I stated in the past but I like repetition. "The Beat" is priced in, but the real question is to what magnitude.
Well, I wouldn't go that far. I think that the market knows there is going to be a beat, but it has not yet priced it in fully. I think that the market wants to, but there is still a lot of time between now and earnings. I believe that the market will price in what it believes the beat will look like between now and the day of earnings. I think that number looks something like $195-$200 depending on how much of a beat the market expects.
The net is that we have 3 weeks to move ~$10, so I expect pretty sideways movement going forward.
If I may pick your brain-- what's your set up for Q3? I have only a small portion of what I can bear losing in Nov 200's, but I think about premium decay and am wondering if I should be rolling those to a later date. Now that Nov. 5th is confirmed it takes off my fear of having an ER call too close to expiry. Thoughts?
I bought both Nov $200s and Dec $200s during the worst of the debt ceiling sell-off. I was buying the Dec $200s when TSLA was trading at $163. I expect that we'll see premiums decay for a while here, but then they should recover as we get closer to earnings. Demand for TSLA options are always huge the day before and day of earnings.
What I would really like to see happen is I'd like to see the stock at $199 on Nov 5th, and I'd like to sell half my calls just before the market closes that day. I'm hoping that by doing that I'll capture the most premium I can and go into earnings just playing with the houses money.
Also, don't get caught up focusing on by how much Tesla beats the street this quarter. Stock price is a reflection of future earnings, not past. The anticipation of a beat will drive the stock up between now and earnings, but a pop after earnings will be all about guidance. There needs to be surprisingly good guidance (just ask SCTY investors). I think our ace in the hole here is going to be China.
Elon mentioned during the last conference call that it was too early to talk about China and that he would do that on the next call. Our own Sleepyhead has indicated that demand in China is phenomenal and that Tesla is looking to do something like 15,000 cars there next year (if I recall correctly). Wall Street loves to hear about China.
If Elon gives this kind of guidance and say, raises next year production expectations to 50k units, that'll be much more important than whether they delivered 6k or 6.5k units in Q3.
