Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[MC3OZ]

Assuming Tesla decides to raise $5B-$10B as part of admission to the S&P 500, is profitable Q3/Q4 and generates even more cash... they could decide to pay a dividend to 2, That would give our generous short friends another opportunity to donate to the cause...

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[S3XY]

Assuming Tesla decides to raise $5B-$10B as part of admission to the S&P 500, is profitable Q3/Q4 and generates even more cash... they could decide to pay a dividend to 2, That would give our generous short friends another opportunity to donate to the cause...

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I like the screwing of the shorts but I'd rather they continue to roll cash back into expansion.

 

[MP3Mike]

Assuming Tesla decides to raise $5B-$10B as part of admission to the S&P 500, is profitable Q3/Q4 and generates even more cash... they could decide to pay a dividend to 2, That would give our generous short friends another opportunity to donate to the cause...

Or they could just use it to re-purchase shares and retire them.

 

[jhm]

I don't think this matters much. I think the main 3 causes of the dip are:

• Profit taking. Happens after pretty much everything earnings. Even after Q3'19, which I consider Tesla's best ER during the 5 years I've followed it from 2015 to 2020.
• Macros. Macros were terrible the last 2 days, and tech/growth stocks were hit particularly hard.
• Delta hedging requirements. This table from @generalenthu shows that the # of shares market makers need to be delta neutral on TSLA, dropped from 42M pre-ER, to 29M right now. Market makers won't delta hedge 100% of this, so they probably didn't sell quite as much as 13M shares over the past 2 trading days, but they dumped at least a couple million shares.

Looking at that delta hedging table, if TSLA rises $200 back to $1,615, market makers will need to buy 14M shares to stay delta neutral, if MMs were short 100% of open interest, and delta hedged 100%. In reality it may only amount to a couple of million shares being bought by market makers, but either way this 14M number is very large.

Considering this, if macros are good at the start of next week and any sort of buying pressure shows up, I think we're in for a very big move upwards.

It is nice to see the option market delta quantified. I've often wondered how big this is but have never seen any actuall calculate it. I think this goes along way to showing how demand for options and IV impact trade in the underlying stock. Naturally options are a feedback mechanism that sustains momentum in the stock if IV stays constant or can move the stock if IV changes.

During the run up over the last few weeks. I was surprised to see IV grow so fast that the call option change price per share would be larger than the change in stock price. My sense was that demand for calls was so high, it was simply dragging the stock price along with it. So it would be nice to see total delta plotted out over this time period. I suspect it could be eye-opening.

 

[MC3OZ]

I like the screwing of the shorts but I'd rather they continue to roll cash back into expansion.

If they have around $13B in the bank... that is plenty to fund expansion..

 

[dl003]

I think that money and engineering experience only go so far in pushing out expansion. Good people are also important and they take time to train. I have a feeling this is another bottleneck next to battery. You can keep building factories after factories but if the people on the ground can't run it efficiently it can quickly turn into a disaster.

 

[UnknownSoldier]

Or they could just use it to re-purchase shares and retire them.

I think most people would not look kindly on stock buybacks during the peak of a global pandemic and recession.

Elon could just declare a one-time "special dividend" to reward people who hold shares as of a certain date. This has been done before by other companies.

 

[vikings123]

I have another theory: MMs have a higher internal PV for the stock, and want to accumlate. Thus they are willing to pay a premium to neuter CALL contracts and are trying to trigger PUT contracts, again to scalp the shares which they privately value much higher than the current SP.

I think the IV crush did not make sense last week, was a significant drop for no reason with earnings still to be announced. I don’t know if your theory is right but it would make sense for them to do that in order to buy back calls, correct?. The IV went up again on Monday of this week.

 

[Bet TSLA]

Who voted <1500 please raise your hand.

For reasons I posted here, I was one of those six people. And I also posted my brilliant approach to dealing with this:

Hmm. I spent today selling (to open) lots of calls to turn my existing calls into spreads. I was feeling way too leveraged, so I more or less halved it by dealing with the calls. Downside protection. All the puts I have sold I left alone. I didn't want to trim my call positions, and the monstrous premiums will possibly mean that I make money on both sides of the spreads tomorrow. We shall see.

Perhaps I'll get to buy them back tomorrow at a profit and go back to fairly extreme leverage. I'm loving this for sure. My portfolio (mostly TSLA and derivatives) is now 6x what it was at the start of the year. After tomorrow who knows. If I'm lucky I'll get back to my all-time high from January, 2018 soon.

Unfortunately for me, I don't listen to myself. I was so impressed with earnings (despite the profit not coming solely from operations) that I discounted the possibility of a serious selloff. When I saw on Thursday morning that I could buy back all the calls that I sold and make a nice profit I immediately did so, at around 1620. So rather than take a nice protected ride down, my heavily leveraged portfolio is down five times as much since Thursday morning, about 40% of all of July's gains. Ouch!

It's not about what you think, and it's not about what you post. It's about what you do.

 

[dl003]

I think the IV crush did not make sense last week, was a significant drop for no reason with earnings still to be announced. I don’t know if your theory is right but it would make sense for them to do that in order to buy back calls, correct?. The IV went up again on Monday of this week.

I was tracking IV the entire last week and this week as well. IV crashed on last Friday afternoon and then recovered very little this week. My calls were giving back most of their insane gains even as we went up to 1620 right before ER. I think the Friday before when we added $120 in 2 hours, followed by a 250 points gained on Monday, was what made IV so high last week. Market was expecting a repeat and when it became apparent that wasn't happening, it just crashed. At this point it's hard to even speculate if they were separate events developing one after another or all parts of a big scheme.

 

[mrmage]

Conservative investors can take advantage of the high price of calls and lower price of puts to buy shares with nearly 2x more upside than down. Think of it as a covered call where the profit is used to buy protective puts.

If the SP falls, the puts can be sold to buy more shares / options. If the SP goes up, you still make whatever range you established with the call.

Example: Today when SP=$1430, buy 100 TSLA, buy 1100p, sell 2050c. The 1100p and 2050c were the same price, so this doesn't cost anything. Potential 43% upside (2050 SP) and worst case 23% downside (1100 SP) until expiration. Replace 1100p and 2050c with whatever range matches your risk profile.

I did a variation of this today to increase leverage 3x while increasing risk only 2.3x.

 

[Buckminster]

Little weekend OT:

My username is finally going to make sense in a few months!

I heard yesterday that I got accepted into INSEAD's MBA program

That'll start in Singapore in January, so I'll finally be moving to Singapore sometime later this year

View attachment 568654

So is your plan to re-educate your lecturers on the merits of vertical integration or just go with the flow?

You will do great either way!

 

[capster]

For reasons I posted here, I was one of those six people. And I also posted my brilliant approach to dealing with this:



Unfortunately for me, I don't listen to myself. I was so impressed with earnings (despite the profit not coming solely from operations) that I discounted the possibility of a serious selloff. When I saw on Thursday morning that I could buy back all the calls that I sold and make a nice profit I immediately did so, at around 1620. So rather than take a nice protected ride down, my heavily leveraged portfolio is down five times as much since Thursday morning, about 40% of all of July's gains. Ouch!

It's not about what you think, and it's not about what you post. It's about what you do.

Well, I wasn’t one of the six.

I just held.

For me, it’s mostly about what I don’t do.

 

[Mo City]

I think most people would not look kindly on stock buybacks during the peak of a global pandemic and recession.

Elon could just declare a one-time "special dividend" to reward people who hold shares as of a certain date. This has been done before by other companies.

In Elon's owns words, the pace of innovation is what really matters. Therefore, using part of Tesla's cash pile for stock buybacks or dividends will never happen while he is in charge. Doing so shows complacency and a lack of urgency, which run counter to his nature.

As Tesla generates cash, Elon will spend it to "accelerate the world's transition to sustainable energy". For example, I don't care how big Tesla becomes, Elon will never allow the company to build a cash mountain of anywhere near $200 billion like Apple.

It's always going to be pedal to the metal no matter how far ahead of the competition they are. This is why the gap will continue to grow and statements by analysts that competition will bite Tesla soon make me laugh.

 

[Steve m]

I think most people would not look kindly on stock buybacks during the peak of a global pandemic and recession.

Elon could just declare a one-time "special dividend" to reward people who hold shares as of a certain date. This has been done before by other companies.

buy backs and dividends are for companies that don't know better ways to use their cash. Tesla is short cash for all the projects it wants to do.

 

[M|S|M MYP]

Little weekend OT:

My username is finally going to make sense in a few months!

I heard yesterday that I got accepted into INSEAD's MBA program

That'll start in Singapore in January, so I'll finally be moving to Singapore sometime later this year

View attachment 568654

Congrats and def well deserved @FrankSG! You will no doubt succeed and maybe graduate top of class and possibly by then, Tesla will have expanded to Singapore and you can run their finance or Business Intelligence department after!

 

[RobStark]

buy backs and dividends are for companies that don't know better ways to use their cash. Tesla is short cash for all the projects it wants to do.

There are only so many good engineers available to hire and minerals available for purchase. There are bottlenecks to growth that can't be solved with spending more money.

Tesla is no longer a 200 employee firm that can grow without regard to human and mineral resources available.

A way of doing long term institutional investors a solid and screwing over the shorts at the same time would would be to sell institutions $10B in fresh TSLA shares then do a $10B buyback a week later.

 

[Paul_SF]

 

[UkNorthampton]

I think that money and engineering experience only go so far in pushing out expansion. Good people are also important and they take time to train. I have a feeling this is another bottleneck next to battery. You can keep building factories after factories but if the people on the ground can't run it efficiently it can quickly turn into a disaster.

Build the factories. Just don't put any people or equipment in. Quickly switch on without that annoying 9-12 month building delay.

Just make sure each is many times bigger than last.

Once you've used up a large desert, switch to floating ones... Needs good names though... Maybe Peta-Atlantis?

 

[wipster]

He actually said "hitting on all cylinders", although the traditional form of this metaphor is "firing on all cylinders", which we clearly want to AVOID when it comes to Tesla Battery Packs / cylindrical cells.

This generational gaff represents a missing component in our new-age EV mindshare that has not been properly addressed. I have struggled for years to develop a suitable 21st Century metaphor to replace this outdated mental imagery, with origins going back all the way to James Watt in 1769 at the beginning of the "steam era".

We need a new metaphor to herald our new zeitgeist. Perhaps we too can reach into the past to the beginnings of Industrialization, and find a suitable analog in the work of James Clerk Maxwell, Michael Faraday, Thomas Edison, Nickela Tesla, and George Westinghouse.

These five and others (Einstein · Lenz · Lorentz · Ørsted · Ohm · Ritchie · Savart · Singer · Volta · Weber) are the giants of the age of discovery, the ones who's shoulders we stand upon. Surely these are fertile fields to grow our mindshare with an rejuvenated metaphor, one ripe for our time.

I think this is a discussion worth having. I may start a thread for this purpose when I have some insight. Give me a couple of sleeps to work on it.

Cheers!

How about just running all out? Doesn't need to be more than that...