Wiki Selling TSLA Options - Be the House

[StarFoxisDown!]

So true. The strong inflows and relative strength is surely odd. There’s something going on under the hood that’s not clear yet. Tough to position for other than to be extra conservative on trades for both sides (i.e., sit on hands) which is not easy to do. Maybe that’s what “they” want, muddy the waters and then play with us.

Will we possibly get a reprieve until August?

This is one of those times where I would love to see the alternate reality version of the past 2 months where V12 was not released (and thus no big FSD progress and no Robotaxi announcement for Aug 8th)

Would we down in the 140's already?

Because there's 3 possible setup's going on right now.

A) This is simply a short term head fake that hedge funds like to do in order to trick traders into bad short term positioning before the next leg lower drops

B) Wall St had already determined that Q1 (and 2024) is just a throwaway year and thus are willing to set a floor at 160 for next years return to growth

C) FSD V12 progress has in fact caused Wall St to start a re-evaluation period of Tesla's value, which could last all the way until Aug 8th (which if its a disappoint I would expect the stock to be hit very hard)

 

[Max Plaid]

Regarding NVDA... around the last earnings, I did buy, for free 20x July +p600's to sell puts against. Of course the stock shot up, which made it trickier, but I kept it sensible, just selling 5x - 7x weekly up here, giving some scope for rolling down if necessary

Now I got caught holding 7x -p950 and the stock has retraced, IV has dropped a lot from before, so weekly rolls are yielding very little, even monthly roll is poor

Just closing out the 7x -P950 and the 20x +p600 is an possibility, just put it down to experience and move on, not that much of a loss, tbh, but I hate giving back cash...

Right now I'm looking to just get back what I have on the table, with would be $70k in the puts (they actually owe me more like $40k given the premiums take, but let's forget that), and the current intrinsic on the long puts, around $15k, so $85k -> let's call it $100k to allow for the aggravation caused

There are approximately 20x weekly expiries available to write against these July +p600's, so I'm thinking to start writing 20x $5 premium, which would be -p800 for next week, ought to be OK

Of course, the moment I close the -p950's, the stock will shoot up to 1000, but that's the game, eh?

 

[DaBooster]

This is one of those times where I would love to see the alternate reality version of the past 2 months where V12 was not released (and thus no big FSD progress and no Robotaxi announcement for Aug 8th)

Would we down in the 140's already?

Because there's 3 possible setup's going on right now.

A) This is simply a short term head fake that hedge funds like to do in order to trick traders into bad short term positioning before the next leg lower drops

B) Wall St had already determined that Q1 (and 2024) is just a throwaway year and thus are willing to set a floor at 160 for next years return to growth

C) FSD V12 progress has in fact caused Wall St to start a re-evaluation period of Tesla's value.

A)

 

[adiggs]

I don’t think it’s more pessimism, just less optimism. And other factors, more large whales saying they are going to engineer and fab their own special purpose chips/chipset and sw. A lot of NVDA pricing and bullishness for the past 1-1.5 years has been that they have a lock on supply for (from now) at LEAST 18-24 months. I don’t buy that anymore, demand and sales will grow, but I think others will have capable chips in 24 months for at least SOME of either the LLM tasks, or the more focussed inference.

There is a big difference between chip design like NVDA does, and chip fab like TSMC / Samsung / Intel / Global Foundries (such as TSMC fabbing the chip designs from NVDA). As far as I know between those 4 that is the complete universe of companies that fabricate chip designs on leading edge chip manufacturing equipment. AI chips will be on that leading edge, or 1 manufacturing node back, and either way the money to enter that business, achieve success, and sustain that success makes starting a new car company look like child's play.

Somewhat unlike the car business the chip fabrication business has been shaking out for multiple decades, leaving just the 3 or 4 left standing, from dozens back in the 80s. I actually don't know if GF is still standing, and if Intel doesn't get their foundry business working, I'm not confident that they have the scale any longer to make the economics of fabrication work.


But chip design, while still radically difficult, is also a business that doesn't require extreme capital expenditures to enter, or anything like what makes chip fabrication difficult. So Google or Tesla or whoever deciding to do their own chip design - that totally makes sense to me. It doesn't take 10s of billions to enter and likely fail, and there is big potential upside to paying TSMC (Samsung, ..) directly for the chip fab, getting exactly what you want in the chip feature set, and not paying NVDA's markup. If one's volume is large enough, while still being far less than the output from one or more modern fabs, then that business case works really well.

 

[StarFoxisDown!]

A)

Thing is.....everyone thinks it's A.

Which again makes me uneasy to be in such a crowded trade.

 

[Jim Holder]

A) This is simply a short term head fake that hedge funds like to do in order to trick traders into bad short term positioning before the next leg lower drops

B) Wall St had already determined that Q1 (and 2024) is just a throwaway year and thus are willing to set a floor at 160 for next years return to growth

C) FSD V12 progress has in fact caused Wall St to start a re-evaluation period of Tesla's value, which could last all the way until Aug 8th (which if its a disappoint I would expect the stock to be hit very hard)

Experience trading TSLA leads me to think A.

Seeing the intensity of the nonstop inflow (that’s a lot of billions just to play games) plus my gut feeling says B and C are more likely.

 

[tivoboy]

https://www.cnbc.com/2024/04/09/hedge-funds-are-selling-stocks-at-the-fastest-pace-in-three-months.html

 

[tivoboy]

I'm trying to decide what to do with my 170CCs for Friday. I'm planning on rolling to 4/26. Do I roll to 170 for lots of premium and hope the SP comes back down after ER, or roll up as much as possible?

I will wait until Friday and go from there. I would rather not lose these shares.... (I guess that means I roll up as high as possible and don't worry about lost premium).

Edit: It seems like Cybertruck deliveries/VIN assignments are on hold, probably from a bad part (several trucks have needed to be towed after only a few miles). The VIN tracker doesn't show any new VIN assignments for the last two weeks or so, and many waiting for delivery from older VIN assignments.

Honestly, for the $$ I think a roll to 4/26 seems better, but NFA, WDIK..you could roll to 4/26 $180 for a 100% credit.

 

[Jim Holder]

https://www.cnbc.com/2024/04/09/hedge-funds-are-selling-stocks-at-the-fastest-pace-in-three-months.html

What do you make of the TSLA inflows?

 

[Singuy]

There is a big difference between chip design like NVDA does, and chip fab like TSMC / Samsung / Intel / Global Foundries (such as TSMC fabbing the chip designs from NVDA). As far as I know between those 4 that is the complete universe of companies that fabricate chip designs on leading edge chip manufacturing equipment. AI chips will be on that leading edge, or 1 manufacturing node back, and either way the money to enter that business, achieve success, and sustain that success makes starting a new car company look like child's play.

Somewhat unlike the car business the chip fabrication business has been shaking out for multiple decades, leaving just the 3 or 4 left standing, from dozens back in the 80s. I actually don't know if GF is still standing, and if Intel doesn't get their foundry business working, I'm not confident that they have the scale any longer to make the economics of fabrication work.


But chip design, while still radically difficult, is also a business that doesn't require extreme capital expenditures to enter, or anything like what makes chip fabrication difficult. So Google or Tesla or whoever deciding to do their own chip design - that totally makes sense to me. It doesn't take 10s of billions to enter and likely fail, and there is big potential upside to paying TSMC (Samsung, ..) directly for the chip fab, getting exactly what you want in the chip feature set, and not paying NVDA's markup. If one's volume is large enough, while still being far less than the output from one or more modern fabs, then that business case works really well.

The most expensive part of about chip design is software and debug. It takes a tremendous amounts of effort to get chips to run efficiently and as designed. They also have to figure out how this can translate easily to the end user.

Current Nvidia dump was brought to you by Intel's reveal of their AI chip. I think big players used this event for a quick sell off. At the end of the day, it's most likely a nothing burger for Nvidia.

 

[MikeC]

What do you make of the TSLA inflows?

I wonder if it’s a coincidence that we get inflow as NVDA is cooling off, since we had so much outflow when they were rocketing. The money has to be coming from somewhere.

 

[tivoboy]

What do you make of the TSLA inflows?

Other than trying to maintain position as much as possible before Earnings, I don’t have an informed answer.

 

[Singuy]

This is one of those times where I would love to see the alternate reality version of the past 2 months where V12 was not released (and thus no big FSD progress and no Robotaxi announcement for Aug 8th)

Would we down in the 140's already?

Because there's 3 possible setup's going on right now.

A) This is simply a short term head fake that hedge funds like to do in order to trick traders into bad short term positioning before the next leg lower drops

B) Wall St had already determined that Q1 (and 2024) is just a throwaway year and thus are willing to set a floor at 160 for next years return to growth

C) FSD V12 progress has in fact caused Wall St to start a re-evaluation period of Tesla's value, which could last all the way until Aug 8th (which if its a disappoint I would expect the stock to be hit very hard)

I think people are giving FSD a benefit of a doubt for the first time since it was released to the public. The next few months of reiteration and feature improvements need to escalate because as of now, the impressive part about V12 is how vastly superior it is to old version at it's most terrible form. If it took AI to learn FSD controls and drive 3x better than V11(which took over 3 years) in just a over 6 months, what will another 6 months bring with 10x the compute? Some people are placing bets.

 

[bmd00]

While the technicals thus far have indicated tsla still has further to fall, the past 2 days have changed things a bit. So I will give the bull case for why we could be at the start of a new rally and how I plan to trade it. At this time I don’t have any position in tsla. Please note that the bigger trend is still pointed down and will remain until we break the well-respected descending trendline leading back to the ATH.

Since Dec 28th, 2023, we’ve been in a steady downtrend with a small 17% retracement from Feb 5th - Mar 1st. The gap-up on Mar 18th and high volume retest of the 160 low on Apr 5th weren’t by themselves significant enough for me to justify a bottom just yet. But now that we have broken the descending resistance trendline on Apr 8th we should re-evaluate and see if we can justify at least a temporary bottom.

Here’s what I like about the recent price action:

1. Daily bearish divergence began forming on Jan 25th.
2. Increasing daily volume led to the low on Mar 15th.
3. Gap up on Mar 18th indicates support at 160.
4. Failing to break the low on Apr 5th further indicates support at 160
5. Breaking the resistance trend line Apr 8th signals a high potential downtrend has stalled

Notice I labeled the retest on Apr 5th as Day 15 from the current bottom on Mar 18th. Now see the picture below which is the start of the May 2022 rally.

Interstingly, during the May 2022 rally SP retested the low on the 16th day, which seems oddly coincidental given the structure of the move is also very similar to today. Look at the daily and weekly charts from May 2022 to today and notice the positioning of the 21 EMA and the 50 + 200 SMA relative to the SP.

Here’s what I don’t like about the current setup:

1. Volume and candle setup on the weekly chart are not conducive to a strong reversal
2. While daily volume picked up slightly towards the bottom, it’s nothing significant
3. There was no significant daily reversal candle
4. The 50 SMA is below the 200 SMA on the daily chart and both moving averages are above us. Getting above these moving averages and the 50 to cross back above the 200 is doable but it will take a lot of momentum. I’m not sure this bottom setup is capable of pushing us that far up (see what happened between May-Sept 2022).
5. If this is the start of another rally, without a significant reversal candle, like we had on Jan 6th, 2023, we will be encountering many bumps along the way up. There could be several sharp pullbacks, as we’ve already seen between Mar 26th - Apr 5th.

Having recognized the similarities to the May-Sept 2022 rally, I’ll be using this as a reference and watching for similarities and differences. We may end up looking nothing like that rally, but for now, there are several similarities.

I won’t be doing anything this week. If we close the week up and above the descending trendline leading back to Dec 28th, I’ll look to enter a position in the next week or two. It’s possible there won’t be any significant pullbacks to buy on, but with the current setup, I’m inclined to think there will be. Nonetheless, I’ll tread with caution and watch for resistance. If we can break past $206, several resistance zones may converge with one another and create a strong pivotal point around $220.

 

[Jim Holder]

While the technicals thus far have indicated tsla still has further to fall, the past 2 days have changed things a bit. So I will give the bull case for why we could be at the start of a new rally and how I plan to trade it. At this time I don’t have any position in tsla. Please note that the bigger trend is still pointed down and will remain until we break the well-respected descending trendline leading back to the ATH.

Since Dec 28th, 2023, we’ve been in a steady downtrend with a small 17% retracement from Feb 5th - Mar 1st. The gap-up on Mar 18th and high volume retest of the 160 low on Apr 5th weren’t by themselves significant enough for me to justify a bottom just yet. But now that we have broken the descending resistance trendline on Apr 8th we should re-evaluate and see if we can justify at least a temporary bottom.

View attachment 1037103

Here’s what I like about the recent price action:

1. Daily bearish divergence began forming on Jan 25th.
2. Increasing daily volume led to the low on Mar 15th.
3. Gap up on Mar 18th indicates support at 160.
4. Failing to break the low on Apr 5th further indicates support at 160
5. Breaking the resistance trend line Apr 8th signals a high potential downtrend has stalled

View attachment 1037104

Notice I labeled the retest on Apr 5th as Day 15 from the current bottom on Mar 18th. Now see the picture below which is the start of the May 2022 rally.

View attachment 1037105

Interstingly, during the May 2022 rally SP retested the low on the 16th day, which seems oddly coincidental given the structure of the move is also very similar to today. Look at the daily and weekly charts from May 2022 to today and notice the positioning of the 21 EMA and the 50 + 200 SMA relative to the SP.

Here’s what I don’t like about the current setup:

1. Volume and candle setup on the weekly chart are not conducive to a strong reversal
2. While daily volume picked up slightly towards the bottom, it’s nothing significant
3. There was no significant daily reversal candle
4. The 50 SMA is below the 200 SMA on the daily chart and both moving averages are above us. Getting above these moving averages and the 50 to cross back above the 200 is doable but it will take a lot of momentum. I’m not sure this bottom setup is capable of pushing us that far up (see what happened between May-Sept 2022).
5. If this is the start of another rally, without a significant reversal candle, like we had on Jan 6th, 2023, we will be encountering many bumps along the way up. There could be several sharp pullbacks, as we’ve already seen between Mar 26th - Apr 5th.

Having recognized the similarities to the May-Sept 2022 rally, I’ll be using this as a reference and watching for similarities and differences. We may end up looking nothing like that rally, but for now, there are several similarities.

I won’t be doing anything this week. If we close the week up and above the descending trendline leading back to Dec 28th, I’ll look to enter a position in the next week or two. It’s possible there won’t be any significant pullbacks to buy on, but with the current setup, I’m inclined to think there will be. Nonetheless, I’ll tread with caution and watch for resistance. If we can break past $206, several resistance zones may converge with one another and create a strong pivotal point around $220.

View attachment 1037106

Fantastic post and example of fleshing out a thesis

 

[Jim Holder]

https://twitter.com/x/status/1777436415103529104

 

[Jim Holder]

FWIW Cary, an objective chartist who’s not a deep Tesla tracker like many of us, may be onto something that might split the difference.

He says getting over $179.83 can see $184.25, and a close over that can see $188-$190 channel top and max out there. Then rotate back down to the channel bottom in the low $160’s.

Only a close over $188-$190 indicates further bullish momentum toward $240s over 2-3 months.

 

[tivoboy]

FWIW Cary, an objective chartist who’s not a deep Tesla tracker like many of us, may be onto something that might split the difference.

He says getting over $179.83 can see $184.25, and a close over that can see $188-$190 channel top and max out there. Then rotate back down to the channel bottom in the low $160’s.

Only a close over $188-$190 indicates further bullish momentum toward $240s over 2-3 months.

View attachment 1037126

I'm just going to put this out there. But even from a TA standpoint or literrally anything else anyone can come up with I see No, ZERO chance of being over $240 in 2-3 months. I'm about to get put that old shoe again.

 

[Patrick66]

I don’t think it’s more pessimism, just less optimism. And other factors, more large whales saying they are going to engineer and fab their own special purpose chips/chipset and sw. A lot of NVDA pricing and bullishness for the past 1-1.5 years has been that they have a lock on supply for (from now) at LEAST 18-24 months. I don’t buy that anymore, demand and sales will grow, but I think others will have capable chips in 24 months for at least SOME of either the LLM tasks, or the more focussed inference.

Fully understood (and priced into my assumptions). But... when did Tesla announce a chip that could compete with Nvidia on the data center space, and how much are they still spending a year on Nvidia chips? The moat Nvidia has is much deeper than the chips themselves, it is the tools as well which aren't a slam dunk for people to replace wholesale. When you look out 2-3 years you might see a cap to growth rate, but until then I don't see it. The broader market is growing so much faster than Nvidia's chip supply.

Now, if you look 5-7 years out maybe we will all look back on the pop of the AI bubble and have a different discussion.

 

[Jim Holder]

I'm just going to put this out there. But even from a TA standpoint or literrally anything else anyone can come up with I see No, ZERO chance of being over $240 in 2-3 months. I'm about to get put that old shoe again.

Lol. My main point is about what he suggested was the rotation off $188-190 back down to $160’s and possibly lower, which seems to unify the group’s voices here somewhat (all the positive inflow but looming ER dump).

Maybe the inflow gang is just here for the ride and will exit with the rest (dunno though if it matches similar shenanigans in the past given its billions nonstop).