Busy day, so just a quick update:
The downtrend in Tesla continues.
I know they raised more capital, and I know they say they will have a million robo-taxis in operation in a year (despite the fact that they don’t have the cars, and have not yet found a city to allow them to test the concept) but charts don’t lie. The downtrend since the beginning of December continues uninterrupted. We could see a pop back up to $260, perhaps even $270, but then it’s a break of $230, then a break of $200, and then the game is over.
I’m holding puts (but only a very small amount, because this is gambling, not investing).
Now, a new stock to watch, one that I have never mentioned before on this blog.
Tyson Foods Inc.
What? Tyson foods? What does that have to do with gold, or Tesla, or anything?
This is a story that is massive, and yet is not being reported generally in the news.
An African Swine Fever outbreak is expected to cut China’s pig meat output by at least 10 percent in 2019, and it is highly likely that the damage is far worse than reported. I’ve heard reports that they have already slaughtered more pigs in China than are alive in the United States. That’s massive, because pork is a basic food staple in China.
As a result, pig prices are soaring, so pork producers, like Tyson, can sell their product for a lot more than last year, which is why Tyson was $50 at Christmas and is almost $80 today.
NOTE: The RSI is 84, so it would appear that this stock is very over bought, so I am not buying, and I don’t own any Tyson or any other pork producer. This is not investment advice, it’s just a comment on what’s happening in the world now.
It bears watching, because this is likely to take many years to solve this problem, so pork prices will remain high, and that will also increase the price of substitutes, like chicken. I have not compiled a list of other pork producers that may benefit, but I’m working on it, and watching.
That’s the update; more next week.
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Tesla: Even and Idiot Like Me Can Make Money Buying Puts
by JDH on May 18, 2019
Watching the collapse of Tesla has been glorious. Yes, I know the true believers say the car is great (and perhaps it is, particularly if you have never driven another electric car) and perhaps Elon should be given credit for forcing real car makers to make electric cars, but I still believe that anyone who continually lies to the public is not a genius; he’s a charlatan. He has made over $10 billion of real people’s money disappear, and that should be a crime.
So, here’s how I played it. I bought puts, $200 strike price, expiring the third Friday in June, on the following dates:
April 26: 10 contracts at $6.45
April 26: 10 contracts at $8.85
April 30: 10 contracts at $6.60
May 2: 10 contracts at $5.00
May 3: 10 contracts at $3.00
(As you can see, between April 26 and May 3 the price of Tesla went up, so the cost of the puts went down, so I kept buying more to average down).
And then I began to sell them:
May 13: 10 contracts at $5.65
I knew I would be busy this week and wouldn’t be able to keep an eye on it, so I placed sell order as follows, all of which got filled on May 17:
10 at $7.00
20 at $8.00
10 at $9.00
They closed the day at $9.61, so in hindsight I should have just put in a sell order for all 50 of them at $9.50, but that’s only possible in hindsight. It was a nice profit, so I’m happy.
What next?
Tesla is now trading at $210, which is the same price it was trading at in February of 2014, so in over 5 years the buy and hold crowd has not made a penny. That’s not a good return on investment.
Tesla is in an obvious down trend, but it doesn’t go down in a straight line. It will likely bounce back up over $200. It’s likely that Fraud Boy Elon will announce that he will be releasing a moon rover or some such and the market will bounce up. So, when that happens, I’ll buy more puts, perhaps the July expiration, perhaps around $190 strike price.
Or maybe I’m done playing this game, I don’t know.
Tune in next week and see if anything happened.