Short-Term TSLA Price Movements - 2014

[sub]

I'm interested to see the price action in the last hour of trading today.

 

[FluxCap]

They sell stock. And when the options they've sold expire worthless they buy it back. Since they're large players they sell large number of stock. This together with negative news stories and "reports" creates a feeling among some investors that something has changed in the stock, so they may take out stop losses too, making others sell. In this way they may profit both from the options that expire worthless as well as being able to buy back the stock even lower than they sold it in the first place (to depress the price).

Precisely. It takes a large (non-retail) amount of capital and can be risky if they run out of ammunition to provide liquidity, but it works.

 

[tdiggity]

I'm interested to see the price action in the last hour of trading today.

Yea. Looks like they aren't letting the stock get too far from $245.00

 

[mejojo]

I think I'm about to learn an expensive lesson that there is not much difference on the Max Pain chart in the range between 245 and 250.

I'm regretting my bet.....let's hope I end the day regretting my regret....

 

[FluxCap]

Well, I'm wrong so far today. Max pain has not been defended and the overall market drifted down all day despite a frothy premarket buying spree. We will see what the final hours hold.

 

[mejojo]

I know one place where Max Pain is being felt......

 

[TSLAopt]

Could someone succinctly state the case for how market participants manipulate TSLA short-term? I have a Chicago education and can't get my head around it. Thanks.....

Trust your Chicago education more than us conspiracy theorists about TSLA stock price manipulation. It is possible for micro cap and penny stocks, but I highly doubt this could happen for anything like TSLA. For every buyer there is a seller and vice versa. Market makers can take positions but they are very risk sensitive and would not take on a huge position in the interest of defending a particular option strike price.

 

[Citizen-T]

Oh good. I wanted to buy those 2017 LEAPs, time to go shopping.

 

[Tuxedo]

As far as I can see, there is no longer any meaningful short to middle term upside potential in the stock (and I mean 1 - 2 years). Current stock valuation implies that everything goes as planned, and it never does. When I first bought at 40ish, their plans were not priced in. Now they are.
I'll be sellling all of my positions at around 255 or so (if we reach that level in the next month), and go on to other opportunities. But I'll still enjoy driving the car, that's for sure!

 

[Curt Renz]

Trust your Chicago education more than us conspiracy theorists about TSLA stock price manipulation. It is possible for micro cap and penny stocks, but I highly doubt this could happen for anything like TSLA. For every buyer there is a seller and vice versa. Market makers can take positions but they are very risk sensitive and would not take on a huge position in the interest of defending a particular option strike price.

It's not just the marker makers. Well capitalized hedge funds that have written puts and calls at popular strike prices may find it advantageous on the expiration date to nudge the share price towards a particular strike. They can re-position their stock holdings on Monday.

Meanwhile folks, let's keep in mind that the most recently published max-pain strike was based on the options open interest at yesterday's close. The max-pain target may have changed today.

Again, here is the video in which former hedge fund manager Jim Cramer describes how manipulation can be done: Jim Cramer Explains How The Stock Market Is Manipulated - YouTube

 

[The Blue Owl]

Trust your Chicago education more than us conspiracy theorists about TSLA stock price manipulation. It is possible for micro cap and penny stocks, but I highly doubt this could happen for anything like TSLA. For every buyer there is a seller and vice versa. Market makers can take positions but they are very risk sensitive and would not take on a huge position in the interest of defending a particular option strike price.

I agree with you, I don't see a conspiracy either. If you look at the trajectory of the NASDAQ today, it looks almost exactly the same as TSLA's.

NASDAQ:

TSLA:

- - - Updated - - -

It's not just the marker makers. Well capitalized hedge funds that have written puts and calls at popular strike prices may find it advantageous on the expiration date to nudge the share price towards a particular strike. They can re-position their stock holdings on Monday.

Meanwhile folks, let's keep in mind that the most recently published max-pain strike was based on the options open interest at yesterday's close. The max-pain target may have changed today.

Again, here is the video in which former hedge fund manager Jim Cramer describes how manipulation can be done: Jim Cramer Explains How The Stock Market Is Manipulated - YouTube

I've also posted that video before, and Cramer likely speaks the truth (as people are wont to do when they think it won't get out.) That doesn't mean it explains the movement of TSLA whenever it moves against our expectations. There are simpler explanations available (as in, "the market.")

 

[EnergyMax]

As far as I can see, there is no longer any meaningful short to middle term upside potential in the stock (and I mean 1 - 2 years). Current stock valuation implies that everything goes as planned, and it never does. When I first bought at 40ish, their plans were not priced in. Now they are.
I'll be sellling all of my positions at around 255 or so (if we reach that level in the next month), and go on to other opportunities. But I'll still enjoy driving the car, that's for sure!

Conversely, I'm holding as I think the run rate Tesla will achieve in one year is not priced in. The "priced for perfection" story is not true IMO.

 

[Curt Renz]

I agree with you, I don't see a conspiracy either. If you look at the trajectory of the NASDAQ today, it looks almost exactly the same as TSLA's.

The NASDAQ 100 (QQQ) ETF and its individual components can be similarly manipulated as options expire. Also, max-pain strike targets can change intra-day as specific or general market conditions develop. When I was working in TV financial news, I used to stand every noon hour near or beside the trading pits at the CBOE and have discussed this phenomenon with the market makers and floor traders.

 

[The Blue Owl]

The NASDAQ 100 (QQQ) ETF and its individual components can be similarly manipulated as options expire. When I was working in TV financial news, I used to stand every noon hour near or beside the trading pits at the CBOE and have discussed this phenomenon with the market makers and floor traders.

Yeah, but would the aggregated max pain targets of the 100 individual components align the same way? And would that lead to a synchronized 100-way waltz during the day? Nobody has enough money to pull that off.

Moreover, the graph is showing the composite NASDAQ (> 3000 components.)

You may be able to capsize my fishing boat with the wake of your destroyer if you move it just the right way, but you can't lift the whole ocean.

 

[MikeC]

Conversely, I'm holding as I think the run rate Tesla will achieve in one year is not priced in. The "priced for perfection" story is not true IMO.

I remember it being "priced for perfection" at 90. So either that phrase is meaningless or they have been executing better than perfectly over the last year.

 

[Curt Renz]

Yeah, but would the aggregated max pain targets of the 100 individual components align the same way? And would that lead to a synchronized 100-way waltz during the day? Nobody has enough money to pull that off.

Moreover, the graph is showing the composite NASDAQ (> 3000 components.)

You may be able to capsize my fishing boat with the wake of your destroyer if you move it just the right way. But you can't lift the whole ocean.

The NASDAQ-100 weigh overwhelmingly heavy in the NASDAQ Composite. You replied before I finished editing my post. The added sentence was, "Also, max-pain strike targets can change intra-day as specific or general market conditions develop."

And keep in mind that price nudging by hedge funds can lead to a cascade of retail stop loss limits being hit. This reduces the amount that the funds need to risk.

 

[The Blue Owl]

The NASDAQ-100 weigh overwhelmingly heavy in the NASDAQ Composite. You replied before I finished editing my post. The added sentence was, "Also, max-pain strike targets can change intra-day as specific or general market conditions develop."

I did see that sentence. Yes, they can change. No, they won't match the target, or the change in the target, for TSLA.

 

[dha]

Why is the market manipulation bogeyman only brought up when TSLA is moving down?

 

[FluxCap]

Why is the market manipulation bogeyman only brought up when TSLA is moving down?

It's not?

 

[Tuxedo]

I remember it being "priced for perfection" at 90. So either that phrase is meaningless or they have been executing better than perfectly over the last year.

Forget about perfection (at least I usually do :smile: ) At 40, or 90, the stock was not priced according to the company's plans. Now it is. Three years ago they basically had the same plans as they have today. The game for the next couple of years will be all about just meeting the targets, not seriously beating them.