Would you be able to take a look at this thread, about reverse gamma squeeze, and share your comments?
My limited knowledge seems to say the points mentioned don’t actually point to any such dangerous setup for the stock.
I am not clear about this
@FrankSG ?
That was an interesting thread. Thanks for pointing to what's out there in the twittterverse. There is some decent info mixed up with a good amount of BS. The BS piece is mainly about passive funds selling when price goes down. And no, that doesn't happen. At least until the index committees changes weights in the index. Even when they do, it will be slight tweaking around the edges that gets lost in the noise.
The interesting piece (more clear in the second link) is the flip in skew in the last 2 weeks. It went from expensive calls to expensive puts in a 2 week time frame from right after earnings to now. Obviously the expectations were elevated going into earnings from higher gross margins, higher contribution margin, etc., given the record deliveries. No wonder call skew was high around earnings. Put skew being steeper is actually the natural order of things and in my view we just mean reverted there. So it looks like knowingly or unknowingly () these folks have picked data points that tell a grim picture, while we might be just going back to a period of sideways action from a face ripping rally in Q4 thru early Jan.
I would say though, particularly with Tesla, gamma can cause both sharp upwards and downwards moves. That has been the case for a long time. The move this time can be sharply downward. But claiming that the current setup necessarily portends one is evidence free.
On a side note, those claiming Q4 margins were bad are missing what @st_lopes pointed from the 10-K around margins severely impacted by SBC which jumped due to a booming stock price. This should normalize in Q1 and longer term set us up for the margin expansion story to play out. Will see where these arguments go then.
tldr: the options market was very bullishly positioned in January and its becoming more normal. if you compare the 2, it looks like massive flip to a bearish view, but the market is just getting back to normal.