Thanks for calling out. I looked into this last week before the spotgamma article came out and did the analysis. So it's an easy pitch. TLDR: This is not a big deal, but let's wait and see.
Anyways, It is important to set the context in which the stock is trading, and the biggest point which spotgamma didn't call out was that the action last January in TSLA was on the back of a S&P addition in December triggering a lot of tracking funds to add, in first week of January. Early January was unusually strong getting into the expiry week (week of 2021-01-11). The expiry week itself was relatively uneventful, closing at 826 on 1/15.
Now I pulled the number of open call contracts with strikes all the way up to 800, that were expiring on 2021-01-15. This was a really large number. We started the year at about 640k contracts open interest (OI), and ended the opex cycle on 1/15 with a third less. All these (418k OI) on 1/15 have been hedged / rolled or taken delivery on. That is they didn't have much of a delta impact.
Note that this analysis includes strikes that were out of the money at the beginning of 2021, and excluding this doesn't materially change the analysis.
Now if we look at the corresponding OI trend for this year, the thing that jumps out is we have far less of it now. This makes me think that we wont have a tough time absorbing this. Here, I am including all the calls up to a 950 strike expiring on 2022-01-21. There has been not that much of a drop in OI in the week prior to the opex week, but I believe the calls in the 950 range are more 'seasoned' with our repeated visits to the 1100 and 1200 areas in the past. This is unlike last year, when we were making fresh highs. Net net, I do think these calls are mostly 'digested', as in they wont result in a significant amount of net sales this week.
A few other points to consider are: TSLA trading volumes this year have been running may be about a third less than the average we were seeing going into 2021 January opex. So we have slightly lower capacity to absorb options triggered volumes. And finally there's earnings and Macro to think of this week. Earnings are a clear positive and Macro has been a negative. I think the Q4 P/D beat is more significant this cycle.
Net net, while spotgamma is not FUD, it certainly is blowing things a tiny bit out of proportion. As a subscriber, I am glad they are tracking this and at least calling attention to stuff.
