While there would need to be a blowout quarter to squeeze the shorts, only minor disappointments compared to sky high expectations can end in a major long squeeze. Obviously I do not know which one will be (or where in between), but the risk / reward picture seems upside down compared to the previous quarter.
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While there would need to be a blowout quarter to squeeze the shorts, only minor disappointments compared to sky high expectations can end in a major long squeeze. Obviously I do not know which one will be (or where in between), but the risk / reward picture seems upside down compared to the previous quarter.
+1. Agree with Nicu. Expectations are high, current price and valuation are high, shorts are at all time low. It's no crime to be careful and long TSLA at the same time. It's not the time to over leverage.
Or you can fix the upside down conundrum by 1) standing on your head 2) move to a weed legal state Both work for me. I'll stay long through the report but lighter than normal and build position following the inevitable pull back, IMHO. Good luck to all. Long term we are in great shape and have a good 4th!
Gotta agree with you, Sleepyhead.
Short interest as of 6/14/13 (Tesla Motors, Inc. (TSLA) Short Interest - NASDAQ.com) was 19.929 million shares out of 76.93 million float (TSLA Stock Price Today - Tesla Motors Inc. Stock Quote - WSJ.com).
So 26% of the float is short as of mid-June. That's a lot of upward pressure if earnings beats expectations which I think there's a pretty good chance they will for Q2 and Q3.
But if TSLA misses earnings expectations, look for the stock to get hit very, very bad.
Am wondering what the relative costs are, week in and out, to short versus to buy puts. As I noted elsewhere, I saw reference recently to one of the very large hedge funds - Stephen Mandel's Lone Pine - as having one of his largest positions an ungodly number of puts. Something like 1.25 million....and that wasn't dollar value, but actual contracts. Gaack.
When you short stock it's possible the shares you borrowed could get called back at anytime (result in a broker buy-in without warning even possibly), so that is a risk shorts have. When buying a put that risk is not a factor, but you are paying a premium vs. shorting the stock, otherwise there would be an arbitrage opportunity for a market maker or HFT that would correct that quickly. One interesting note, is that when there are no shares available to short or perhaps shorting is not allowed temporarily (ie. circuit breaker triggered), one can still buy puts. When you buy puts, the person (usually a market maker) selling you those puts usually will hedge their short puts by shorting the stock so that they are Delta-Neutral (risk free). Market makers i believe have different rules and are allowed to short stocks even when no one else can in order to hedge themselves.
In the example you mention, the person who sold the 1.25 million puts will buy back more and more of their shares (that they presumably shorted at the time of selling the puts per above) as the stock price goes up. For the short put position, as the stock price goes up, the number of shares needed to be short to stay delta-neutral (ie. risk free) on their short put position will decrease (by a factor of whatever the gamma is on those options at that time). this also happens as time decays. Conversely, if the stock tanks, the person who sold the puts will have to short a lot more TSLA stock to remain Delta-Neutral.
i wonder what the strike price and expiry of the 1.25mm put position is? Do you know?
In the example you mention, the person who sold the 1.25 million puts will buy back more and more of their shares (that they presumably shorted at the time of selling the puts per above) as the stock price goes up. For the short put position, as the stock price goes up, the number of shares needed to be short to stay delta-neutral (ie. risk free) on their short put position will decrease (by a factor of whatever the gamma is on those options at that time). this also happens as time decays. Conversely, if the stock tanks, the person who sold the puts will have to short a lot more TSLA stock to remain Delta-Neutral.
i wonder what the strike price and expiry of the 1.25mm put position is? Do you know?
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No, I've not been able to find out more than here (and note it's 1.758mm puts. Crikeys, that's a lot!). From Lone Pine's 1Q 13F:
http://www.streetinsider.com/13Fs/Mandels+Lone+Pine+Capital+Enters+H%26R+Block+(HRB),+CME+(CME),+Valeant+(VRX)%3B+Liquidates+Facebook+(FB)/8338176.html
Its 1.7m shares, not contracts. 1.7m contracts would be 170m shares, which is more shares than the float.
mershaw2001
I'm short the short sellers
I just want to point out that today at Fidelity, there were only 54,000 shares to short. This is down from 2 or 3 million (If I recall correctly) a week or two ago. The annual cost sits at a low 1.25% but I'm completely surprised at how few shares there were to short.
Either everyone sold their TSLA shares, or someone borrowed them and they aren't there to short.
Anyone else want to check for other brokerages?
Either everyone sold their TSLA shares, or someone borrowed them and they aren't there to short.
Anyone else want to check for other brokerages?
I hope this is accurate .... As much as I hate to see bears get shaved over and over again it sure has been good for my account
I just put in an email to my broker to see if they can update me with how many shares are available to short TSLA .... cant find that info anywhere but they seem to have good customer service ... hopefully they will get the info for me and I will post here.
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I don't think so; the information on the number of shares being shorted are only released twice a month.
mershaw2001
I'm short the short sellers
The total number of shares short is released twice a month, however, you can check with your own broker just to see how many shares they have available to be shorted. If you keep tabs on that number, you can see how easy it is for shorts to get their hands on shares. For those looking at other brokerages, I find the information by going to "trade stock" and then pretending to short a share, and it tells me how many shares are available and what the annual price is. Then I just never click "execute order".
This is what I get when I try a pretend "sell short" trade of TSLA on Schwab
"This stock is either ineligible to be shorted or shares must be borrowed externally. Lenders of hard-to-borrow securities charge a fee in the form of interest. Clients who wish to short a minimum of $50,000 of a hard-to-borrow security and are willing to pay a fee to cover the cost of borrowing those shares, may contact Securities Lending at 800-***-**** to determine the fee amount."
smorgasbord
Active Member
Interesting SA article (not Petersen)
From almost 33 million to just over 18 million in about 3 months. Despite what others have said, the Shorts have NOT reloaded en masse.
I think those who got out at $95 expecting a lower buy-in price are going to continue to miss out for a while, unless there's some overall market correction. With BMW's i3 not impressing stat-wise, Tesla looks to have the luxury/performance EV market cornered for the next 12-18 months.
From almost 33 million to just over 18 million in about 3 months. Despite what others have said, the Shorts have NOT reloaded en masse.
I think those who got out at $95 expecting a lower buy-in price are going to continue to miss out for a while, unless there's some overall market correction. With BMW's i3 not impressing stat-wise, Tesla looks to have the luxury/performance EV market cornered for the next 12-18 months.