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

[Blue horseshoe]

Decided to pull the trigger on a straddle play.
Bought 4 (Oct 2) calls strike $2050
Bought 4 (Oct 2) puts strike $2050
TSLA price at time of trade: ~$2050
cost of straddle $44,710ea = $178,840 total

If price stays around $2050 through Oct 2 max loss is $178,840.

Profit occurs on this volatility bet if the price goes up or down and with the run up before the split and sp500 inclusion I expect a large move and with this trade it doesn't matter if it's up or down.. it just has to move.

 

[lafrisbee]

My theory was a little different as I believe regular short-sellers are fine (other than taking a hit from the rising price). My theory (which has yet to be proven or disproven) is that bad actors (probably market makers) had been running a scheme to float a bunch of synthetic shares they had created out of thin air (due to lack of any real oversight). These shares were used to manipulate the market (mostly depress TSLA share price) and make money but the extra accounting brought about by the split threatens to uncover their shenanigans and they have to make those shares whole (by buying on the open market). This may or may not precipitate a short squeeze.

This is just a wild theory (that there are millions of synthetic shares floating about) I am entertaining MAY be happening - there is no hard evidence of it. And I don't know if this Friday or next Friday would be the date they would have to make good on their shares (I'm leaning towards today). One way they could possible shake enough shares loose is by running the price too high, too quickly and hope they can precipitate a selling frenzy. Even after this has fully played out we may not know the real answer. But if we see another strong rally before the day is out (or before next Friday) I think it adds a lot of credence to this theory.

After reading your opinion I started thinking that is some Hiro *sugar* right there. Perhaps he would smile if he read your post. And perhaps this is just the kind of thing that Elon hired him to come do.

 

[ggr]

it’s not a point of contention.
it’s not dividend income

you keep debating it

i’ve replied to you directly more than once with the mechanics of how it works. yet you keep posting non-factual interpretations. i’m trying to help you understand.

the long, who lent shares or not, gets the extra 4 shares tacked onto his position.

And you keep missing the point @Knightshade is making. Yes, the real holder gets his 4 new shares. But the guy the short borrowed from also needs to get his 4 new shares, and the only way for that to happen is for the short to make him whole, either by buying shares on the open market, or borrowing more. If the short takes no explicit action, the broker will just borrow new shares on his behalf, and add them to both the lender and short's balances. But Tesla did not provide those shares. They came from somewhere else. My only disagreement with @Knightshade's post is that the short won't feel like he had to do anything, and the dumb shorts will just sit there, fat, dumb and happy, in a deeper hole.

 

[astrotoy]

Hate to say this, but . . . yes. YES: KEEP YOUR MOUTH SHUT.

Learn from our experience.

We loaned about $40k to buy my wife's sister her Model 3 last year. Payments have come, BUT they've been less than "like clockwork" despite a signed and very formal loan agreement. This is awkward so I've not brought it up with my wife.

Now that we're at a massive sum of PAPER gains on TSLA, what do you think the odds are that I'll have much leverage on getting those payments back on the agreed-upon schedule?

Those odds would decrease even further if the full extent of our gains was known within the family. So, YES, IMHO it is far, far better to keep your pie hole shut when it comes to TSLA investments. Nothing good will come of it.

Nothing.

My experience is that if you loan money to a close friend or relative, you must assume that it is a gift, not a loan. If the loan payments slow down or stop coming, they will stop communicating with you and you will have lost both money and any relationship you have. The only exception is to take possession of collateral of equivalent value to the loan amount. So if they stop paying, you have their asset and you don't feel taken advantage of and the loan payment is never discussed again.

 

[Singuy]

Yup. They keep saying that every time TSLA rises. But there are too many good news items in the near future for this to be a bubble of any kind. No doubt there will be more ups and downs, but the long term trend will be up.

I don't understand what is going on. Stock pulled back almost 30% from post earning highs due to dead news and transition out of tech. If the split was not announced, we may be in the gutter right now as my other tech stocks with blow out earnings have yet to hit their post earning highs. Tesla was pulling back faster than my other tech stocks at the time. So I think it's too early to call this anything until the dust settles post split, post battery day, post s&p and post q3 deliveries.

 

[humbaba]

I think more along the lines of would I like to have bought the stock, at today's price, 5-10 years from now. That said, when someone is thoughtfully investing long term, their answers should be the same either way.

One potential pitfall of long-term investors who are focused on short term prices is that if one happens to think the share price is overvalued today, but undervalued long term, they may be inclined to wait on a dip that never comes.

While all stocks will dip, there's no guarantee that any one stock will dip below whatever they think is a fair price today.

This is one reason I generally recommend that fence sitters buy/sell half of their intended position while they are thinking it over.

Since I am generally wrong about short-term price movements, this approach often makes me 50% less wrong.

I was recently asked for advice about investing in $TSLA (uh, me?!?!?) as they were wanting to time their purchase. I pointed out that "time in the market beats timing the market" and gave two examples. First, there's the "buy the rumor, sell the news" that we see so often whenever there are definite dates (earnings calls being a good example) and it works well to buy after them when people are selling. Of course, it doesn't always work, like last Q3. Second, there's the "pops on Monday, fades into Friday" pattern. And, guess what, it looks like this will be another one of those weeks that bucks the pattern. There's also the whole mandatory morning dip.

I've tried dribbling out buys to get some price averaging, but honestly I have such little money for investing...

I also pointed out that pretty much every time I've tried to "time" buys it didn't work out (might not have been bad, just didn't do what I thought it would). Buying at <$200 was the best thing I've ever done and it wasn't from timing anything it was desperation in finding more money to invest in that ridiculous short-sponsored drop and getting the money closely coincided with the bottom.

For anyone looking to hold long term I'd say just buy now. As @StealthP3D keeps telling people trying to min/max purchases just results in lost opportunities. (I'm not saying people can't trade stocks profitably, or make out like bandits from options, but for a long term investor doing buy-and-hold in a company with solid growth potential for years is a reasonably good strategy.)

 

[jerry33]

I don't understand what is going on. Stock pulled back almost 30% from post earning highs due to dead news and transition out of tech. If the split was not announced, we may be in the gutter right now as my other tech stocks with blow out earnings have yet to hit their post earning highs. Tesla was pulling back faster than my other tech stocks at the time. So I think it's too early to call this anything until the dust settles post split, post battery day, post s&p and post q3 deliveries.

Short term no one knows. I was talking about long term. A bubble is only a bubble if there is no long term recovery.

 

[Right_Said_Fred]

Upon popular request: let's move on from talking about loaning money to our wives or relatives. And the way Rob Maurer dresses and shaves is not very relevant to this thread

 

[Boomer19]

I was running some math on buying more shares on margin just to sell premium but it doesn't make sense. (not willing to "risk" my core shares either) I don't use too much margin normally so it's no big deal.

not sure where margin requirement is for tsla right now.

also if highly concentrated, can be subject to “exposure fee”

like if short a bunch of puts and stock is falling precipitously with not enough equity to cover, or reverse with calls and stk rising

 

[Mo City]

Can you believe we are +50% since the split announcement?

Just wow!

 

[Boomer19]

And you keep missing the point @Knightshade is making. Yes, the real holder gets his 4 new shares. But the guy the short borrowed from also needs to get his 4 new shares, and the only way for that to happen is for the short to make him whole, either by buying shares on the open market, or borrowing more. If the short takes no explicit action, the broker will just borrow new shares on his behalf, and add them to both the lender and short's balances. But Tesla did not provide those shares. They came from somewhere else. My only disagreement with @Knightshade's post is that the short won't feel like he had to do anything, and the dumb shorts will just sit there, fat, dumb and happy, in a deeper hole.

no tesla did not provide those shares and neither will apple

i demonstrated that with the transactions i laid out that will occur from one day to the next. business as usual.

has no impact on price or need to ‘cover’ by any defined date

the market is full of shorts and loan contracts with collateral and interest attached that is marked to market.

the SP and liquidity impact the collateral and interest which determines the ‘cover’ or status quo

 

[lafrisbee]

First, is this it? Is this where it ends today, roughly $2050?
Why? It can't be right? I mean "they" are holding it right here in the middle like this is the price it deserves. And when they do that it never is. When TSLA is at constant price it is more misaligned with reality than when it is up or down a hun'red.
TSLA's stable price is always manipulation, and manipulated for a reason. As is its movement (downward if you are a Bull).

 

[dl003]

Can you believe we are +50% since the split announcement?

Just wow!

I'm more impressed by the fact that there's a place on the internet where smart, experienced, and mostly respectful people from all paths of life convene to educate about a company. 50% gains are everywhere these days but the fact that we just sit here steady everyday, expecting the unexpected, is the most fascinating thing.

 

[lafrisbee]

Second, is it going to be allowed to go to $2100+, or "manipulated" back down below $2000 before close today? Why?

 

[Mokuzai]

Passed 2x Toyota! My mom is Japanese and she told me that some friends/family have brought up the topic when Tesla first passed Toyota. Guessing it was fairly big news over there.

 

[M|S|M MYP]

Can you believe we are +50% since the split announcement?

Just wow!

That's it? just wait till post split...hahahaha. Congrats to all longs!

 

[vikings123]

And you keep missing the point @Knightshade is making. Yes, the real holder gets his 4 new shares. But the guy the short borrowed from also needs to get his 4 new shares, and the only way for that to happen is for the short to make him whole, either by buying shares on the open market, or borrowing more. If the short takes no explicit action, the broker will just borrow new shares on his behalf, and add them to both the lender and short's balances. But Tesla did not provide those shares. They came from somewhere else. My only disagreement with @Knightshade's post is that the short won't feel like he had to do anything, and the dumb shorts will just sit there, fat, dumb and happy, in a deeper hole.

My disagreement is with the bolded above, The broker is not borrowing new shares on the shorts behalf, is he not just splitting the existing share into 5?. I think the big unknown is the naked short sellers and how this impacts them.

@Artful Dodger laid out his theory and I think it makes sense that the week of 21st is essentially there to tally up the shares and also give brokers ample time to work on the mechanics. I think we will see what happens next week. Even if no S&P announcement happens this weekend I think we continue to move up. The technicals seem to be supporting a move to 2350.

 

[StealthP3D]

I know that's not how it works and the brokers will take care of transferring the extra shares to the buyer of next week.
The question is how many "noob" traders do not know that and hope to "game the system" ?

I hope not many. That would make them even stupider than Mark Spiegel.

For the sake of humanity, let's hope it's not more than a handful of people.

 

[UncaNed]

Just for the record; in the event that other long term TSLA shareholders are ready to sell a bit it is wise to remember that if they're US taxpayers they'll end out with very substantial capital gains. In my case it has ended out with my 2020 gross income higher than I have ever previously had. Thus I'll have hefty estimated tax due on 15th September. For those of us who have not previously faced this it is sometimes easy to forget the estimated tax. I have had this happen before but never quite this large. of course, if you forget to pay, the penalty from the IRS is only 3% from 3Q 2020, although it is compounded daily until paid.

I refer to this as definitely a First World Problem.

@jbcarioca , estimated tax "due on the 15th of September" 2020 for 2020 cap gains?

Also, I totally agree with your post; but had to give it a Disagree because I find paying taxes highly disagreeable.

Edit - Omitted "Or for 2019 cap gains?"...

 

[Hock1]

My theory was a little different as I believe regular short-sellers are fine (other than taking a hit from the rising price). My theory (which has yet to be proven or disproven) is that bad actors (probably market makers) had been running a scheme to float a bunch of synthetic shares they had created out of thin air (due to lack of any real oversight). These shares were used to manipulate the market (mostly depress TSLA share price) and make money but the extra accounting brought about by the split threatens to uncover their shenanigans and they have to make those shares whole (by buying on the open market). This may or may not precipitate a short squeeze.

This is just a wild theory (that there are millions of synthetic shares floating about) I am entertaining MAY be happening - there is no hard evidence of it. And I don't know if this Friday or next Friday would be the date they would have to make good on their shares (I'm leaning towards today). One way they could possible shake enough shares loose is by running the price too high, too quickly and hope they can precipitate a selling frenzy. Even after this has fully played out we may not know the real answer. But if we see another strong rally before the day is out (or before next Friday) I think it adds a lot of credence to this theory.

IMO, this is not a wild theory, it IS what is happening. It's about time. Been waiting for a long time for the tide to go out!