moves are so ingrained that I don't need to think about it. Not really that fast.

  22. GDP up 6%-plus in 2019: experts

  23. Germany agrees timeline, compensation for coal phase-out

  24. Ukraine Investigates Reports of Surveillance of Marie Yovanovitch

  25. Fast/Snow – Well, you have my respect.  I rode a bike 5 miles on Tuesday and I could barely walk yesterday! 

    WHR/Millard – Not as exciting as AAPL but:

    • Buy 10 WHR 2022 $130 calls for $36 ($36,000) 
    • Sell 10 WHR 2022 $160 calls for $22 ($22,000) 
    • Sell 5 WHR 2022 $125 puts for $16 ($8,000)
    • Sell 5 WHR March $150 calls for $8.50 ($4,250) 
    • Sell 5 WHR March $140 puts for $2.80 ($1,400) 

    The net of the initial position is just $350 and you're collecting $5,650 in the first of 8 quarters so about $35,000 in potential collections while you wait and it's a pretty agnostic spread – just looking to roll the losing puts or calls out to June whatevers and, hopefully, we hit the middle of the zone a few times along the way.

  26. Dividend Portfolio Review:  $126,233 (up 26.2%) is up a lovely $9,211 from our 12/18 review – who says dividend stocks are boring?  Best of all, we didn't touch a thing – we just collected a couple of additional dividend pay-outs but, otherwise, it's a full portfolio and we have no reason to touch it – though I am tempted to add more SKT down here….

    Image result for need more cowbell animated gif

    So far, we've collected $756 on M, $500 on NLY, $370 on SIG, $520 on T, $420 on MO and $355 on SKT – that's $2,921 in our first quarter with 3 more positions to pay ($485/CHL, $300/ETP & $150/F) but already 2.9% of $100,000 in a quarter alone is far better than we'd do in a bank!  

  27. Have to unwind GILD spread by tomorrow:

    10 Jan $60calls $3.30 ($15.77)

    -10 Jan $75 calls $.01 ($11.38)

    Also have:

    10 GILD '21 $55 ($12.32) 

    -10 GILD '21 $70 ($7.88)

    -10 GILD '21$60 puts ($8.23)

    Assuming I would just sell the long '20 GILD $60calls  but as GILD Is low, is it worth adding any long calls or selling puts at the same time?


  28. This Is How Bernie Wins

  29. Phil, sorry to chip in there Just asking if it would not be wiser to see what gives with AAPL after 1/28. Re WHR seem to always have a range between 140 to 155 even 160. Is the stock not a bit to high to start a new play?

  30. Am closing out my 30 '21 AAPL $200/$240 bcs as advised, to collect $34 points and have bought back the short calls at $86. Have longs on sale for $120.

    Now wondering if I should try selling some short term calls instead of all the '21 longs. Or I could roll my short 10 March '20 $220 and 10 June $270 calls to 30 '20 $270s as you suggested earlier, and hang on to 10, or more of the long '21 $200s. I see the value of repeatedly selling shorter term calls against the long term longs but I can't do that AND sell the long term calls at the same time (no portfolio mgn). 

    Also have 30 Jan'22 $270calls ($65) and 15 Jan'22 $240calls ($84.7)

    Realize that AAPL may move after 1/28 but feel I should lock in some premium while it is in this range, and if they are short term then I could roll them out if it goes up. Suggestions?


  31. Earnings Portfolio Review:  $110,470 (+10.5%) is up a nice $7,755 from our last review and we've used almost no cash and little margin – so miles of room to play.  Let's just make sure we still like what we have as we move into our 2nd earnings season.  

    • HBI – Right where we started so good for a new trade and I fully expect to collect the remaining $2,485.  
    • ACB – Not much action and back to where we added more in late December.  I am confident we'll end up with the full $3,000 and now net $935 so $2,065 (220%) upside potential PLUS we can roll the short calls AND the short puts for another $2,000 and all ACB has to do is get back to $3 – but that is $3Bn  and they are running $400M in annual revenues but did make $12.7M last Q so – potential!  

    • CLF – On track for the full $10,000 and currently net $2,285 so $7,715 (337%) upside potential certainly makes them worth keeping or even good for a new trade – even if you did miss the first $1,335 in gains!
    • HRB – Pretty new but already making money as we timed it perfectly.  Potential is $6,000 and we're at $2,949 so $3,051 is a good double from here and we only have to wait until July and it's 100% in the money already.  Don't you just love option spreads?!?


    • IMAX – I just picked it as a Top Trade Alert yesterday so good for a new trade too.  It's an $8,000 spread and currently net $2,912 so $5,088 (174%) to be gained by June will make it a lot easier to swallow the next time I have to fork out $20 for a ticket.  

    • IRBT – We got a huge bargain on the 2022 $40 calls when it was gapping down in October.  That's the value of a Watch List as we jumped on them as soon as we read that earnings report and decided it was an over-reaction.  Even though we're already up $7,225, it's a $25,000 spread at net $5,875 so huge $19,125 (325%) upside potential and I feel very good about hitting it.  

    • M – You know how much I love M!  We're up a bit already and it's a $3,000 rollable spread (so maybe $6,000 potential) at net $2,777 and we'll certainly add more longs and roll the short calls but first I'd like to see earnings before putting more money down at these prices (we entered at net $1,300, so already more than a double).  Not an accident that I'm not counting on more money from this unadjusted spread.  

    • SQQQ – Why do we keep hedging?  They never work!  Actually, it's not to bad as we're only down $100 overall but it will get worse if we don't salvage our longs and roll our short puts.  So, we'll roll the 10 March $25 short puts at $5.70 ($5,700) to 15 June $22 puts at $4.20 ($6,300) and we'll put a stop on the 20 short March $27 calls at 0.80 and we'll roll our 20 June $20 calls at $2.50 ($5,000) to 30 2021 $20 ($4.20)/30 ($2.50) bull call spreads at $2.10 ($6,300) so it's net $700 for the immediate adjustment and we'll spend no more than $1,600 buying back the short March $27 calls but we'll leave the 20 short June $27 calls to hang as were 50% over-covered.  It's a $30,000 spread that's good protection tying up about $5,600 and figure we lose $4,000 if the market keeps going up.


    By the way, we don't need to always roll the puts.  We could roll $6,300 worth of SQQQ puts to 5 AAPL 2022 $225 puts at $12.50 ($6,250) or whatever we decide we'd REALLY like to own if the market does tank.  But, for now, there's nothing wrong with owning 1,500 SQQQ at $22 as we could sell the 2022 $19 calls for $7.50 and drop our net to $14.50 ($21,750) and that would still be $6,750 of protection at $19. 

    • WFC – That one still has that new trade smell but it already popped and made us $1,370 for the week and I'm pretty confident they can't take back $50 but not enough to put it in green.   Our potential is $2,500 and the net is currently $1,825 so I really don't see the point of risking it just to make $675 more so let's cash out.


    So there's $39,529 to be gained in our longs against a $4,000 loss on the hedge if all goes according to plan.  Not that it ever does, but it's good to have a plan so you know whether you are on track or not, right?  It's important to know what to expect from each of your positions and to make sure that your expectations remain realistic as we get more reports and learn more about each stock along the way.  

    Since these are mostly on track – I might be willing to take a few more chances this quarter (we've been very conservative so far) as we have this relatively safe backstop of $20,000+ coming to us this year.  

  32. GILD/Wing – I guess you can see why I lean towards being conservative on my spreads.  $75 was a pretty unrealistic goal and you are very lucky there's $3.50 left on your Jan $60 calls – as you passed up several chances to take a non-greedy exit as they topped out over and over again at $67.50.   

    Obviously, you have to cash those in and obviously you keep waiting and hoping (not a valid investing strategy) that it will go up and not down.  I think GILD is good long-term and I sure wouldn't buy back the 2021 $70s for $3 and the $60 puts should be OK so I'd take the $3.50 and invest it in rolling the 10 2021 $55 calls at $10.50 ($10,500) to the 2022 $50 calls at $15 ($15,000) and I'd sell 5 March $65 calls for $1.60 ($800) so net $200 drops your longs $5,000 lower with another year to make gains and sales and, for the first 3 months out of 24 to sell, you pick up $800 – on the way to $6,400 if you keep selling each Q while you wait to see if your $20,000 spread pays off.  

    AAPL/Yodi – I think there's good earnings premium in those options now so I'd rather capture it.  As to WHR, it's not where I'd jump in, of course, but he asked as a new play now and the Butterfly Plays aren't really that sensitive – as long as you are generally in a 10% range.  

    AAPL/Wing – The AAPL spread above is very, very nice – I'd aim for that kind of set-up.  I don't feel the shorter-term calls offer enough protection with AAPL this high in (over) the channel.  If you are not allowed to sell uncovered calls then I guess you can sell less of the LEAP calls but I'd be very careful with that as you can get hurt badly on a big drop.  If you are saying you have 45 uncovered calls worth $360,000 and you are wondering what to do into earnings – I'd say cash in at the all-time high and AFTER earnings look for a good set-up, rather than risk a Tesla on the results.  

  33. GILD sure looks like it would make a nice butterfly play.  Thoughts?

  34. Hemp Boca Portfolio Review:  $59,115 (+18.2%) is up a very nice $6,355 in our completely untouched portfolio since our last review.  In fact, we haven't touched this since November as I didn't want to rock the boat into the holidays and then we went to Thailand and the show is off for Jan as we're still working full-time on that project.  So no changes but things look good:

    • TAP – We picked a good bottom and it's rocketing higher now so I'm very much believing we'll get our full $20,000 and currently net $7,850 is already up $2,650 but another $12,150 (154%) left to gain at $60+ is still very exciting – especially for a $50,000 portfolio!   And that's only the end of this year….

    • IMAX – How can you not love these guys?  Here's a spread from back in July and, although they are just plodding along, the magic of premium decay works for us (the House) and it looks like we'll expire tomorrow just about where we planned but, sadly, that's already baked into the $2,830 gains (out of a potential $3,330).  

    • M – See how consistent I am in my value plays?  I don't need 6,500 stocks (there used to be 9,000+) when I have a few dozen I can play over and over again.  That's because we don't need them to go higher to make money – flat is fine, down a bit is fine too!  We jumped in on the Nov dip and it's a $10,500 spread that we paid $725 for and now it's net $3,112 so already up $2,387 (329%) but another $7,388 (237%) more to go and we're right on track.  

    • MJ – Signs of life?  This killed our gains last year with a $9,000 loss and I doubt we get that back but the new spread is $14,000 and we only need to get to $22 and that's currently net $150 so great for a new trade with $13,850 (9,233%) left to gain.  

    • THC – Another one I will buy over and over and over again when it's low in the channel because traders are idiots and over-react and have no patience.  Very high in the channel now but we are 200% in the money at net $5,637 out of a potential $7,000 so $1,363 (24%) is very boring for a year and we'll probably kill this on the next show.  

    So $33,388 is about 66.6% to be gained on the $50,000 portfolio over the next two years and that's pretty respectable for a low-touch portfolio.  

  35. GILD/Palotay – You're right, they'd be great.  Remind me when they stop dropping.   Earnings are 2/5ish but if they hit $62, I'd be ready to sell puts and buy calls.  

  36. Phil to labor the AAPL more what would you do today with 300 AAPL stock bought @ 152.00

    sell or hold, but certainly not for the div.????

  37. Money Talk Portfolio Review:  $105,130 (+5.1%) is good as we only just started it in November and only put in 3 plays because I didn't want to risk all the uncertainty into this month but we'll add more in Feb, next time I'm on the show.  This is another no-touch portfolio between appearances.  

    I know it seems very boring when we start these things but adding 3 plays per Q is PLENTY and we did it in the last MTP and that ended up gaining well over 100% in 2 years.

    • SPWR – I expect to get the full remaining $2,650 from my favorite solar stock.  This would make a good short to pay for an SQQQ hedge.  

    • GOLD – Already over our goal but just showing net $3,550 of our $12,000 potential so $8,445 (237%) left to gain is still a nice return on our Trade of the Year, though we're already up $2,875 (425%) from our $675 entry!  

    • IBM – Last year's Trade of the Year so I'm super-confident in this one too and we're already about at the money.  Net $1,340 is already up $1,800 (391%) from our $460 credit entry (aggressive put sales) but  that's still $14,660 (1,094%) left to gain in this no-brainer of a trade.  

    So these were the 3 trades I was most confident in back on 11/14, when I did the show.  I was very worried about the holidays with Trade War and Impeachment still up in the air so I was very conservative but still, the potential (aside from the $5,130 we already gained) is for another $25,755 left to gain on just these 3 stocks

    You don't have to play risky or even play often – just play sensible!  

  38. AAPL/Yodi – Well it's tying up $94,000 and what are your dreams?  $400?  That's another $26,000.  You could cash in and pick up 6 June 2022 $250 ($87)/350 ($37) bull call spreads at $50 ($30,000) and sell 3 of the June 2022 $250 puts for $20 ($10,000) and that's net $20,000 on the $60,000 spread so $40,000 upside at just $350 and your worst case is being re-assigned 300 at $250 ($75,000) but you still have $74,000 in your pocket from the cash out.  So no real risk other than missing out on a 20% drop and AAPL would have to be at $450 for you to make $40,000 on 300 shares so I can't imagine any possible way that's not better than holding the stock – not to mention you have $74,000 to play with while you wait.  

    Also, for me, I'd sell 2 April $320s for $13.75 ($2,750) as that's 92 out of 883 days you have to sell so that's another $25,000 in sales you can make along the way and worst case is they go up a lot and you buy 4 more longs and roll to 2x (4/10) on the short calls.  

  39. Thanks Phil I guess that was the same thought than you mentioned above, as I am traying to roll some Jan 21 BCS to Jun 22 but no takers. I will advise.

  40. You have to have patience on those June fills, Yodi, they are not too popular yet.  

  41. By the way, that's why I stick to $250s, $300s and $350s – they are more popular than the in-between strikes.  

  42. /NG collapsed after that morning pop, not sure why.  Good chance to get in again but let's wait for them to stop going down. 


  43. Oh damn, it's a holiday weekend – we should have played /RB long on the dip!

    Markets are closed on Monday.  

  44. Having four different Jun 22 vertical plays on AAPL even on par or on the price offered they do not fill!!!

  45. Oh you have to leg in.  I very much doubt a vertical will fill with those spreads. 

  46. Oops, 3 already?  Today flew by.  

    I have to go to a meeting, will check in later.  

  47. Regards from the Cannaregio Sestiere in Venice, we will stay for an in deep visit (my wife is Art historian) without tourist masses for 2 weeks, so I will connect here and there.

    Chinese buy of agricultural U.S.products doesn´t make sense for them, CBOE commands prices in the world of commodities (CBOE+freight is the rule), so they keep the pressure on prices by buying less U.S products, the price reduction affects the whole world so they buy also cheaper the Brazilian or Argentinian soy.

    TSLA, I agree that others design things, let´s say rockets, Space X showed the rags and misery of them, others were doing credit card transactions until Pay pal create a new way, others fabricate cars, well, let´s see what can happen, analyzing TSLA financial data you analyze the past (which in Tesla case is quite impressive anyway), cyber truck, for example, showed something radical that no other with thousands of designers, engineers, and millions of computer hours create, same can be said of Boring company, solar, etc, will he be successful? perhaps not, in all the ventures but if his team is able to crack the nut with their cars…well all the financial result is already discounted

    Having CD´s paying 1% or german bonds with negative rates creates a "logic explanation" for 100 P/E´s, what I don´t see here are scenarios, what if… 

  48. Legging in I always lose on this.

  49. Advill- I have said before that Musk is a genius and a huckster. We need people like him to push the envelope. While I admire his accomplishments (note that all the critics sit on their hands) I know his ventures are fraught with risk so I stay away. 

    As to "what if". The mantra I hear most from data centric bulls is that the S&P earnings yield exceeds Treasuries (5.7% vs. 2% +/-) . In other words, there is no alternative (TINA). Lots of potential flaws in that scenario but since this time is different the drill is to continue to buy the dip and carry on upward. 

  50. Phil, two comments one, one perspective and another an aside…

    The Corn/Soybean/Wheat complex didn't pop because better news was already baked in.  My main income comes from exporting grains to secondary markets (not China) … the market is generally firm because we have demand in the market but it was a classic case of "buy the rumor, sell the fact" … 

    Otherwise….on NLY somebody cashed the `22 calls I had sold against to poach the dividend, my stock got called away pre-dividend, I wasn't watching it because I assumed the time-value was just too big for anyone to do that, but it happened!  I guess it's something to watch.  I have my NLY Put sell still on but that's it.

  51. Albo/TSLA

    Agree with you that any possible "breakthrough" is already discounted, my point basically is that we have been complaining during a yer about TSLA meanwhile it went from $250 to $500 against "all logic", I agree that in the short term is difficult to assume a position….perhaps is a self complaining.

  52. Sorry,,,,PSTAS.

  53. Yet another pop higher after the close.  Dow hit 29,317, /ES 3,318, /NQ 9,158.  These numbers have no meaning anymore.  

    Venice/Advill – Very nice.  Gotta see it before it sinks!  I love sculptures and Venice is such a good city for that.  True on Ags, they can set off a Global inflationary wave that will be hard to contain.  DBA might be interesting to play:

    As to TSLA, there's a difference between being innovative and being profitable.  Just ask Delorean – or Alpha Romeo, for that matter.  AAPL is a truly amazing company that combined design excellence with manufacturing superiority and that's the fantasy Musk is projecting but, so far, he's proven none of that.  

    Musk first claimed TSLA's would be level-5 autonomous in 2017 and he took money from his customers for self-driving tech that they've never been able to use. Every year since he says it will be ready by the end of the year and still no and TSLA, don't forget, is the ONLY company not using LiDAR and many engineers think that's a completely insane approach to self-driving.  What it is is cheaper, so Musk makes a very nice profit selling self-driving tech that may never be certified.

    Fanboys, like the link above, can argue Musk's approach is superior but it's old, cheap and not patented but NOT ONE car company in 5 years has "seen the light" and gone with Musk's 3-system approach.  The very best non-Tesla engineers in the World are all betting Billions that he's completely nuts…

    Space X is still not TSLA and no money from Space X will go to TSLA.  They raised $1Bn last year and probably burned through it so we'll see how things go there.   Solar City did 29 megawatts in Q2, down from 272Mw in Q4 of 2015 – so it's hard to see the genius there since he bought SCTY ($2.6Bn) in 2016 so it's not like they haven't had time to turn it around.   Remember the solar roof tiles he promised (and displayed)?  3 years later – still not really available.  

    The Gigafactory has also been disappointing so far and you never hear that from TSLA but it's been admitted by their partners at Panasonic – who don't do dog and pony shows for earnings reports.  You would think having a customer like TSLA would make the factory profitable but still no profits as of Q3.

    "We are quickly ramping up battery production (at the Gigafactory joint venture with Tesla), but improvements in production efficiency have been delayed," Chief Financial Officer Hirokazu Umeda said at an earnings briefing on Thursday. 

    But Umeda said the joint venture is still aiming to make start making profits at least on a monthly basis, by the end of the financial year on March 31. "Tesla posted profits in the latest earnings and that's positive for us."

    Interestingly, a recent report stated that the Tesla-Panasonic relationship has hit some hard times. The two companies are reportedly arguing over the cost of the cells, investments into the joint factory, and having a “culture clash.”

    I noted when they popped $320 (old range top) that TSLA was too dangerous to short as they do have a lot of positive stories to spin but, at $500, I have to put my foot down again and say there's not enough BS in the World to cover a $100Bn price tag.

    Submitted on 2019/10/11 at 3:33 pm

    TSLA/Palotay – I would be more worried if the overall market wasn't pushing back to highs.  In a forgiving mood, I think and I don't see how revenues can be that far off with deliveries up plus Musk can do fun stuff like order $1Bn worth of batteries from Solar City and book that revenue but then not bill TSLA until next Q so it's all profit and no cost on  the books.  Once people start to pick those threads apart – THEN the clock starts ticking.

    Submitted on 2019/10/24 at 11:09 am

    TSLA/Palotay – CapEx is less than 5% – that's completely unsustainable for an auto company and makes no sense for a company that is growing – they must have moved all sorts of things into Q4. 

    Submitted on 2019/10/28 at 10:52 am

    TSLA/StJ – Massive PR push over the weekend, they are throwing everything at keeping the momentum going which means this Q is probably a one-off.  I wouldn't be surprised if Musk asks for money again – despite the fact they "don't need it" per their books.

    Submitted on 2019/12/10 at 9:34 pm

    SLA/Batman – You know it's dangerous, right?  I agree with the premise but be very aware TSLA could pop 20% in a month very easily (or drop 20% too) and that would be $425 so make sure it's nothing you won't be comfortable doing a 2x roll on and spending a year working out.  Also, as silly as it may seem – TM is a $201Bn company with about $300Bn in sales and $19Bn in profits and TSLA has $24Bn in sales and no profit but what if someone at TM decides they could squeeze 10% out of TSLA?  And don't forget, TSLA is not just a car company – they have the battery company and the solar company so maybe TM buys the cars for $15Bn and GE buys the batteries and solar for $15Bn and TSLA gets bought out at $420 (Musk's prediction) – then you are F'd.  Not at all likely but not impossible. 


    TSLA/Stock – They are great cars, it's just that the company isn't set up to be profitable making them.   Musk has raised over $20Bn and has generated $10Bn in negative cash-flow with $14Bn in debt and, the last 4 Qs were -$702M, -$408M, +$143M & -$827M so net -$1.8Bn in the last 4Qs on $24Bn in sales while Ferrari (RACE), for example, also makes a cool car with just $3.4Bn in sales last year but $800M in profits.

    I wouldn't buy RACE either for $165 (37x earnings) but at least they make money!  When we're down to just one company in the World – I don't think it will be TSLA.

    TSLA/Advill – The car and the market have nothing to do with whether Tesla, THE COMPANY, will make money.  Lots of great products don't make great profits and being first and even being best doesn't make it that way.   As Yodi notes, the average person isn't going to get an electric car until they are sure it performs as well as a gas one – that will take many years and will require a lot of infrastructure that hasn't been built yet.  Yes, TSLA has 17% of the global EV market and, in the US, there are 1.2M EVs now on the road– but that's out of 272M cars – 0.5% so 17% of 0.5% is not even 0.1% of all cars – of course they can have "explosive" growth when the number is that low to start.

    Meanwhile, the guys who sell 10M cars a year can flip a switch on a production line and completely crush TSLA's economies of scale in 90 days – once they decide it's worth it which – so far – they have not.

    DDD had a similar lead in 3D printing 10 years ago and the market was growing and they were dominating and 3D printing is indeed the Future but DDD is an also-ran already as later companies crushed them.  They are still around and still in the game – but not the winner they seemed like they'd be.


    Submitted on 2019/12/20 at 10:19 am

    TSLA/Maya – Game has changed, they are on our "Stocks of the Future" list now.  The car thing may not make money but the battery business is going well and I think their solar roof biz may take off too as CA is only the first state to mandate solar roofs on new construction so rich people will all want TSLA's new solar tiles – as it looks 1,000% better.  

    TSLA/JMD – See yesterday's comments from the Short-Term Portfolio.  If our position on TLSA wasn't mostly bullish (with a large short-put position), we would have gotten really screwed on this run up.

    TSLA/Palotay – Not nec. financially but a lot of excitement about their new battery tech makes me think they may do well in the future.  They just got a 93Mw order from Alaska using their new Mega Pack model after just finishing a 100Mw project in Australia ($66M) which the customer says has already saved them $28Mand TSLA promised to have it up and running in 100 days and they did.  Now Australia is asking for another 250Mw and this can all spread globally for TSLA very quickly.  

    Using Megapack, Tesla can deploy an emissions-free 250 MW, 1 GWh power plant in less than three months on a three-acre footprint — four times faster than a traditional fossil fuel power plant of that size. Megapack can also be DC-connected directly to solar, creating seamless renewable energy plants.

    That's the future baby!  


    TSLA/Palotay – I have simply come to respect their ability to ride things out and their battery business may save the company.  I certainly don't trust Musk so I still won't go long and the multiple is obscene but I am mostly saying why I wouldn't short them – despite the issues you raise (which are obvious and we've been talking about them for years yet, like Trump's many, many crimes – they don't seem to matter).

    You are right about Solar, SCTY was the leader by a mile and now, inside TSLA, they have slipped to 3rd place but I believe they are purposely restructuring and halted sales this year but, again, with Musk you never know what to believe.  Commodity or not – they are going to sell a lot of panels under the new law and commodity producers make money too.

    Image result for tesla solar roof sales competition

    If you want to be bearish on TSLA, I'd be way more worried about this chart:

    Image result for tesla solar roof sales competition

    Not much competition there. 

    Image result for tesla battery sales by quarter

    Image result for tesla battery sales by quarter

    Again, I'm not telling people to buy TSLA, just saying a bullish case can be made and stating what it is – in order to warn people not to short it either.

    Submitted on 2020/01/08 at 1:57 am

    TSLA/Palotay – Yes, that small float let's them manipulate the Hell out of the stock, unfortunately.  They did the same thing at the start of 2017, running from $180 at Thanksgiving to $380 (+111%) in June with barely a pause.  This run started at $210 in Aug and now $470 (+123%) but $100 of it came on two days in October and the last $70 came in the past 5 sessions so it's very unlikely there's a strong base to support it.

    As to "what if" – Yes, money has nowhere else to go but equities but what a catastrophe for equities when that changes.  Timing your exit to the exact top of the market is very tricky (see March 2000) and obviously we are playing along but I keep reminding people to keep one hand firmly on the exit – just in case…

    Image result for chicken little animated gif sky falling

    Related image

    Grains/Bent – Thanks.  No biggy on NLY, you keep the money you sold the calls for and, at $9.65, the 2022 $10 calls are 0.33 and the dividend is only 0.25, so I'd rather sell the call and get called away at $10 than collect the dividend anyway.  I guess you must have sold the $7s though, if you got called and those are stupidly cheap at $2.65 (no premium).  

    Rather than buy the stock again, you can just sell the NLY 2022 $10 puts for $1.85 as that's net $8.15 if assigned (15% discount) and $1.85 in your pocket now is just 0.15 less than 2 year's worth of dividends.  

  54. Hi Winston good morning from sunny Spain to rainy England!

    But I like to show you the progress on Your play idea in reference to AAPL ONLY on paper trade. Looks like on a up market things looking good, but how will it look on a down market. Possible we will see a dip after 1/28

    Option Code    Exp    Strike    Type    Qty    Trade Price    Mark    Mark Value
    AAPL200221C310    21-Feb-20    310    CALL    -1    13.65    14.4095452    ($1,440.95)
    AAPL200221P310    21-Feb-20    310    PUT    -1    11.15    9.05956471    ($905.96)
    AAPL220617C260    17-Jun-22    260    CALL    1    80.65    82.7923882    $8,279.24
    AAPL220617P260    17-Jun-22    260    PUT    -1    23.7    23.12643707    ($2,312.64)