Lets have a chat about Tesla, why I sold my call options.
Tesla is one of the most revolutionary companies following the likes of Google, Facebook (or Meta), Amazon, Alibaba, Apple. Lots of folks have realised it's potential during the late 2019 to 2020 period, myself included. I love that Elon Musk has the vision to cover all bases in terms of the betterment of humanity:
Earth preservation
Underground space for the increasing humanity
Space
You might then ask why would I sell? I cover that in the video below.
Some of you might be confused with what options are so let me expound further here.
Basically there are two types of options, a CALL and a PUT.
You need to understand an option is similar to a contract promising control over 100 shares of the underlying company in exchange for a premium. Its similar to your Option-To-Purchase when buying a property. You are given a right to purchase the house within a period of 3 weeks in exchange for the $1,000 option fee. In other words you control the property for 3 weeks, but if no action was taken within the span of that 3 weeks, your options expires worthless. You follow?
I'm gonna just assume you got all that. Now, moving on to the two types of option:
Call: The right to buy the underlying shares at the stated price.
Put: The right to sell the underlying shares at the stated price.
So given the example in the video:
Long position: I bought the right to buy a 100 tesla shares at $900 until 17 March 2023
Hedge position: I sold the right of selling 100 tesla shares at $1,200 until 17 December 2021 for a premium of $1,700
I do hope this clears up some things in the video for you. I'd like to stress that options are very powerful yet dangerous, there are many nuances that goes into trading them. Be very careful when you dabble in it.
I'd hate to see anyone lose money unnecessarily.
Please do like and subscribe if you enjoy the content. Leave a comment in regards to any questions you may have and I'll get back to you!
Stack safe folks :)
Daniel signing off