Today I trimmed another 2 shares of Tesla (TSLA) from our portfolio at $700 per share. TSLA was added to the S&P 500 ten days ago – which would require purchases by funds mandated to track the index. For much of 2020 TSLA has traded up due in part to speculation it would be added to the index. Efforts to front-run passive funds are complicated due to the timing between Standard and Poor’s announcement on November 16th and the actual dates of the trades made by S&P 500 tracking funds.
After trimming in August (ten shares at $350 and, later, five shares at $499), we have had four different limit orders executed to sell (two shares per order) at $625, $695, $650, and, today, $700. Had we not sold any of the TSLA shares we have held since 2016, the value of our TSLA stake would be 3.2% of our portfolio; after today’s sale TSLA is roughly 1.1% of our portfolio.
On December 22nd I took a small speculative position in fuboTV (FUBO), a company recommended last week my favorite newsletter. FUBO’s price activity has been spectacular over the past two weeks. FUBO has tripled since it began to trade on public markets in August but on December 22nd FUBO traded around $58 from roughly $10 in August. I sold two put option contracts (strike: $30; expiration: 19FEB2021) for $2.60 per share before commissions and taxes. My premium was about 8.7% on a strike price 52% below the market.
Then came the steamroller. After finishing December 22nd above $63 per share, FUBO crashed. As I type, nine days later, FUBO trades around $28.50. Unless we see a rebound in FUBO, we’ll own 200 shares for $27.40. See the below chart for FUBO up and down over the past month.
Source: Questrade
Unfortunately, earlier this week, after FUBO’s rough Christmas weekend, I sold two more put option contracts on FUBO (strike: $25; expiration: 15JAN2020) for $1.10 per share before commissions. FUBO was trading around $40 per share so my strike on the new contracts was almost 40% below the market. Today, I decided to roll the second position down to a strike price of $22.50 and out to 19FEB2021. The lower strike price reduces our capital held as collateral by $500 to $4,500. The longer time to expiration, five additional weeks, allowed us to recoup the cost to close the previous position at a loss.
“How much did we lose?” you ask. Seven and one half percent of the collateral. In three days. Ouch.
The new contracts sold for $3.90 per share, but I had to pay $2.95 per share close the contracts sold on Monday. Stay tuned, folks this is a wild one.
Through writing this summary, I’ve decided to add FUBO to my list of candidates for investment via long-dated call options. New to the public markets, we’re likely to see significant price volatility in FUBO shares. My broker only has December 2021 call options available but, if options dated two or three years in the future become available and FUBO continues to relinquish gains made since August, I’ll take a long look at the potential.