Entirely possible. Some of the more profit-oriented shorts surely play it both ways, and selling as a long generates no indications of short-selling.
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Papafox's Daily TSLA Trading Charts
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Entirely possible. Some of the more profit-oriented shorts surely play it both ways, and selling as a long generates no indications of short-selling.
adiggs
Well-Known Member
Can you explain the mechanism that makes this possible? I haven't completed a short sale, but I've been into that interface on Fidelity as part of my education about what the process looks like. Admittedly I'm a retail investor, but I only see a mechanism to borrow shares as part of execution of a short sale. I don't see a mechanism to borrow the shares and start paying the interest on them while holding the shares.
This doesn't make a lot of sense if I put myself into the shoes of a short seller, but i realize I could be missing something. To borrow the shares, I would obviously need to start paying the interest on the loan immediately, so that's cash out of pocket. Maybe in this situation, where I'm still holding the shares, I don't also need to deposit cash equal to the value of the shares - I have the shares themselves as surety that I will return them on demand. But if this latter bit isn't true, then I'm also depositing cash equal to the shares value, so I also have cash flow out the same as if I'd bought shares.
Interesting quote from Dudanskiy yesterday
$TSLA update, short interest is $12.1 billion, 35.3 million shares short. Not seeing a surge of buy-covers-yet. #Tesla shorts are up $218 million in mark-to-market profits today, but still down -$1.54 billion in August & -$1.71 billion year-to-date.
$TSLA update, short interest is $12.1 billion, 35.3 million shares short. Not seeing a surge of buy-covers-yet. #Tesla shorts are up $218 million in mark-to-market profits today, but still down -$1.54 billion in August & -$1.71 billion year-to-date.
There aren't really many shares left to short. The big shorts who are it in to destroy Tesla might actually be buying up large lots of shares at the beginning of the day, hence the early rise, and then unloading shares throughout the day to force it down and get the bots to play along with sell trends. For a lot of these people the battle is way beyond mere profit now, Chanos and his ilk have staked their reputations on Tesla going down and they are willing to lose any amount of money to make sure it happens.
I liked this post from 2013 , our turn must be close
DonPedro, Apr 20, 2013
I think keeping cool is the recipe. According to Yahoo Finance, there are 31.3 million short shares. Today's volume so far is slightly above 1 million shares. Even if the entire volume were shorts covering, this would still only reduce the number of outstanding shorts by 3% or so. The "Tsunami of Hurt" is in its very early days
DonPedro, Apr 20, 2013
I think keeping cool is the recipe. According to Yahoo Finance, there are 31.3 million short shares. Today's volume so far is slightly above 1 million shares. Even if the entire volume were shorts covering, this would still only reduce the number of outstanding shorts by 3% or so. The "Tsunami of Hurt" is in its very early days
Sudre
Active Member
There are a lot of post about shorts borrowing shares and unloading throughout the day. I have never shorted shares so I don’t know the process plus larger hedge funds have a diffferent mechanism than a website link for retail buyers.
The advantage? Shorts can only borrow and dump the amount of shares the institutions allow them to borrow. Overall the institutions have control over the short manipulation. If you want to drop the price by shorting on a day moving 22 million shares.... well it’s not going to happen if the institutions are only loaning 5 million shares that day. The shorts know huge volume days are coming. Can’t cut them off with a few million shares. Right now as trading lightens up is a perfect time to dump tons of shares. I guess it’s technically not shorting. It’s just buying at a low prices on margin. I noted that Mark S was very clear about what his short position was as if he may also have a hedge in the other direction.
pz1975
Active Member
Don’t even bother doing a post today Papafox - such a dull trading day.
What a day, all TESLA fans, Papafox, Heroden !!! I can't stop smiling.
Haha,seriously! Long time lurker, first-time poster. Had to make an account to get in on this. I nearly jumped out of my chair at work to cheer for Musk's announcement. Hope Einhorn and Chanos get destroyed.
Please forget everything we've been talking about for the past couple of years. The game has changed, at least for now, which is anticipating how this privatization talk along with the Saudi money is going to affect the value of your shares and calls. Consider:
* There's a great likelihood that the SP will be approaching 420
* There's a possibility if Tesla does well enough before the vote, the share holders might possibly vote down the proposal (but not likely)
* Another bidder could join the game and bid more than $420
* There are 35 million shares sold short. These guys are screwed, like 100% of them will be under water. The question for us is how will their exit affect the stock price. Will TSLSA go above 420 during a real squeeze?
* Calls valued above 420 may turn out to be worthless
* You should have an ability to participate in the privatization as an investor but you will likely need to own shares before a certain date. There are advantages to a private company including not being hounded by the shorts and being able to expand aggressively without market pressure
* Shorts are in denial, as usual, which suggests there's more upside coming soon as they start staring the bull in the eyes
It'll take a few days to wrap our collective heads around all of this. I suggest holding what you have (unless you're into 400+ calls) while we sort through the details. The exception would likely be options with lots of time value (such as J20s). Time value goes away when the privatization is complete. Right away compare the present value of those calls to what you would get at 420. I also suggest you look at your shares and options and figure the value at $420 so that you have a rough idea of where you'll stand if all goes forward. More tomorrow. Breathe.
Conditions:
* Dow up 127 (0.50%)
* NASDAQ up 24 (0.31%)
* TSLA 379.57, up 37.58 (10.99%)
* TSLA volume 29.8M shares
* Oil 69.16, up 0.01 (0.01%)
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Having followed a few of these, the date by which you must elect whether to continue to hold the shares as shares of a private company ("election date") is certain to be in the future, and will be *after* they announce the terms of the deal. There will probably be an opportunity to buy on the public markets after the deal terms are known and before the election must be made, though that isn't for sure. One thing to watch out for is that you may have problems if your shares are wrapped up in the wrong sort of retirement account or suchlike; you may need to get a new account set up and get your shares moved over *before* the election date, which can take a while. If you hold shares on margin you might have to pay your margin loan off. If you own fully-paid shares in a normal after-tax brokerage account or, better yet, as certificates or direct registration, you should be fine.
There is also a definite posssibility that the stock price will skyrocket before the vote on the go-private deal happens (this could be due to a short squeeze *or* due to Q3 numbers coming out before the vote) and this leaves a possibility that the go-private deal will be called off because Musk has funding to go private at $450, not at $2000. Don't bet on it but don't count it out.
My Dutch broker informed me of the possibilty that open option contracts at the moment of privatization are closed at ‘fair value’, calculated according to a predetermined formula. This happened to a position that I held some fifteen years ago in a then delisted Dutch stock. But my memory and Google searches turn up empty regarding the details of the phenomenon. Somebody knows more?
A lot of people are going to need a lot of advice very soon, including me. Seems like worst case is taking 10%+income tax rate on your IRA to convert to private shares. Soon could be as soon as tomorrow if the stock goes to $2000 in a squeeze. I can't imagine holding onto IRA shares in that case, but it's entirely possible I'll do something stupid.
Welcome to Day Two of After the Privatization Announcement. Volume was heavy today. The red ink we saw until the final hour or so of trading was likely due to continued disbelief that Elon will actually complete the privatization process successfully. There is lots of commentary speaking of a leveraged buyout, but this is not such a transaction and should be quite a bit more achievable since most current shareholders will have an opportunity to retain ownership of their shares in a company with the same management team.
Speculation among bulls today is that when word that the Saudis were investing big in Tesla got out, Musk may have been forced to get the word out about a possible privatization at 420 because he didn't want the stock price to run so high that the privatization plan would be in jeopardy. Mentioning 420 suggested that you wouldn't want to be buying above this level (at least in these early days).
Take a look at the brief run up into the green shortly after market open. Notice how steeply TSLA climbed. This is a pattern we'll see again and again in the future because shorts in particular are hoping for a drop but scared silly about the SP running up rapidly and involving them in some type of squeeze.
Close to closing, share prices fell, due to a story of the Department of Justice looking into Musk's tweet about going public. Again, such an action is additional evidence that many shorts think he is just bluffing. Unfortunately for them, Elon wouldn't say funding secured unless he meant it.
Various brokerages showed additional shares available for shorting today, reinforcing Ihor Dusaniwsky's claim that some covering took place today. BTW, he also says some shorts were adding to their positions.
At this rate of short covering, it would take over a month to clean out the remaining shares sold short
Bloomberg's Model 3 tracker is quite optimistic, not only showing 5,538 Model 3s/wk rate, but also changing the trend projection from a rather sizable dip to a slight increase in production next week. The fundamentals of the business are still important as the proposed privatization moves forward. Would you want to own TSLA shares at $420 if Model 3 production was looking bad?
Looking at the tech chart, you can see that TSLA closed right at the upper bb today. If the upper bb rises above the SP tomorrow, this arrangement will provide some encouragement for the SP to continue climbing, as well.
Conditions:
* Dow down 45 (0.18%)
* NASDAQ up 5 (0.06%)
* TSLA 370.34, down 9.23 (2.43%)
* TSLA volume 24.2M shares
* Oil 66.78, down 0.16 (0.24%)
* Percent of TSLA selling by shorts: 40.22% (by volumebot.com)
Ihor beleives that "shares available for shorting" is a useless / totally manipulated metric without any bearing on actual short activity:
Ihor Dusaniwsky on Twitter
Ihor Dusaniwsky on Twitter
Daily Short Sale Volume indicates that although the short sale volume vas very high the past two days, the short percentage is lower because the overall volume is high. (It defaults to GOOG so you have to enter TSLA first.)
Day Three of Taking Tesla Private Proposal
We live in interesting times. Today was the second day of fear-of-failure pulling the SP down. We've all seen these fear cycles before where the SP starts dropping, investors worry that someone has inside information and is trading on that information, the stock drops more, etc. In today's case, we did see Moody's put out a warning that if Tesla goes private, it would negatively affect credit rating. There could have been some front-running trading on this note by people who received leaks, so it is possible it was part of today's dip. Moody's caution strikes me as a concession to those individuals who do not want Tesla to go private. Moody's basically looked at this transaction as a $70 billion leveraged buy out, which it is not going to be if Musk's guidelines are followed, and therefore the credit risks are overstated. Other financial concerns have talked about a figure more like $20 billion to bring the plan about, which strikes me as more realistic.
In after hours trading, TSLA jumped up about $10 on news that the Tesla board will meet next week to discuss the privatization plan. The board asked Musk to recuse himself from the discussions since he will be a big holder of stock after a privatization. The Saudis were mentioned as a possible source of funds for the privatization effort, but there's no confirmation yet that the Saudi's are ready to more forward. Nonetheless, with news of the board meeting next week to consider the plan and Saudi money possibly available to fund it, TSLA climbed on the news.
It is worthwhile to consider three possible scenarios to the privatization effort:
1) The short-seller dreams. In their devious minds, the shorts think that since Musk is a inveterate liar, he likely made up the "financing secured" bit, the SEC will find out he has nothing to support his claim, and he'll go to jail. The alternative short thesis is that Tesla has some horrible secret problem right now at TSLA and this whole privatization talk is simply an effort to cover up the real story and to try and shake out some of the shorts. I give both these scenarios less than a 1% chance of coming true.
2) The privatization effort falls through. In this case, TSLA was on the verge of running to a new ATH before the announcement, and so after the fear cycle resolves, TSLA would start climbing again and would be in position to recapture that ATH after a successful 3rd quarter. Some investors who are heavy into OTM calls could benefit from this result.
3) The privatization effort succeeds. This is still the most likely scenario, and in that case you would likely receive $420 for your TSLA stock (subject to change until plan is finalized) or be offered a chance to carry that stock into the privatized TSLA. If the privatization effort succeeds, there's still a chance of a SBOTC at some point and you might be able to take advantage of it.
Arbitrage
In the meantime, as TSLA investors go through the fear and uncertainty cycle, there's a really nice arbitrage opportunity to pick up shares at a great discount and then sell them back to Tesla (or keep them in a private Tesla). If the privatization plan does not succeed, you would then likely have to hold the shares for a while to make money as a new fear cycle would likely follow news of a privatization effort failure.
What we're seeing is that the board is ready to roll up its sleeves and deal with this proposal next week, the board would like to do so without Elon's input, Elon might not be happy with that arrangement, and that the Saudis have been named as a possible source of financing for the privatization effort. Overall, the market is happy that some details have come forth, but more are needed. Expect volatility until the details are ironed out. If a privatization plan is released with solid details, look for a big jump in the SP as shorts scramble to grab shares and traders jump in. If the privatization plan fails, expect a period like we've seen the last couple of days, but TSLA eventually returning to a reasonable valuation.
Meanwhile, the big shorts are hanging in there and we have nearly 35 million shares outstanding.
Consider with such huge volume (16.3 million shares traded) and such small numbers of short shares covered, the buying is overwhelmingly by longs. To me, this buying and selling by longs suggests some of the weak longs and the longs who cannot own TSLA privately are getting out, and traders or strong longs are getting in. Such action suggests a more powerful run upward when/if the board announces its support for the privatization and details. The plot thickens.
Conditions:
* Dow down 75 (0.29%)
* NASDAQ up 3 (0.04%)
* TSLA 352.45, down 17.89 (4.83%)
* TSLA volume 16.3M shares
* Oil 66.75, down 0.06 (0.09%)
* Percent of selling by shorts: 33.44%
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Today was a wild up and down day for TSLA with some huge buy and sell orders 154,000 shares purchased in 1 minute at 2:07pm, which bumped the SP up slightly, and 108,000 sold at 2:56pm, which dropped the SP about $6. The shorts likely were behind the mandatory morning dip. Macros were down between 2/3rds and 3/4ths of a %, making TSLA's climb today a sign of strength.
A few important pieces of news or observations...
* We learned that Tesla will be looking for a large enough number of enabling investors in the privatization effort so that no one entity can seriously threaten to take control. For this reason, it is entirely possible that Elon was was speaking truthfully when he said "funding secured", but there may still be work ahead in attracting additional investors to enable the privatization effort so as to get the desired mix of these special investors.
* Gene Munster did some research and discovered that "funding secured" legally does not necessarily mean that all required funding has been secured. Sorry shorts, Elon won't be going to jail. Besides, if the SEC gets miffed, Elon gets fined, but this is not likely to happen.
* Munster has done perhaps the best interviews today on the Tesla privatization matter. Check out his Bloomberg interview here.
* Munster says he thinks there's better than a 50/50 chance that the privatization will go through.
* He says it might even take up to a year for the privatization to be completed (although it could happen much faster).
* Because of Munster's comments, and because of the complexity of trying to arrange methods to allow important investors to continue owning TSLA when it becomes private, it is entirely possible for this process to stretch past November, perhaps well past. Be prepared.
* Success of the privatization is not assured. Be positioned to make money either way.
* The issue of whether important investors can continue to own shares in Tesla after the privatization could cause some big investors to vote no if they feel the $420 is too low a number. That would put pressure on Tesla to raise the privatization buyout price.
* The disappearance of the short-sellers will not necessarily be at a timing of their choice. Lenders of shares will likely recall those shares to vote on the privatization question, and the lenders also need to recall their shares before they can transition to the new private Tesla (TSLAP). Because many lenders could recall in a short time span, a short-squeeze could indeed happen.
Shorts sold 40.07% of TSLA today, according to volumebot.com. Looking at the trading patterns of TSLA, I'm still inclined to believe that shorts are active with the manipulations but using exchanges that aren't included in FINRA computations. For this reason, I would compare today's selling % by shorts with those of Aug6-9 to get a better idea of the intensity of the short involvement in trading.
Looking at the technical chart, you can see that the upper bollinger band is now at 376.77, which gives lots more room to run. The performance of TSLA will likely continue to be based primarily upon news of the privatization effort next week, judging by today's climb in the face of down macros.
For the week, TSLA closed at 355.49, up 7.32 from last Friday's 348.17. It's been a fatiguing week digesting the possibilities, but also a week with significant promise. Have a good weekend.
Conditions:
* Dow down 196 (0.77%)
* NASDAQ down 53 (0.67%)
* TSLA 355.49, up 3.04 (0.86%)
* TSLA volume 11.4M shares
* Oil 67.63, up 0.82 (1.23%)
* Percent of selling by shorts: 40.07%
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