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Morgan is just a short 47 days ago i put out a video on financial education to talking about this investor that bought 3.3 million dollars worth a tesla stock $1500 call options okay this was essentially a bet that tesla stock would go to $1,500 plus by a certain date okay i want to do a follow up on this video here today okay i want to tell you essentially what
They’re looking at right now and i want to tell you in my opinion what they should be doing with the money right now should they be selling it out should they be buying put options what should they be doing i will be giving you my full opinion i thought this would be a fun video to do here today especially with tesla stocks rise recently like it’s been incredible i
Mean this was one of the craziest moves i’ve ever seen by any investor in the stock market like at an intense move even the wsb community would be proud for this one okay this was just one of those yolo moves three point three mil i mean on a $1500 call that was way way out of the money at that particular time and there were a lot of jokes i remember in the comments
Section people say it was me okay it was not me guys i just wanted i just want to put that at rest it was not me i swear it was not okay i know a lot of people thought this might be something i would do and you know what it was just wasn’t me okay that’s all i’m gonna say here but what else is rise recently in the stock these call options have made this individual
Millions of dollars okay let’s get in this guy’s i hope you enjoy as always smash the thumbs up start getting in this okay so here’s essentially what it was okay remember call option ascent is essentially a bet that the stocks price is going to go up a lot over time okay so they bought it a $1500 strike price that day when they bought they paid roughly around
$90 okay so think about it as 1500 $90 is the break-even now whenever you buy call options put options you can sell them off to somebody else whenever you want okay and remember these call options expired january 21st 2022 so there’s still a long way from expiring however with that being said if that individual wants to sell out they could get somewhere around a
Hundred and ninety dollars each for those as of right now which essentially means that they just over 2×2 their money okay it was a 3.3 million dollar bet and so that means essentially now they’re like three point five plus mil in the positive okay incredible absolutely incredible this person if they want to sell these they literally can take a three point five to
Maybe a little more than a three point five million dollar profit extraordinary let’s all give a round of applause to this individual absolutely incredible okay i mean you know that’s just something that’s just a crazy money this is foot that way i mean making a three point five million dollar profit in a matter of such a short amount of time but they took a big
Risk i mean these call options were way out of money so this was a big rest let’s be honest but still three point five millis in a matter of less than two months like that is just absolutely insane why is this what tesla stocks improved a lot since then remember when this individual opened up that position tesla stock is trading at what six hundred seven hundred
Dollars a share now it’s trading roughly around a thousand dollars you know give or take you know ten twenty dollars something like that so the stock price of tesla this is basically why these call options have begun to get so much more valuable those stock prices has gone up several hundred dollars since that individual opened the position it’s been amazing okay
So we know they’re up massively on this position in my opinion there are five real options this individual has they have more than that’s okay but these are the five most realistic options that they have i want to share with you what i think they should do what is the best option we’ll start with the worst options in my opinion go to the mid tier and then we’ll
Get to the last one what i actually think they should do now in this position okay because they got a massive profit okay these first two are the ones i like the least okay of these five options okay want us to sell all the contracts so basically just sell out of all the contracts which now they should have roughly seven million dollars or maybe a less than seven
Million dollars in value of those call option contracts and so they sell it all off they take a an incredible profit i mean an absolutely incredible incredible profit nothing wrong with that they just completely get out of the position i know like that one a lot remember this individual they want exposure to test the stock and they want it you know specifically
Over the next year to so if you sell off all your contracts know you’re in a situation where you have no exposure to tesla stock and i i don’t think that’s an ideal situation especially if you’re somebody that wants exposure to the stock it also keep in mind if this individual cells off those contracts and they take that profit of let’s say it’s three point five
Million dollars depending on what state they live in let’s just assume there are us buyer rate depending on what state they live in basically take a half that money away okay because the the federal government is going to take a huge share of that remember they’re gonna be in the highest tax bracket possible and it’s a short-term trade okay never mind that if they
Live in new york california one of these very high-income tax states right they’re gonna have to pay another ten percent if not more than ten percent on top of the federal tax rate so this individual could be basically looking at that three point five million profit that’s a go down to what 1.7 million mil is still a nice profit but goodness 1.7 pose not that much
When you compare it to three point five right so this is why i’m not the biggest fan of this the whole idea of let’s just sell everything off take our profit because all you gotta you know you’re gonna take a nice profit sure but the government’s gonna get crazy money crazy money out of that money okay you know that’s why sometimes it pays to be the government
Right you collect that tax money that’s some easy money right there right number two option is sell no contracts so essentially let this puppy right okay let this puppy right yeah i’m not selling out of this i’m gonna ride this all the way till january 21st 2022 when these option contracts expire i honestly don’t like this move either okay look at the dow today
Does just flex on everybody who’s trying to say that that could never go down on the market stock market in general couldn’t go down right it’s just flexes on everybody out there saying hey i’ll do what i want okay that’s what the stock market says i don’t care what all y’all guys say i’m gonna do what i want and along with the stock market being down guess what
Else is down tests on my ass will suck now tesla’s not down as much as the markets down but it’s still down and so let’s just be honest if the market moves down huge tesla stocks probably gonna move down pretty big with it and we’re in a scary stock market right now in which you know a lot of stocks have gotten very overvalued the market in general has gotten very
Overstretch and so it’s not impossible to imagine the market going down for several months or maybe even potentially a year okay remember only a year and a half away from these option contracts expiring so if we’re in a downtrending market that let’s say goes for three months six months or potentially a year that puts tussel stock in a really tough position to be
Fifteen hundred plus dollars which is where the stock price needs to be and remember as of right now with though you know basically the premium on top of where the stock price needs to be we’re talking about $1,700 and if the stock market downtrends massively whether it’s just for a few months or whether it’s for a year that’s gonna that’s gonna put tesla a stock in
A very tough position and this is why i don’t really agree with just holding all those contracts cake you know it’s a scary market when i’m doing videos like this like i did you know what one day and 15 hours ago where i basically am making a video about is you know selling stocks and taking profits you know this is usually the guy that’s doing videos about three
Stocks i’m buying blah blah blah a month right you know it’s a little different when i go from three socks i’m buying – let’s take profits and let’s talk about hey you know taking profits in this market you know we’re at a different time place so to imagine tesla stock going down it’s not impossible okay here they’re okayish options in my personal opinion they
Got a couple okayish options i’m not a huge fan of these but at the same time i can understand them okay number three is you sell half those option contracts and then you play with the house money on the other option contracts by the way let me know in that comment section which one of these five you guys think is the best option i really love to hear as opinion
As well down there but this is one of them okay you know sell half play with house money so remember you know they’re they’re approaching seven million dollars worth of call options they got three point three in it right so sell half of them off and you’ll take a you know very very small profit and then you’re just playing with house money essentially for all the
Other option contracts out there and you know sometimes this is a strategy a lot of people like to use in the stock market sometimes also do with the stock that doubles up so let’s say you buy a tesla stock for instance or any other stock out there and let’s say you buy it for five hundred dollars it goes to $1,000 and you bought a hundred shares sometimes people
Will sell off 50 shares take the profit on that they double up their money right they got back their full initial investment and then they let the other 50 shares ride it’s not a bad strategy a lot of people use this smart i don’t say a lot of people use a strategy but a decent amount of people use this strategy when they’re talking about something they doubled up
Their money and when it comes to stock market and there’s nothing wrong with it i gotta say it’s not it’s not a bad strategy that was keep in mind sometimes the the opportunities are much bigger than a 2x opportunity in the stock market so sometimes you could be selling yourself a little short no pun intended whenever you take a short term profit like that but
They could do that okay number four thing they could do is sell 1 million dollars or two million dollars because just say 1 million dollars worth of these call options off so if they got 7 mil now worth these call options sell a million so they only have 6 million and buy puts ok and in terms of the put options on this one they would have to probably a you know it
Would probably make the most sense to buy like thousand dollar strike prices okay now they gotta pay like a $300 premium for those and this is why i’m not this is why i put this one also in the okayish options tab if the premium was somewhat more realistic i would have put this one into a you know a strong you know option out there that they could do but man this
One’s tough guys because essentially you need tesla stock to go down to $700 just to break even know in keep in mind in this strategy having six million call options in a million dollars or let’s say two million dollars in five million dollars right so two million dollars in puts 5 million dollars in calls there essentially is you’re looking for volatility and
You’re also looking to hedge your position a bit so just in case you’re wrong about this and stock goes down a bunch over the next us a year and a half you can go ahead and catch out with some you know some money at least on the put options side but man i gotta say you know this is why i just put this into the okayish options because look at $700 you need to stop
To go down to over the next year and a half just to break even on the move okay and remember you’re not really trying to break even on this move it’s just not you know if you’re hedging like that would be worst case scenario is only to break-even there and then you lose all six mil let’s say five mil six mil it worth those call options you could sell off here today
That would be that would be just disastrous right in order to accept money you need to start to go to four hundred dollars over the next year and a half not impossible you know everything is possible but man that’s that’s tough four hundred dollars over the next year and a half just to – extra money that’s why i put this one into the okayish options tab now out of
Those four options i just shared out there which one of those do you guys like the best i would love to hear from you but i want to share my opinion now on what i think is the best thing they could possibly do with their money right now this is a well thought out strategy that i was kind of thinking about and this is kind of my opinion double down on those $1500
Calls it’s yellow okay you only live once do you think we came to play games we’re doubling down on those $1500 calls we don’t care what they have to say okay we’re not just coming for the bank vault we’re not just coming for the money in there okay we’ll come in for karen’s money too you know she’s the bank teller we want her 43 dollars in her purse as well okay
We want the whole thing i’m just kidding i’m just kidding okay that money they know that belongs in a special community okay that’s a wsb community right there okay wsb that’s what they would say okay i’m just kidding okay the best option in my personal opinion what this investor could do number five sell all the contracts flip the money into tesla stock straight
Up this is my opinions by far the best move they could make i mean they made an insane amount of money okay we’re talking millions on this one millions of dollars sell out of those contracts don’t put yourself in a time pressure situation right get out of that get out of that the stress around oh my gosh i need the stocks and continue to go up higher and higher
And higher over the next year and a half is a tough scenario man and it’s no fun to be in that you did well you’re – extra money in a matter of less than two months sell take the profits flip the money into shares so you still have tousle exposure and go ahead and take that 7 mil and put buy seven million dollars worth tesla stock and write it out for the next
You know five ten years rather than the hope that the stock continues to go up in the short term okay in january 2020 – i could see any of these prices being realistic and anywhere in between these prices i could see tesla stock being as low as $500 in january 2020 – very much a possibility okay if all sudden the bearish thesis comes back around tesla overtakes
The stock let’s say we have a major stock market weakness again either a major correction or a full-scale crash and a lot of investors getting very scared margin calls coming and just you know investors taking profits or wanting to put profits different places i could definitely see five hundred dollars being a possibility it is something you have to consider in
Somebody that’s even very very bullish on the stock you have to be realistic and you have to at least consider these situations the stock could be a thousand dollars you know basically exactly where it’s at remember we’ve had time periods for years and years where a tesla stock will stagnate you know even even though there’s a lot of excitement going for tesla’s
Business model it’s happened before for four or five year period the stock goes up a little bit down a little bit doesn’t really go anywhere you know so $1,000 that’s definitely a possibility in a year and a half from now $1,500 definitely a possibility okay going up from here that’s another you know 50% upward move definitely a possibility $2,000 also a possibility
– So in my opinion in january 2022 as somebody that’s very very bullish on the stock but is also a realist this stock price will be somewhere between $500 and $2,000 in my opinion okay but here’s where the issue lies at $500 and $1,000 at $1500 this investor loses a hundred percent of their money remember they need a fifteen hundred and ninety dollars just to
Break even on this move okay so anything under $1500 they lose 100% of that initial three point three mil so not only do they give up this you know insane profit they have right now of let’s say 3.5 ml plus rate but they also lose their initial three point three million dollars okay and this is why i think it is just ludicrous in my personal opinion to keep those
Call options open man close them out buy the shares hey if the shares go up a bunch guess what you’re still gonna make a ton of mine i mean if you’ve got seven million dollars worth of tesla stock and tesla stock goes to $2,000 which is a little over a double up from here right now you’re at 14 mil it’s just not worth the risk in my personal opinion of keeping
These call options open now at this point in time because literally like like this stock could easily stagnate for a time period just went on a massive run where it went from under $200 what to you know $1,000 in a matter of a year it’s been on a massive run so it could easily stagnate it could easily go down also for the next year so you know based upon and let’s
Say the market gets super weak that’s definitely a possibility okay and these are all things you have to consider and at the end of the day it does not make sense at all for this individual my opinion to keep these call options open close them out take your sick profit and put the money into tesla stock yeah you’re gonna have to pay your taxes on it and that’s
Unfortunate but hey that’s one of the things when you make a lot of money guess what you got to pay a lot of taxes it’s just so way it goes okay and listen the fed can just start like printing our tax money think about you know is the fake and just print all this money maybe they can just like print our tax money no that’s probably not gonna work okay so anyways
I hope you guys really enjoyed this video very much here today let me know what option you guys think is best and maybe you have something else you think they should do instead of these five i would love to hear from you guys in that comment section as always hope you learned from this video don’t forget to smash that thumbs up thank you for watching have a great day
Transcribed from video
Investor Did 3.5M on Tesla! Do This Next! By Financial Education