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

[gringotuanis]

If you are using trailing stop sell orders there's an important detail that many miss: most trailing stops-sell orders will follow and trigger on the Bid price. But for illiquid instruments or during very volatile market movements the Bid/Ask spread blows up and increases to large values. Very frequently trailing stops get taken out by a spike that temporarily drops the Bid which quickly recovers and takes out the trailing stop.

I don't think IB has such order types, but on professional platforms you can usually specify whether the trailing stop (sell) is Bid-triggered or Ask-triggered. For sell orders Ask-triggered often works better, because during sharp drops it's actually the Ask (sellers) that represent the 'real' price, not the Bid and not the mid-price point. By following the Ask your trailing price will only be pulled down if prices offered by sellers truly drop.

The same is true of regular stops: often the spread will blow through a key resistance or support level and trigger stops, while a big iceberg order is eating up all the real liquidity right at the level. I.e. when the price is rising and there's key resistance at $350.00, you can see the Ask briefly cross $350 but not the Bid.

The disadvantage in this method is that there's a bit of a bid-ask spread fuzz if the order does trigger - but this is generally preferable to the high-spread artifacts that illiquid or highly volatile market conditions can cause.

For options I generally wouldn't recommend using trailing orders - on many retail platforms you won't even get good price history displayed, so if it's taken out you won't really know under what market conditions it happened ...

Just as an aside here, I definitely wouldn't use market orders either. I have gotten ravaged.. definitely use limit buys and sells. Most times I can get the market to take the price within a few minutes. If not, I cancel the order and try again.

 

[gringotuanis]

It’s called overhead, not loss. The cost of doing business. I never made a single dollar on the chairs in my waiting room. Guess my practice would have been more profitable without them

I don't know, have you seen the waiting chairs in some offices? They aren't spending much on overhead that's for sure. Might as well just have lawn chairs.

 

[MartinAustin]

Not very scientific, but... I've been watching www.ev-cpo.com every day and it appears that no X or S have been added to Tesla's New Inventory offerings since December 14th - over a month ago. Not sure if this is meaningful, as they might just add clumps of production to the New Inventory fleet every once in a while. But it certainly reminds me of the old days reading Apple Insider about dwindling inventory/increased wait times on specific Macs or iPhones etc. as they speculated about new model introductions.

There are only 2 New Inventory Model X. Even though the Model X has slowly begun to outsell the Model S these days.

What may also be of interest is that 97% of current New Inventory cars have black seats. There's only one New Inventory car with White seats, and four New Inventory cars with Cream seats. It says to me that Tesla has stopped production of Cream and White seats, but keeps Black going as it is the biggest-selling colour. To me it seems like they are preparing for a change to the seats in both X and S. Hopefully they have answered my prayers and decided to bring back GREY.

 

[KarenRei]

If you are using trailing stop sell orders there's an important detail that many miss: most trailing stops-sell orders will follow and trigger on the Bid price. But for illiquid instruments or during very volatile market movements the Bid/Ask spread blows up and increases to large values. Very frequently trailing stops get taken out by a spike that temporarily drops the Bid which quickly recovers and takes out the trailing stop.

I don't think IB has such order types, but on professional platforms you can usually specify whether the trailing stop (sell) is Bid-triggered or Ask-triggered...

I just got in touch with IB and asked about the fact that they had a stop price field on their trailing orders rather than just having it automatically calculated from the current price. They said that yes, you can specify your own initial stop price... but it can only be *lower* than the current market price. So that doesn't help any.

 

[Hogfighter]

In general I agree, but since moving to USAA things have been pretty good.

(not an endorsement)

I’ll endorse them. After my bad accident (referenced by me a month ago), USAA were complete heroes. I can’t imagine any other insurance carrier going half as far as they did.

They aren’t the cheapest, but they’re the best when you need them...which is why we have insurance in the first place.

 

[EV-CPO]

Not very scientific, but... I've been watching www.ev-cpo.com every day and it appears that no X or S have been added to Tesla's New Inventory offerings since December 14th - over a month ago.

This is correct.... for the US. There have been many new/inventory cars added since 12/14 in Netherlands, Norway, Italy, Spain, UK, and Australia (and maybe a few others).

 

[MarcusMaximus]

Rich people are also more likely to be able to afford defense in case of murder, get away with it, but way less likely to commit homicide. It's an unfortunate fact and I don't think your argument comports* with evidence.

*I do not know if I used comport correctly there. I learned this word on this forum. Welcome to correction.

I’d note that both stances are basically guesses, with no evidence provided. Given that, we cannot say whether Tesla drivers are more or less likely to drive aggressively/under the influence.

 

[TradingInvest]

When I heard Tesla is terminating the referral program, my first reaction was maybe they got too many orders from other countries. Then I checked the ordering page for various countries, all of them said delivery in March. Based on the delivery date, I think the ordering is good but not super strong. The gross margin in Q1 should be very good.

Some shorts think Tesla ran out of US reserve holders in 2018, will also run out of OUS reserve holders in early 2019, then the demand will fall off a cliff later 2019. I think they are making a wrong assumption. By second half of 2019, all new Tesla cars will have HW3 and possibly SW V10, Model 3 production cost will continue to drop, we are likely to have a situation that Tesla cars are even more competitive against all other cars on the market. By then we will have around 700,000 Teslas on the road, every Tesla owner is really a Tesla sales person. Tesla should get a lot of new orders from the whole world in second half of 2019.

I currently expect 3 scenarios:

1. FSD comes out by the end of 2019, the company's market cap will be re-evaluated up by a lot, and shorts will understand they are completely wrong about Tesla, they used to think there is no way Tesla's market cap can pass $80B. Now they will see it can easily pass several fold of 80B. Forced covering.

2. FSD doesn't come out by late 2019, it should be very advanced by then, the market will understand it's coming, the market cap should still reflect that it is coming.

3. Things are not smooth, we get a recession, not enough orders, no FSD news. In this case I will hold onto my shares, slowly add more shares with new cash after each pullback.

I think 1 and 2 are likely to happen. 3 is a low probability event.

 

[hacer]

Those two clauses are in direct conflict... It cannot cap the price unless the order is filled.

That's not strictly true. If you see 10 million shares for sale on a major ECN order book at a price $0.30 above the best offer and it's been there for a long time, maybe even filled a few thousand shares against it for a few minutes without moving many would conclude that the price is capped there and because there is very little upside potential at the moment decide not to place a buy order they otherwise would have. In this way it can cap the price without fills.

Many major MMs (GS cough cough) post a lot of 'mirage' orders on public books which look big but will vanish a microsecond before anyone can fill against them so just seeing something like this doesn't make it actually real. Even these mirages can cap (or prop) the market sometimes.

 

[Hogfighter]

Regarding possible future announcements, all I’ll speculate is that Tesla has made some pretty incredible innovations on a shoestring budget. Imagine what they’ll come up with now that they actually have cash flow!

 

[CuriousSunbird]

I’d note that both stances are basically guesses, with no evidence provided. Given that, we cannot say whether Tesla drivers are more or less likely to drive aggressively/under the influence.

But comparing like with like - cars over $50k - will remove much of the bias. If BMW and Mercedes drivers are generally more drunk aggressive than Camry/Sentry drivers, then so too will likely be Tesla drivers. If less, then less.

 

[EVNow]

I just got in touch with IB and asked about the fact that they had a stop price field on their trailing orders rather than just having it automatically calculated from the current price. They said that yes, you can specify your own initial stop price... but it can only be *lower* than the current market price. So that doesn't help any.

I was considering doing this today - but didn't. Looked like a good way to sell on those brief spikes above 350 - but at any one of those breaks - SP will truly break and go to 355 or above.

 

[EVNow]

Maximum Pain, FWIW, is 330.

Opricot Open Interest|Volume|Max Pain

Last two weeks, I thought SP will come near Max Pain, but there was no apparent effort to bring the SP to MaxPain. This week I don't think the SP will come anywhere near Max Pain - so, it probably will Also, tomorrow is the monthly option expiration, so more important than the usual weeklies.

But considering $350 strike has > 1k calls, it is quite likely SP will be kept below $350. BTW, may be this the reason we see so much resistance at $350 this week.

 

[AudubonB]

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[tsunamiofhurt]

So I'm far from expert on this (maybe @tsunamiofhurt can help out), but I believe that industrial power connections are not really priced per kWh, but mainly per peak capacity allocation.

The reason is that what is most expensive is peak power, and if you allocate a lot of that then the utility has to keep your share of the peak power around on standby - and it's a bother if you don't use it in a reliable fashion.

For example if a Supercharger has 10 stalls 120 kW max each, then that's a peak power allocation of 1.2 MW. Tesla would have to pay for that allocation, because during peak hours the Supercharger could be fully utilized. The total electricity use over a 24 hour period will mostly be off-peak - but that doesn't help the huge peak allocation. The utility that is serving that connection would have to allocate 1.2 MW of peaker capacity, every single day.

This unfortunate 'peaker' effect of Superchargers makes them more expensive than home charger electricity, which can often be scheduled to night time allocations, which have almost zero base-load cost.

I believe Supercharger V3 might change this dramatically: if every V3 site gets enough battery/storage capacity to fully cover peak hours, then the utility connection can use much cheaper power. These savings could then be passed down to customers.

That's correct. Essentially, commercial electricity is priced on kWh usage and a "demand charge", which corresponds to the peak usage that month. Doesn't matter how often you pulled that peak load from the grid, just that you did. Demand charges can be quite expensive -- which is why storage is so valuable for commercial & industrial customers. Cue Supercharger v3.

 

[Hogfighter]

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[EVNow]

But considering $350 strike has > 1k calls, it is quite likely SP will be kept below $350. BTW, may be this the reason we see so much resistance at $350 this week.

Should be nearly 10k calls.

 

[anthonyj]

Unpopular opinion, but I think we are going to drop to around $315 before ER. Something smells funky. Institutions want our cheap shares

 

[SteveG3]

Arguably S&P index inclusion has not been politicized or corrupted before AFAIK, and I don't see the S&P starting with that for the sake of Tesla, who is really a small player in the trillions of dollars of index fund flows.

S&P and other ratings agency credit ratings on the other hand was and continues to be a big source of revenue, and with the 'bond issuer pays the credit rating agency' business model there's an obvious conflict of interest that's not addressed even today.

That conflict of interest does not exist, or is at minimum much, much weaker for the rather mechanic act of S&P 500 inclusion.

So I hope it's going to be mechanic inclusion in ~June.



While it's an exciting movie, I found it kind of disturbing that the protagonist set out to earn a billion dollars from the potential collapse of civilization as we know it. They didn't warn anyone or work towards a solution in reality - they mostly hid all that information they uncovered to try to profit from it privately.

I.e. the usual Hollywood script of "hero sees end of the world and saves it" has changed into "hero sees end of the world and hopes it happens so that he can profit from it financially" script.

While I realize that this is how half of Wall Street is earning money, it's rather obscene if we look at the big picture...

FA, you add a tremendous amount of helpful information and analysis to the forum, but, this one I see quite differently than you. Tesla being a small unlikely company to have actors corrupt a third party process like the S&P's indexing decisions?

Tesla may possibly be the all-time champ of the third party known as the media seeing messaging corruption, despite there being much larger company's out there than Tesla. This has also occurred with campaigns to influence safety regulators and the SEC. Tesla itself may not be among the world's biggest companies, but it looks on course to catalyze the disruption of 10% of the world's economic activity. Not a surprise that this has quite heavily appeared to have some pushback from actors with quite a lot of concentrated resources and influence.

I would guess there is a 70% or greater chance that at least some of the people at S&P involved in the decision about inclusion in the index have received or will receive some lobbying against doing so. I'd guess at least a 10% chance there has been such lobbying and it will turn out to be successful for at least one round of tweaking the index's composition. So, I think the odds are this will not happen... but, I'm not dismissing the idea that it is a realistic possibility.

 

[SteveG3]

Unpopular opinion, but I think we are going to drop to around $315 before ER. Something smells funky. Institutions want our cheap shares

Would not be the least bit surprised, then again, I wouldn't consider that a price drop. As mentioned before, I think it makes much more sense to see Tesla's price as $X +/-$50. I'd say the current price is $340 +/-$50.