Why The **** Didn't You Buy TSLA Puts?

Discussion in 'Options' started by zghorner, Feb 7, 2020.

  1. zghorner


    Who could have foreseen the huge spike in price this week towards $1000...nobody that's who. So not getting rich off of calls is understandable IMO. But the fact that I sat here in absolute conviction that it was a crazy bubble bound to pop any moment and didn't buy puts is unforgivable. To punish myself im heading to the sex shop to buy the biggest dildo they have and make my wife slap me with it until tears develop.
  2. Nobert



    That dildo will spike up, as TSLA did.
    ElCubano, wave and Axon like this.
  3. You can still buy puts. Lots of potential for a big gain if you get the market right.
  4. CALLumbus


    Buy both, calls and puts, so you will always be right.
  5. Except for when both are wrong.

    athlonmank8 and Sekiyo like this.
  6. Specterx


    Rushing to take action based on FOMO is never a good idea. How do you know the short squeeze is even over?

    - There are still a ton of shorts who are down massively and on the verge of a margin call, praying to God that the price drops and ready to puke out (or get liquidated by their brokers) on the first poke above 969. Likewise they're a massive bid under the market which will be heavily buying any significant dip.

    - Retail participation is going into overdrive now, thousands of Robinhood accounts are pouring into the stock every day - the public participation phase might be just gearing up.

    - Insiders (Musk in particular) likely are/have been manipulating the stock higher with the express goal and purpose of bankrupting shorts. It wouldn't surprise me to see a few red days met with news that Musk has bought a big block of shares, along with a burst of positive hype stories or "leaked" positive results in the media.

    - Unlike in 2019, there's no clear near-term catalyst for a serious cratering in the name, or risk that the business will become insolvent etc.

    In short, there are a lot of factors which could launch another major squeeze leg up to 1200-1500+, and not many to get you much further than 400 or so on the downside. IMO it's better to look to actually go long if the first push lower from here is weak, or else wait for another leg up and wave of short capitulation to play an RTM back to 400-500.
    qwerty11, Magic and mt2rules like this.
  7. zdreg


  8. Magic


    Agree 100% with the psychological considerations. Although I don't think $1200 is likely in the near-term. Such a large, rapid dislocation from previous valuations on no obvious paradigm shift has got to be driven by liquidity factors imo. And now that the whole world is watching closely I don't think that will happen again immediately.

    Maybe if we had mass retail participation it could, and although I haven't seen reliable data, it seems like there is enough institutional money and bots to dilute retail euphoria from moving big names so rapidly once everyone is paying attention. In fact I think the low $1000's were / are a great backstop to trade against because the valuation is not realistic; although the premium for such a trade is rapidly bleeding out of the name.


    Specifics aside, agree with Specter on the main point that OP is being naive to view hindsight as so obvious. I traded this thing myself; mainly shorting ITM vega when the middle of the curve started to blend in more vol than I thought was realistic for the timeframe. And in the aftermath; fading the residual steep call skew bid up by retails against the down & out gamma that was trading at atm vols all the way down to sub 20delta until recently??

    Even then with some pretty obvious dislocations; I sized quite small because how do you know the exact price this will collapse at? Could be anywhere when things are this unstable. What if another major block hit the pain point at $950? I was really confident in the fade but I felt I had to be ready to eat another $500 / share in worst case or give away all the edge buying massively expensive risk control.

    So the turning point was extremely uncertain, and the timing was as well. What if we stalled for a few days at $900 before the next wave came in? You're just going to sit tight and shell out $1000's per day on your thetas waiting for a drop? For how long until you reconsider? Even then if you're right on direction but the move is too gradual you won't ever recoup that. Sure we could have all made a fortune buying puts but an immediate 15% rip off the highs was in no way the obvious next step.

    Next time you have an idea put on a tester 1 lot or something, talk through what you're doing and your assumptions with someone in real-time each day. You'll realize this stuff is far from being obvious even though it sure looks that way in hindsight. It's a cognitive bias.
    Last edited: Feb 7, 2020
  9. ZBZB


    you should have been watching Tesla investing videos on YouTube. They all got it.
  10. tsznecki


    @Specterx Disagree. One never really knows the top or bottom, you just have to pick an entry. Those shorted Tuesday at any time nailed it. Even Weds before 10AM EST.

    Retail participation as indicated by the WSB indicator is fading. Still there, but the post ratio has decreased from a peak.

    @Magic It was 100% an algo. Blocks of 100 size on both sides appearing and pulling through the week.

    This was a parabolic move, parabolic moves blowoff and retrace just as hard. You can even model it out in code. There is no "gradual" retracement.

    I've got respect for you vol guys, but sometimes you need to look up from your Excels and models to look at the price action. Tues close was the sell signal. Taking the trade Weds at the open was still good.

    @zghorner Head on over to r/wallstreetbets. Plenty made on the upside with calls. Bring your wife("husband") too.
    #10     Feb 7, 2020