What is the “idea” of Solar City, vs. the “idea” of more solvent solar companies like First Solar?
I’ve gotten good at enjoying the interesting story of a company (The Saga of Elon Musk, and all that) without involving my money.
Well, I didn’t entirely leave my money uninvolved. A couple of months back, I bought long-term puts and calls on Tesla, because I figured it would jump up or down a lot, I just didn’t know which way it would go first. I got antsy waiting, and sold the calls at a slight loss. When Tesla dropped on the recent Solar City news, I sold the puts for a slight profit. I think I ended up with a net profit overall, but well under $100.
I have similar bets still active on Netflix. Right now, my puts are worth about what I paid for them, and the calls are worth quite a bit less.
I learned that options are trickier than I thought. They don’t correlate nearly as closely to the stock price as I expected. I bought puts on Sears, for instance, and too often their price will go down even when Sears stock is going down. And this is with options that have more than 18 months left. It might have to do with their being pretty far out of the money.
I also need to learn more about choosing a strike price.
My most successful options play so far has been betting against Valeant. I’m holding a bunch of $5 puts that expire in January of 2018. I’m hoping that will give them enough time to go bankrupt, or at least go through some more financial disappointments and federal investigations.
Selling puts and covered calls, on the other hand, is not speculation as much as it is hedging. Same with buying puts on stocks that you own.
Mostly what I do with options is sell puts on stocks I want to buy, and sell calls on stocks that I hold that I’m ready to sell.