My TSLA Short Plan

Newest, Newest info:  I covered my short, sold my put, and even bought a whole 10 shares and put those shares in my “don’t touch for 5 years” pile.  Here is why I changed my mind…

The short answer is, new data.   I wanted to use TSLA as a short to hedge my other high growth longs.  This earnings season as told me that high growth is very strong.  FB especially is speaking volumes.  Even though I feel TSLA’s stock price is well overextended, the risk to call the top feels higher today than it did two weeks ago.  I can see TSLA easily going to $100, or going to $150.  That’s not the payoff I was looking for.  Now if TSLA rises up to $150 day before earnings, I may take a lotto put position.

 

——————

 

Newest Info… apple didn’t carry the market so not as worried (see below).  Shorted 20 more shares this afternoon @ $121.05.  yay finally got more shares to short.

My basic goal is to slowly build up a bear position in TSLA before earnings.  Add to my position in small amounts on strong up days.  Keep an out of the money call around for downside risk.  Once earnings comes, load up my bear position if its going the way I want.  If not, exit the trade.  People who want to make fun of my small position (20 short and 1 put) might want to consider that’s its small because TSLA isn’t giving me strong up days to add to my position :)

July 12th Friday: 3:55pm – Initial short, 10 shares @ $129.26.
Monday: Stock down, do nothing.
Tue: 1:22pm – added short 10 shares @ $112.10
Tue: 3:51pm – bought 1 Jul 20 $125 call (risk protection) @ 0.38
Wed:  Tried four times to get shares to short during the day, couldn’t… so
Wed:  9:53am – bought 1 Sep $100 put @ $7
Thurs:  12:35pm – Sold my Jul 20 $125 call (risk protection) @ 0.55
July 19th Fri: Stock was flat, do nothing.
Monday:  Stock didn’t go up as much as I wanted, do nothing.

Tue:  Stock flat, do nothing

This is the first day I’m not as happy with my short.  The reason I wanted to put this on in the first place was to provide a hedge vs. my other high growth long positions that I think are much better investments.  If the market tanks, growth stocks tank harder, I figure TSLA tanks even hard, thus hedging some loss. If the market does well, TSLA short loses money, but my other stocks more than make up for it.  Part of my concern was AAPL was going to do poorly, thus hurt the QQQ and maybe the whole market.  This coinciding with the SPX hitting a wall at 1700.  It didn’t do that in the aftermarket, so its less likely I need to worry as much about hedging.  I also started shorting YHOO after Loeb dumped his shares, that may provide a less risky short.

I’m likely still to do nothing tomorrow… figured I’d have at least 50-100 shares short and some puts with TSLA at $135-$145… so I really don’t have much of a position to worry about in the first place…  I may just exit and buy puts day before ER.

—- previous days thoughts —-

July 12th Friday: 3:55pm – Initial short, 10 shares @ $129.26.
Monday: Stock down, do nothing.
Tue: 1:22pm – added short 10 shares @ $112.10
Tue: 3:51pm – bought 1 Jul 20 $125 call (risk protection) @ 0.38
Wed:  Tried four times to get shares to short during the day, couldn’t… so
Wed:  9:53am – bought 1 Sep $100 put @ $7
Thurs:  12:35pm – Sold my Jul 20 $125 call (risk protection) @ 0.55
July 19th Fri: Stock was flat, do nothing.

Monday:  Stock didn’t go up as much as I wanted, do nothing.

I was looking to buy 2 Aug $115 puts if the stock hit $127, but alas it did not.

Rest of the week:  My plan hasn’t changed at all… add to my short position on days the stock closes up in a big % strong.  Example:  $127, then $135, then $144 3 days in a row? I’ll be adding all 3 days with more volume on every day.

Aug 5th and 6th… add to my short position no matter what, let price tell me how much to add.

After earnings:  if it goes my way, load up.  if it doesn’t, exit my positions.  I see a 3:1 risk reward payoff.  The idea isn’t that I have a high chance off success… the idea is that the payoff if I’m right is much more than the loss if I’m wrong.

— Previous Days Thoughts ————

July 12th Friday: 3:55pm – Initial short, 10 shares @ $129.26.
Monday: Stock down, do nothing.
Tue: 1:22pm – added short 10 shares @ $112.10
Tue: 3:51pm – bought 1 Jul 20 $125 call (risk protection) @ 0.38
Wed:  Tried four times to get shares to short during the day, couldn’t… so
Wed:  9:53am – bought 1 Sep $100 put @ $7
Thurs:  12:35pm – Sold my Jul 20 $125 call (risk protection) @ 0.55
Fri: Stock was flat, do nothing.

STILL could not get any shares to short.

Plans next week:  Each day look for shares to short, but likely I will have to use put options.  I think I’ll hold off buying puts until Friday and hope Friday is the peak of the week.  With any luck its ~ $135 or more.  Exception would be if TSLA is up around a 10% up day, buy puts then.

Definitely will buy more puts one day before earnings.  If earnings is a bear feast, look to load the boat with 1.5-2% of my portfolio.

—- Previous Days —–

July 12th Friday: 3:55pm – Initial short, 10 shares @ $129.26.
Monday: Stock down, do nothing.
Tue: 1:22pm – added short 10 shares @ $112.10
Tue: 3:51pm – bought 1 Jul 20 $125 call (risk protection) @ 0.38
Wed:  Tried four times to get shares to short during the day, couldn’t… so
Wed:  9:53am – bought 1 Sep $100 put @ $7
Thurs:  12:35pm – Sold my Jul 20 $125 call (risk protection) @ 0.55

Stock didn’t go to $125ish like I wanted it to today, I wanted buy more shorts or puts if it did.  I still cannot sell short through my broker, frustrating, so I’ll have to use options.

Fri:  With MSFT and GOOG both down after hours on poor earnings, I’m pretty confident TSLA will have another red day, probably significant.  I likely won’t do anything.  If it gets up to $125+, I’ll look to buy another put.

I’m more confident in my position than I was last week, the stock is down $13 on the week.  My main concern continues to be I have won’t many more chances to build up my position.

Previous days thoughts.

————————

WED 7/17 thoughts

Friday: 3:55pm – Initial short, 10 shares @ $129.26.
Monday: Stock down, do nothing.
Tue: 1:22pm – added short 10 shares @ $112.10
Tue: 3:51pm – bought 1 Jul 20 $125 call (risk protection) @ 0.38

Wed:  Tried four times to get shares to short during the day, couldn’t… so
Wed:  9:53am – bought 1 Sep $100 put @ $7

Thurs:  What I hope happens is the TSLA climbs into the $125-$128 range, I’ll look to get 20 shares short at that level, or 1 Sep $100 put.  Otherwise, do not add to my bear position.  I also plan to sell my call protection this day.

Plans:

Hasn’t changed since yesterday, see below.  The stock is behaving as I would like, its down from Friday, 11+ points from its high.  I’m getting to build my short position on this strength, still looking at $90-$100 range in the coming days/weeks.  The only problem I’ve had is the stock fell too far too fast than I’d have hoped, that’s a good problem to have.

———-

TUE 7/16 thoughts

Friday: 3:55pm – Initial short, 10 shares @ $129.26.
Monday: Stock down, do nothing.
Tue: 1:22pm – added short 10 shares @ $112.10
Tue: 3:51pm – bought 1 Jul 20 $125 call (risk protection) @ 0.38

My initial target was the 50day moving average, which is around $99 right now. I got a good chunk of that move, but not as big of a position as I wanted. Also my broker information said earnings was Jul 22. Now it appears to be Aug 7th, so the window is greater. Lastly I looked to add to my short ~ 3:30pm but my broker didn’t have shares, so I may have to switch to options.

Plans:
1) Hold my short at least though Friday. If stock is around $100 or lower may cover half.
2) Use any 4% + move to add to my short position in increments of 20.
3) Hopefully the stock is very bumpy the next few weeks, use the volatility to build a 100-200 share short position by Aug 7th.

Ideally what happens is:
Stock retraces back to $120ish in the coming days, add to short and sell option.
Then, it falls back down to $102-105, buy Aug call for protection.
Then, goes back up to $110-12ish, add to short
earnings come out… wide spread panic.

Netflix, a ‘disruptor with a godlike CEO’ fell from $300 to $70 in a few months in 2011. It was and is a viable company with a bright future.
I’m not looking for near that fall, a 25%-30% correction would be just fine with me.

As for anyone wondering about my small position size:
I want a bigger position.. was assuming it was going to keep climbing. However, I don’t like to risk more than 1% portfolio on any one invest in general (WFC, CVX, and AVG being my current exceptions) and this is a ‘calling the top speculation play’ so if I only make a few hundred in a day, well ok call me small ball I’ll get over it.

Disclaimer: these are just my thoughts, make your own decisions, my degree is in Computer Science not Finance and I’m too lazy to take an exam to get a certificate.. not that I currently require one.

————————–

Mon 7/15 old thoughts
Tues: If stock is around $135 after 2pm, look to short 10 more shares, else nothing
Wed: If stock is greater 3% Tue close after 2pm, look to short 10 more shares, else nothing
Thurs: Same as Wed
Friday: Short 10 shares @ 3:55pm, 20 shares if only have 10.
Monday: If stock is up around 5% or more, short 20 shares, else nothing.

– EARNINGS AFTER CLOSE
Tuesday: If stock moves down hard, short 100 shares, else COVER all shares.

– Exception: if TSLA falls to $115 or less this week, do not short any more.

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