NigelM
Recovering Member
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Short-Term TSLA Price Movements - 2013
- Thread starter Robert.Boston
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[moderator's note: posts on options and technical trading were moved to Technical Trading Strategies ]
So Citizen - I am curious. Why do you feel "window of opportunity is very small here" ? Looks like the stock price is going to be fairly erratic but gravitate around the 40 - 45 range. Do you feel otherwise?
Window is small because it takes time for people to digest the news and then realize what the actual goal of leasing is. Everybody was up in arms but if they sat down in Elon's chair they'd realize this financing product is a catalyst and ploy to get even more reservations. Not to mention after everybody's blood stops boiling, they'll realize there are 3 more announcements coming.
Norbert
TSLA will win
And it makes sense to first get the financing deals in place, before making the other announcements...
NigelM
Recovering Member
I'm seeing 40.88 with bids 40.50, sells 41.20. Wouldn't surprise me it it opens lower in the morning.
^ Thanks Nigel. I think 40-41 is fair at this point and the future is bright for TSLA.
Safe to say I am an offical kool-aid drinker now for Elon and TSLA and now have gotten two other people to buy into the stock. One at $20k last month and now another $60k for my wife. I told them it's a volatile stock but they're believers now too and want to get in while it's really worth the while. I wish I had more to invest, but at least I purchased a P85 and am helping the cause :wink:
Safe to say I am an offical kool-aid drinker now for Elon and TSLA and now have gotten two other people to buy into the stock. One at $20k last month and now another $60k for my wife. I told them it's a volatile stock but they're believers now too and want to get in while it's really worth the while. I wish I had more to invest, but at least I purchased a P85 and am helping the cause :wink:
Citizen-T
Active Member
I think the window is small because we are going to get swarmed by analyst reports upping price targets. I don't think you can trade on the technicals right now, there's too much news flying around.
I believe you are correct because of the series of announcements to come out just weeks leading up to earnings report. I wonder if deliberate attempt to create short squeeze. Should be hearing soon about 10,000 car produced soon
Zzzz...
Member
While I don't personally touch options tradings, not even activated on my account.... My understanding of how market works is limited(newbie)... But I still want to comment on this. Share price had reached $46.68. An all time TSLA high. Have it scared shorts? Have it triggered short squeeze?
From my (limited) understanding of the market you could not possibly ask for a better "news" to trigger shortsqueeze. TM is profitable contrary to believes of analysts! But how come price have not reached even higher skies? Problem is(IMO) that most shorters are the institutions. And when price reach all time high - they got resources/money to double down. They are not "squeezed". Moreover they got more reasons to short - higher price. The iconic WV squeeze was a different story. "The news" had an effect of a bomb, anyone who were late to the party of buying shares would pay Porsche an unlimited price per share. That have created a huge demand in very short time when institutional day traders had to cover their asses(a friend of my friend(sic!) is a trader for RBC, largest bank of Canada in terms of money hold). But with TSLA such scenario simply not possible. I would not see how shorsqueeze chance could be better than what happened(amending profitability 3(three!!!) quarters before any analyst foresee it).
If you know better example of SS than what happened to VW - please point me to it. Until then I team up with JohnP. about shortsqueezes being more rare then an unicorns in the wild. IMO.
Netflix about three months ago. Short squeeze in extreme can raise price like vw but just obvious losing position recognition could double stock price. Whether institution or individual no one wants to lose money and will abandon position
mitch672
Active Member
I think these short positions are so large, that they actually affect the price of the underlying security, that's something that's unfortunate, and it's too bad there's no way to stop it. The options market originally had a real purpose, that use has long been abandoned, now hedge funds abuse it for profit. Really sad.
Thumper
Active Member
mitch672
Active Member
Easier than you think. After the Feds finish devaluing the dollar (and the riots, hyperinflation and Marshall Law go into effect), there will likely be another American revolution, the people will revolt, the rascals will be prosecuted as traitors, and hung.
Ok, just wishful thinking, but the U.S. is headed for a full default, will make the 1929 depression look like a walk in the park. The triggers are all in place, eventual loss of the dollar as the worlds reserve currency, the inability (soon) to even service the debt (.46 of every dollar spent now goes to service the debt), we don't know what the trigger will be, but there are so many, it's just a matter of time.
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This article does a great job explaining naked short selling. I think it might also explain what could happen to Tesla, with a few differences to allow whoever is doing this to do it legally. What if someone is buying up all of the available shares? Short Selling Stocks for Predators: Naked short sellers seek protection from short squeeze
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mitch672
Active Member
The question of course is WHO is buying up all the TSLA shares.. It looks more like a battle of large hedge funds taking 1 side (naked short selling), with who knows on the other end (buying up all available TSLA shares), since the value of the company is near 5 billion, it would have to be someone with deep pockets, of course the float is much smaller. I think these hedgeys just enjoy the action (read: manipulating the stock for their own gains). Maybe they even take turns, it seems like a big game to them.. How else can anyone explain such huge volatility in the stock. I wish they would just find a new company to F with and let TSLA be.
@mitch672
The volatility of a stock like Tesla is easily explained by the huge uncertainty about what the right value of the company really is.
An established, business-as-usual company can relatively easily be valuated by looking at the cash flow, making some projections and scenarios (that will be a few percent apart), and then discounting to find a value. Make some adjustments for risks and potential upsides (like the probability of a bid for all the company's shares). On the other hand, a company like Tesla faces the whole range of potential scenarios - bankruptcy, small-time truging along, taking over the world or acquisition by a major player. Who knows what the company would be worth in each of these scenarios, and which probability to put on each scenario? Each new piece of news and each new insight into how to think about the company can change each player's calculation dramatically. And on top of this is just general "sentiment" (or "herd mentality, if you like"). Volatility is very natural for a stock like this.
Whether short selling is good or bad is an age-long debate. It is not clear cut. Personally I am grateful to the short sellers in Tesla, because I only recently discovered the company and decided I want to hold the stock for the long term because I believe in Tesla. If there were no short sellers, the supply of the stock would be much smaller and thus the stock price higher. They have made it possible for me to come it at the present valuation. As such, they are willing counterparties to a bet I want to make about the future of Tesla. The short selling also provides liquidity, which is nice for investors and also actually dampens volatility. Furthermore, in the absense of short selling, bubbles are more likely to develop (in individual companies especially). The existence of shorts makes it "safer" to be a long investor, because there is a lower probability that any given stock you invest in is inflated far beyong fundamentals (although I would not over-estimate this effect).
Short selling is frequently confused with market manipulation. However, shorting is only one of many instruments that can be used to manipulate the market, and by far the most prevalent. In fact, long positions can be equally useful for a market manipulator (see the link posted by drinkerofkoolaid above). Conversely, most short selling is not manipulative. You should try it yourself as an investing strategy, the next time you see an obviously overvalued company. Just be aware that you are entering into a position with theoretically unlimited losses - there is nothing that says a stock shorted at $40 could not rise to $800, costing you 20x the initial sales revenue. Seeing it from this side shows you how the shorts provide additional upside to the longs...
The volatility of a stock like Tesla is easily explained by the huge uncertainty about what the right value of the company really is.
An established, business-as-usual company can relatively easily be valuated by looking at the cash flow, making some projections and scenarios (that will be a few percent apart), and then discounting to find a value. Make some adjustments for risks and potential upsides (like the probability of a bid for all the company's shares). On the other hand, a company like Tesla faces the whole range of potential scenarios - bankruptcy, small-time truging along, taking over the world or acquisition by a major player. Who knows what the company would be worth in each of these scenarios, and which probability to put on each scenario? Each new piece of news and each new insight into how to think about the company can change each player's calculation dramatically. And on top of this is just general "sentiment" (or "herd mentality, if you like"). Volatility is very natural for a stock like this.
Whether short selling is good or bad is an age-long debate. It is not clear cut. Personally I am grateful to the short sellers in Tesla, because I only recently discovered the company and decided I want to hold the stock for the long term because I believe in Tesla. If there were no short sellers, the supply of the stock would be much smaller and thus the stock price higher. They have made it possible for me to come it at the present valuation. As such, they are willing counterparties to a bet I want to make about the future of Tesla. The short selling also provides liquidity, which is nice for investors and also actually dampens volatility. Furthermore, in the absense of short selling, bubbles are more likely to develop (in individual companies especially). The existence of shorts makes it "safer" to be a long investor, because there is a lower probability that any given stock you invest in is inflated far beyong fundamentals (although I would not over-estimate this effect).
Short selling is frequently confused with market manipulation. However, shorting is only one of many instruments that can be used to manipulate the market, and by far the most prevalent. In fact, long positions can be equally useful for a market manipulator (see the link posted by drinkerofkoolaid above). Conversely, most short selling is not manipulative. You should try it yourself as an investing strategy, the next time you see an obviously overvalued company. Just be aware that you are entering into a position with theoretically unlimited losses - there is nothing that says a stock shorted at $40 could not rise to $800, costing you 20x the initial sales revenue. Seeing it from this side shows you how the shorts provide additional upside to the longs...
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Zzzz...
Member
You mean this one? When stock added 70% in a matter of days? But that was a good news and stock gone up on that news. I do not think that qualify as short squeeze. Investopedia defines SS as: "A situation in which a lack of supply and an excess demand for a traded stock forces the price upward." Was there a luck of supply in Netflix case? I doubt it. Just good fourth-quarter earnings report driven price up, and it stayed there. Not panic among shorts. But in VW case there were a huge lack of supply, and that why stock skyrocketed.
Norbert
TSLA will win
I don't think it has to be a lack of supply (although that may cause a "super" squeeze). My understanding is that the rising price must trigger more shorts to cover, which cause the price to go higher, forcing even more shorts to cover. The supply only has to be small enough to cause a price increase when there are many buyers coming in (keep in mind the shorts are really quite a high percentage of available shares).
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Re NFLX: It seems NetFlix didn't have a lot of shorts, so the price increase couldn't possibly cause a short squeeze.
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