Buy Dec21 TSLA Puts - Redux

Quote from FXforex:

Buy Dec21 TSLA Puts - Redux

More info on Tuesday or Wednesday. My previous TSLA thread from last week: TSLA 130 weekly put at $0.55

:)
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Is this going to be a weekly thread until you finally get one right?

I have no opinion on TSLA, but I wouldn't want to be shorting any stock that hedgies are overweight into the end of the year. Especially not one with low float and obscene option premiums.
 
Quote from FXforex:
  • TSLA at $147.30
  • Bought 3 contracts Dec 21, 2013 140 Puts at $0.32
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Any comments from the peanut gallery about this trade? :)
 
Quote from cdcaveman:

start quantitative trading.. give this up...
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or at least go to ATM strikes 10x multiplier options on some other popular stocks so you at least have a chance of intrinsic value at expiry.

:)
 
Quote from scriabinop23:

or at least go to ATM strikes 10x multiplier options on some other popular stocks so you at least have a chance of intrinsic value at expiry.

:)
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There's nothing quantitative about that either.. a "chance" ... You buy or sell an option based on a model of what it should be priced at.. That model is derived from some quantitative study.. ATM is no different then OTM .. They are all priced on a future distribution of prices in which most times , or on average , over the long term you will not make money..

You have to create some measure in which to price the options against.. Even if thats a directional backtested strategy in which you use options to limit risk and change the risk reward profile of the strategy.. Although even then if you don't have your on volatility assumption as well , you can be right on direction and still lose..
 
Quote from cdcaveman:

There's nothing quantitative about that either.. a "chance" ... You buy or sell an option based on a model of what it should be priced at.. That model is derived from some quantitative study.. ATM is no different then OTM .. They are all priced on a future distribution of prices in which most times , or on average , over the long term you will not make money..

You have to create some measure in which to price the options against.. Even if thats a directional backtested strategy in which you use options to limit risk and change the risk reward profile of the strategy.. Although even then if you don't have your on volatility assumption as well , you can be right on direction and still lose..
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ATM is different than OTM. By going so far OTM on such time horizon, he's defining his probability of success from the get go, regardless if he has a system or not. As it stands he's posting long shots.

Let's take an implied vol of 50% annualized, or 4.4% standard deviation on a 2-day basis. By taking a a 148/140, you are betting on a 5.4% drop just to get you to intrinsic. More importantly you need it to happen quickly and with force.

Off the top of my head, you have a little more than ~86% of the distribution above you (so p(success) < 14%). From the get go. And your odds are probably a tad worse than that, as market makers need to stay in business.

So with these bets, I expect you to be correct no more than one out of seven posts. Most people don't have the patience to stick with far shot betting. So I expect to see confidence through these losses.

And when you win, you'll need to have >700% payoffs.

It's another matter of trading farshots on day 1 of weeklies and closing on day 2. Then you're just replicating directional exposure with the cost of theta (and vega risk).
 
I don't know how the table below will paste well. My apologies if they don't. I'm new to this forum, but in the previous thread "TSLA 130 weekly put at $0.55" by FXForex I offered (before market, but the post lagged until 12-18-13 12:28 PM) that a Victory Spread (long ratio diagonal) was available at a great price of net credit of $82 selling 1 x TSLA 147 Dec13 monthly call and buying 3 x 160 DecWk4 calls the next week. I did 10 of these spreads and as you can see below netted $1200. With little to no risk. Recall that if it went down more I still would have received the $820 or so. I thought this was a good time to exit since TSLA was at 143 or so. Seems like a less risky way to play than short term directional (puts or calls) or non-directional (straddle/strangle). If it would have gone up this trade would be unlimited profit.

Trade Date Indicator Action Symbol/Desc Qty Price Commission Net Amount Gain Loss
12/19/2013 O BTC TSLA Dec13 147 Call 6 $0.68 $4.50 ($412.69)
12/19/2013 O BTC TSLA Dec13 147 Call 4 $0.69 $5.25 ($281.38)
12/18/2013 O STO TSLA Dec13 147 Call 10 $6.13 $12.50 $6,117.07 5,423.00
12/19/2013 O STC TSLA DecWk4 160 Call 18 $0.38 $13.50 $669.93
12/19/2013 O STC TSLA DecWk4 160 Call 12 $0.39 $15.70 $447.91
12/18/2013 O BTO TSLA DecWk4 160 Call 30 $1.76 $37.50 ($5,318.44) ($4,200.60)
Net $88.95 $1,222.40 $1,222.40
 
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