Short-Term TSLA Price Movements - 2016

[NOLA_Mike]

Stormy weather in Shortville today...

$TSLA looks like a coiled spring getting ready to let loose.

 

[TSLAopt]

First and formost I have no relationship with MarkIt. I just happen to have access to it. This is what MarkIt says about it's sources:

"
Markit Securities Finance is the leading global provider of securities financing data and daily long and short institutional fund flow insight.

Based in New York, London and Hong Kong, the company's predictive analytics help clients identify investment opportunities and manage risk by analyzing fund flow, stock loan availability, short interest and stock lending volume.

Established in 2002, Markit Securities Finance's unique content set of more than three million daily transactions is sourced directly from contributing customers across securities financing, including Investment Banks, Prime Brokers, Lending Agents, Beneficial Owners and Hedge Funds.
"

So there *might* be some sauce on top of the raw data to normalize it with exchange data. But it is in fact based on some real data. Not just fictional imagination.



Genuine questions:

- How do you *know* markIt is wrong? Have you cross checked markit against exchange data?

- How you *know* a squeeze is happening, other than gut instinct? do you have any data to back it up?

Separately, I am not sure why you are getting so worked up about this. Why does it matter? it's better with a rally if they aren't squeezed yet, no? That would mean an even bigger up run. So we should be happier (on the long side). So why sweat?

Good questions and it is important to clarify things. I am not getting worked up, just trying to prevent misinformation on the potential for a short squeeze from being propogated on here...I put my answer to your above post in the 'tracking short interest thread'
Tracking short interest

Please feel free to carry on the discussion there where it is more appropriate and meaningful

 

[FredTMC]

Can we expect an announcement regarding Panasonic reacting to the projected staggering demand for Gigafactory batteries from the off the hook stationary and now Model 3 demand too?

In my opinion, these model3 reservations should really give Panasonic great confidence to execute/accelerate GF plans. Whatever concerns they had about cell demand just vanished

 

[FredTMC]

Stormy weather in Shortville today...

$TSLA looks like a coiled spring getting ready to let loose.

Seriously funny. Thx Elon. Was funny tweet then.

Congrats to all the longs

Gotta figure some shorts are getting concerned. New shorts will probably pile in if the "tsunami of hurt Part 2" really takes off

 

[sunhelm]

263, love it!

Not sure if I'm considered long or not. I bought a pile in mid February at 145 and then 165, and am currently 60% up. However, here in Belgium they recently introduced a "speculation tax" - 33% of all profits deducted at source for all shares sold within 6 months of purchase. However, sell after 6 months + 1 day and there's no tax due - none at all, you don't even need to declare it.

So if I were to sell now, I hand-over €9k to the authorities, so I think I'd rather wait... It makes day-trading impossible, but that's perhaps a good thing, because then I'd never get any work done

What if you can write a call option with expiration date close to the untaxed 6 months+1 day "maturity date"?

Pros:
- not tempted to sell before then
- leverage your idle stocks by earning a premium on the call option
- if called away at expiration, earn additional on the delta from strike price
- all tax free

Con:
- stocks can get called away

 

[Causalien]

+10%. Come to papa.

 

[bh1783]

Wonder what will happen if Musk tweets reservations are over 400k tonight.

 

[Ukland Wombat]

The high volume these days looks like shorts covering too. I don't like it happening now because when we're at 300, there won't be as much short interest as before. As a result, there would be less buyers (urgent ones) to push the stock higher.

On the other hand if SP floats up to ATH on sizzle of reservations not steak of earnings, won't that embolden many to open new short positions? Those many could belong to the large group that believes resistance at ATH will be too strong so that SP will surely slump later (on negative EPS etc...etc.). Aren't short plays just like long plays where there will always be a rolling cascade of entry and exit points? I'm not too worried about your concern about fewer urgent buyers above ATH.

In a recent post, SBenson explained it better than I can.

 

[Tslynk67]

What if you can write a call option with expiration date close to the untaxed 6 months+1 day "maturity date"?

Pros:
- not tempted to sell before then
- leverage your idle stocks by earning a premium on the call option
- if called away at expiration, earn additional on the delta from strike price
- all tax free

Con:
- stocks can get called away

I have to admit that I'm a total noob and don't really understand a work of what you just said (where's the "embarassed" emoji when you need it?)

Another reason I was sticking to buy and hold tactic!

But I'm a keen learner and am slowly picking up knowledge, partially through following this thread...

 

[Causalien]

Wonder what will happen if Musk tweets reservations are over 400k tonight.

Then we see scalpers order the next 1 million model 3

 

[ludicrousspeed]

On the other hand if SP floats up to ATH on sizzle of reservations not steak of earnings, won't that embolden many to open new short positions

Yes, there would be new shorts, but most likely less net short interest as a whole. Think about 2013, when the short interest was above 40% of the float. The SP exploded and I'm sure most of the original shorts still thought it was overvalued, but are now too scared to touch it because of the traumatizing losses they incurred. Now the short interest is less than 1/4 of the float. I believe over time that the short interest will gradually decrease for a long time until it settles to a relatively normal number in the single digits.

 

[Curt Renz]

The high volume these days looks like shorts covering too. I don't like it happening now because when we're at 300, there won't be as much short interest as before. As a result, there would be less buyers (urgent ones) to push the stock higher.

Indeed, short covering could be a factor today as the market mocks Citron and Barclays. However, many people who placed reservations on a Model 3 could now be buying TSLA shares with the intent of remaining strong long term shareholders.

 

[mrdoubleb]

OK, i know we are all very happy here, but how "bad" will the ER be as a result of the delivery miss? Do we think it's priced in already?

Ps: I am glad if I am wrong, but I do think we need to temper our expectations on preorder numbers. The pace was slowing down already, I expect mid-300k. Not that's still not amazing...

 

[Causalien]

What if you can write a call option with expiration date close to the untaxed 6 months+1 day "maturity date"?

Pros:
- not tempted to sell before then
- leverage your idle stocks by earning a premium on the call option
- if called away at expiration, earn additional on the delta from strike price
- all tax free

Con:
- stocks can get called away

Tax hit from stock getting called away is another factor to take into consideration. I never let it gets called away.

 

[bh1783]

OK, i know we are all very happy here, but how "bad" will the ER be as a result of the delivery miss? Do we think it's priced in already?

Ps: I am glad if I am wrong, but I do think we need to temper our expectations on preorder numbers. The pace was slowing down already, I expect mid-300k. Not that's still not amazing...

ER will have the missed deliveries already priced in but the losses shouldn't be as bad since they still sold 2500 Model X's at approx 150k each. Plus they will have around $150 million in extra free cash flow from the Model 3 reveal on the 31st.

 

[austinEV]

Honestly I don't think this is a "short Squeeze". (a net covering of shorts reducing the total shares sold short). Just as a dedicated long was unhappy but didn't lose faith in Feb, a dedicated short will see this as a temporary thing to ride out. Just as we say "oh well, I didn't pick the perfect bottom. Selling now would be the dumbest thing I could do; locking in my losses. It will come back up".

A short will say "oh well, I didn't pick the perfect top. Covering now would be the dumbest thing I could do; locking in my losses. It will come back down.

I think this action can be explained by just new investors who got emotionally invested once they reserved. Say that there are 300k new reservation holders/customers (that are not current S/X owners). They might have tuned out TSLA because they didn't want to get emotionally connected to a brand they could never afford. Now they are watching it, invested in it. Watching the news trying to figure out if the model 3 is real and the company is good etc. If half of them invest $5000 in TSLA that is ~3M shares. The higher volume is multiplied by day traders getting involved.

The nice thing about that theory is that the "short spring" is still tightly coiled

 

[BobSk]

OK, i know we are all very happy here, but how "bad" will the ER be as a result of the delivery miss? Do we think it's priced in already?

Ps: I am glad if I am wrong, but I do think we need to temper our expectations on preorder numbers. The pace was slowing down already, I expect mid-300k. Not that's still not amazing...

The first quarter result doesn't matter. We know it was due to production/lack of parts. Those cars were produced and will add to second quarter delivery. Now it's all about second quarter and model 3.

 

[sunhelm]

I have to admit that I'm a total noob and don't really understand a work of what you just said (where's the "embarassed" emoji when you need it?)

Another reason I was sticking to buy and hold tactic!

But I'm a keen learner and am slowly picking up knowledge, partially through following this thread...

Same. I was a noob myself and learned a lot from the wonderful folks on this thread. This is not financial advice but take it for what it is, in the end I'm sure you know you are the best judge as to what strategy suits your personal style/risk profile.

If you have at least 100 shares of TSLA (or any stock) you can opt to sell (or write) a Call option @ a certain price until an expiration date. Writing a call option means you are entering a contract and an OBLIGATION to sell your shares at a price you set (obviously more than your acquisition cost), known as the strike up until the expiration date.

Obligation expires at the date you select (well, technically, based on rules set by the Chicago Board of options, there are Weekly, monthly and yearly expiration dates you can choose from).

This obligation that you entered earns you a premium, aka the price of the option.

They say 30% of options written expire worthless but there's a real chance your call option gets exercised by the option buyer. When that happens, your shares get called away, hence a call.

You may have to apply for that trading privilege from your broker.

More on options here: Options Basics: Introduction | Investopedia There may be other websites better than this that I hope other TMC'ers can provide.

 

[sunhelm]

Tax hit from stock getting called away is another factor to take into consideration. I never let it gets called away.

Exactly right. Sorry have not thought of that.

The trick is to set the strike that will likely NOT get it called away. As with everything, no guarantees.

 

[Citizen-T]

Going vertical. =)