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Short Squeeze Strategy

Discussion in 'TSLA Investor Discussions' started by sweter, Jun 19, 2018.

  1. sweter

    sweter Member

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    We're nearing the time when we need to position ourselves to play the potential short squeeze. What are your strategies? How do you think it will play out and what price points its gonna hit? How to make the best of it?

    (Regardless of whether it will happen or if at all, that's an entirely different discussion - for the purpose of this thread let's assume it will).

    Are you gonna sell at all? Some %? Cash out or come back in afterwards? What do you think the SP will reset at afterwards (what would be the good SP to buy back)?

    Very curious to hear your thoughts on this.
     
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  2. Teslie

    Teslie Member

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    I doubled my short position yesterday, thx very much...
     
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  3. WarpedOne

    WarpedOne Supreme Premier

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    I am not selling, go away.
     
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  4. EVMeister

    EVMeister Member

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    ^^ Like a gambler who doesn't know when to quit.

    As to the original question, I don't really know what will happen. And my stretegy remains fluid, depending on how things play out. In other words, I don't really have one.
     
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  5. Dwdnjck

    Dwdnjck Member

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    I choose to use credit to create leverage and not options. I think it’s less risky and might even be less expensive in the short term. I have a certain amount of Tsla that I have accumulated over the years, and I am leveraging this holding by another 25 per cent. As the stock goes up, I buy more. I use a line of credit based on my entire portfolio, not just tsla.
     
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  6. Teslie

    Teslie Member

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    :D:D:D You made my day
     
  7. EVMeister

    EVMeister Member

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    Glad I could help, thought you could use a bit of distraction from reality. ;)
     
  8. CarlK

    CarlK Member

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    Own shares. Buy calls. Write puts. What else? Let's hear yours.
     
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  9. ggr

    ggr Roadster R80 537, SigS P85 29

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    I'm uber-long too, but be aware that this is a dangerous strategy.
     
  10. Johann Koeber

    Johann Koeber Member

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    If a short squeeze means the stock goes way up (and quickly), I would be selling a small part of my shares; hoping to get in cheaper a few days later.

    If it is a 'gentle' squeeze taking several week or months to play out I just hang in there and enjoy the ride. Might lock in some of the profits if we go way up.

    More than once Elon gave nice clues; so just listen to him and don't overleverage myself.

    Question: Would a trailing stop work in the quick way up situation?
     
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  11. pz1975

    pz1975 Member

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    I am accumulating a bunch of July 20 way OTM calls as lottery tickets. They are very cheap of course (500 and 580) and I fully expect them to go to 0.

    I am only spending about 0.3-0.5% of my total portfolio on this. It is worth the gamble IMO in case a true short squeeze ensues as these could potentially go up by 100-1,000x depending on how high a squeeze went.

    I still have a majority share and LEAP position but just want to position myself to not have major FOMO in case there is a squeeze. I have sold some LEAPs this week and am taking a small portion of the proceeds to fund this lottery purchase.
     
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  12. ggr

    ggr Roadster R80 537, SigS P85 29

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    Ach, Mein Gott, nein! The problem is that during the squeeze itself, volatility can be nuts. Somewhere in the rise, probably long before it's done, some bozo will enter a wrong price order, maybe buy a couple of shares at a ridiculous price, and the next trade will trigger your stop, and sure you pocket some cash, but now you don't have the stock any more and have to chase it up to buy back in. I have, in the past, used trailing stop orders, and I can't think of a single time I didn't regret it in the end.

    Also, remember that when the stop triggers, it becomes a market order. For a stock like TSLA, this probably doesn't matter much for people like you and me, since it will fill almost instantly, but for a thinly traded stock you might find that the actual trade is somewhat, or even much, lower than the trigger price.
     
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  13. neroden

    neroden Happy Model S Owner

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    So I initially read the title of this thread a bit differently. :) Humor me.

    If we credit Jesselivenomore's analysis and assume that a large group of short-sellers are actually trying to kill Tesla by starving it of capital, the only time this will matter is when the 2019 convertible bonds need to be paid or converted on March 1, 2019. The decision date for convertible holders turns out to be February 27, 2019, two days earlier.

    Accordingly, the correct strategic move to prevent a bear raid if the stock price is anywhere below or near $360 is for all long holders to recall all shares from share lending programs sufficiently before that. (And those who are leveraged should pay off all margin loans, preferably by selling other stocks, so that their TSLA can't be loaned out by the broker either.)

    It can take up to two business days to recall shares. The market makers may have up to 13 business days to re-locate shares (during that time, "naked shorts" may exist). Adding another day to allow the market to actually react, recalls would need to start on February 4th, 2019.

    It would probably be most reliable to recall them at least a few days earlier, during January 2019. Too many weeks before that and the short sellers might find a way to refinance themselves :)

    I'm happy to take money from short sellers but I won't allow them to put Tesla in a bad financial position, so that's when I'm going to recall my shares.
     
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  14. adiggs

    adiggs Active Member

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    This is an idea, and timing, worth repeating at least in this community. It's a specific tangible event, like the Solar City acquisition, with known timing ahead of time. For investors with long horizons, it's a time to put the two desired outcomes together with some tangible action (monthly interest/cash in the meantime, plus share price support at a time where it matters).

    And significant share recalls WILL move the price up.

    My back of the envelope math from a couple days ago:

    210M shares @ $370/share = 77.7B market cap
    remove 40M shares shorted to get down to the 170M shares in the market

    170M shares @ ?/share = 77.7B market cap
    ? = $457.

    Clearly all 40M shorted shares won't be recalled, but recalling shares will conservatively drive the share price somewhere in the $370 - $457 window. Which is really just support for the share price, at levels already established a few times and confirmed this week.
     
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  15. winfield100

    winfield100 Active Member

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    would following the A/D line be helpful from a chartist point of view? it looks up ~40 million shares since 1/1/2018 and up ~10 million since 6/1, but is this "just noise" or a useful hint?
     
  16. AWDtsla

    AWDtsla Active Member

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    There is no way that's correct. This is only for an orderly exit case, which we can be nearly sure won't happen. You can't have a demand for 40m shares *at any price* over the course of several days, and maintain that market cap. It will be astronomical.
     
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  17. adiggs

    adiggs Active Member

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    Totally agreed. I think you'd agree that we could call this a really ,really conservative lower bound :)
     
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  18. Nate the Great

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    Can you clarify, how did he go about providing clues?
     
  19. Johann Koeber

    Johann Koeber Member

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    There were famous quotes, among others:

    „Tsunami of hurt“

    „The stock went a bit higher than we deserve“ (something like that - out of memory)

    These were clues that were quickly proven to be right.
     
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  20. kbM3

    kbM3 Member

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    Personally right now I'm "over invested" in TSLA. I'm really having trouble selling at the current price with short interest at such an incredible level, and because of Elon's short timeframe for the short burn. I'm thinking that if the short burn does come soon and is very dramatic and fast, I need an exit plan for my stock. Of course, my preference would be a slow burn so that I'm not tempted to sell as many shares, but I want a strategy just in case Elon is right.

    I'm interested in getting other people's thoughts on strategies they would pursue if the stock does have a violent rise because of an unprecedented announcement.

    Personally my current thought (I'm about 120% invested in TSLA and would like to diversify):

    Start selling if it crosses $500.00/share (maybe 10%)?
    Sell in tranches every $50.00/share increase thereafter (maybe my diversification might hit 50% if we get to $1000.00/share).

    Please share your strategies.

    1) Are you "over investing" because of Elon's tweet prior to next week, and if so how much and by options/margin/shares...?
    2) What is your exit plan?
     
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