2017 Investor Roundtable: TSLA Market Action

[1kEE]

We will see I was expecting a trade sideways today (Thurs) , and a rally tomorrow (Fri).

That makes sense... wonder if yesterday's 252 bottom will hold, if it's reached?

Edit:
Looks like the 252 kinda held, I did pick up shares in the high 251s... It was sub-252 a little deeper than yesterday. I have a feeling way too many traders enjoy buying the dips and offer support at those numbers.

 

[1kEE]

TrendTrader007, mind telling us what percentage gain you made since the 180 bottom? Stock is up ~40% and I'm up ~55% thanks to trading, options and margin. Not impressive but I'm a rookie.... I was tempted to do more options and go after 100% gain but didn't happen

 

[TrendTrader007]

TrendTrader007, mind telling us what percentage gain you made since the 180 bottom? Stock is up ~40% and I'm up ~55% thanks to trading, options and margin. Not impressive but I'm a rookie.... I was tempted to do more options and go after 100% gain but didn't happen

I actually totally mistimed TSLA. I bought close to $225 last year in July 2016 and sold it right at $182 on November 16 , 2016 so I lost about a million in that trade. I waiited exactly a month to avoid a wash sale then went all in on December 19, 2016 with tons of stock and about $200k worth of calls dated 2019 and 2018 when stock was at $202.50
So now I am up about 24% on my stock and anywhere from 90 to 150% on my calls with total profit exceeding a million on my stock position alone, not counting options
I'm used to losing 20 to 30% in my trades which with my account equity translates to over a million or so but then I always make it back plus more on next trade. Overall I get a pretty consistent returns of anywhere from 20 to 30% annualized on my taxable accounts and about 50% annualize over the last several years in my Roth IRAs
Options is chump change so I don't care but enough to make me feel good about myself

 

[Nate the Great]

Shouldn't there be a greater amount of correlation be the amount of short contracts and puts?

Why would one be preferential over the other?

 

[Nate the Great]

Trend Trader are you trading from an untaxed account or mixed?

 

[ZenMan]

Trend Trader are you trading from an untaxed account or mixed?

Since he was concerned about the wash sale rule, I'd say it was a taxable account.

 

[Irishjugg]

Placed a limit sell order for 20% of my trading shares at 252 (purchased as SCTY at 16 or so, equivalent to 146.50 if I recall correctly). I'm fearful of a short term reversal into earnings starting at the 3 year trend of 255 or so and I was unable to sell at 258 yesterday due to a particularly useless work meeting.

Plan is to rebuy at 230 or lower if the downtrend pans out. If it doesn't I'll look for a decent re-entry after earnings.

If earnings beats I'll buy back in day after earnings I think. Still have 80% of trading shares and 100% of core shares to capture a possible squeeze.

 

[durkie]

For what it's worth, I spoke with someone at IB (over live chat, whose representatives have told me wrong things in the past concerning voting rights of loaned shares) who said the only way to recall shares is to leave the Stock Yield Enhancement Program altogether (or to sell the shares).

If you leave, there are documents on the IB website that warn: "Please note, though, that if you terminate your participation in the Stock Yield Enhancement Program, you may not be permitted to re-join the program, or you may have to wait a certain length of time to re-join."

 

[tander]

I'd like to hear what your broker thought of people's worries over missing out on a short squeeze by having their loaned shares swapped for cash.

I explained to logic behind it and he agreed.

 

[austinEV]

I am watching the hourly chart. the 20 hour SMA has been support recently. Looks like it is holding:

 

[Incredulocious]

I'd like to hear what your broker thought of people's worries over missing out on a short squeeze by having their loaned shares swapped for cash.

I explained to logic behind it and he agreed.

You're saying he confirmed that a short squeeze could lead to people's loaned shares having to be swapped for cash? (Not by an action on the part of the person loaning the shares, like recalling the shares or attempting to sell them in the midst of the squeeze?)

 

[tander]

You're saying he confirmed that a short squeeze could lead to people's loaned shares having to be swapped for cash? (Not by an action on the part of the person loaning the shares, like recalling the shares or attempting to sell them in the midst of the squeeze?)

Well I'm not sure I understand what you are saying there in parenthesis, but I explained the logic behind recalling the shares and asked if it made sense to him and aside from the taking investment advice from an internet forum which we both laughed about, he didn't say I was crazy or that it couldn't happen.

 

[MitchJi]

You're saying he confirmed that a short squeeze could lead to people's loaned shares having to be swapped for cash? (Not by an action on the part of the person loaning the shares, like recalling the shares or attempting to sell them in the midst of the squeeze?)

That's exactly what you'd want to do. Sell your shares at or near the peak of the squeeze.

 

[austinEV]

You're saying he confirmed that a short squeeze could lead to people's loaned shares having to be swapped for cash? (Not by an action on the part of the person loaning the shares, like recalling the shares or attempting to sell them in the midst of the squeeze?)

None of this belongs in the "market action" thread but I think it is pretty clear what is going on. The collateral protects the brokerage in the event of the squeeze, and you get that no matter what. But your brokerage owes you the shares or has the obligation to make you whole. So if you wanted to sell at 500, but the borrower went bankrupt at 270, your brokerage would be on the hook for the rest. They would cough up the cash or be in default. IF your brokerage went bankrupt (not gonna happen) then you would only get the collateral. Otherwise IB would just have a money losing quarter since they had to pay out happy TSLA investors.

 

[ruralectric]

None of this belongs in the "market action" thread but I think it is pretty clear what is going on. The collateral protects the brokerage in the event of the squeeze, and you get that no matter what. But your brokerage owes you the shares or has the obligation to make you whole. So if you wanted to sell at 500, but the borrower went bankrupt at 270, your brokerage would be on the hook for the rest. They would cough up the cash or be in default. IF your brokerage went bankrupt (not gonna happen) then you would only get the collateral. Otherwise IB would just have a money losing quarter since they had to pay out happy TSLA investors.

And seriously. In the case of Fidelity, a TSLA short squeeze would be the antithesis of a brokerage in trouble. How many shares of TSLA does Fidelity own again?

 

[vgrinshpun]

And seriously. In the case of Fidelity, a TSLA short squeeze would be the antithesis of a brokerage in trouble. How many shares of TSLA does Fidelity own again?

I would guess that about 50% of shares owned by Fidelity are lent out by them. If there is mass default by shorts which are not able to return the shares Fidelity will hurt massively as they will be left with collateral which would be overrun by the share price, so they will not be able to buy the same quantity of shares that they lent out. This is the reason, like I mentioned before, that if they perceive increased probability of a squeeze, their risk department will tighten guidelines on lending.

 

[TrendTrader007]

Trend Trader are you trading from an untaxed account or mixed?

90% of my position is in taxable accounts and 10% in tax free Roth IRAs

 

[TrendTrader007]

I would guess that about 50% of shares owned by Fidelity are lent out by them. If there is mass default by shorts which are not able to return the shares Fidelity will hurt massively as they will be left with collateral which would be overrun by the share price, so they will not be able to buy the same quantity of shares that they lent out. This is the reason, like I mentioned before, that if they perceive increased probability of a squeeze, their risk department will tighten guidelines on lending.

Realistically, default is extremely unlikely to happen but I want to sleep well at night in case a short squeeze ever materializes
A black swan event for short sellers is not that unlikely
I admire short sellers in that they either have nerves of steel or they are clueless, probably both which is an extremely dangerous combination

 

[Incredulocious]

That's exactly what you'd want to do. Sell your shares at or near the peak of the squeeze.

Well, personally I wouldn't sell in the midst of a squeeze (same day). I would give it more time to see where it goes. And watch others pile on (buy high!!) ;-) before choosing my exit. So I don't feel any need to be able to recall my shares in the midst of a squeeze. For those that do want to be able to do so, it would make sense to not loan them out.

Now if only we could have more of those 10% loan rates on TSLA we saw last July.

 

[Incredulocious]

If there is mass default by shorts which are not able to return the shares...

This is the bit I still don't understand.