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

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Heh. :D

At the risk of not succeeding in explaining it: options are relatively simple financial constructs, a $360 call option gives the buyer the right to buy 100 shares for $360 up until the expiry day - even if TSLA is worth $420.

This means that if TSLA is $260 then the $360 call option expiring a few months in the future probably has near zero value, if TSLA is at $460 then the option's value will fluctuate around $100 ($450 minus $360), per share, up until expiry. (So a single contract will be $100*100 = $10k worth.)

Since ~90% of options contracts are written and sold by 'market makers', who don't like to blindly assume this kind of leveraged risk, their usual modus operandi is to buy shares as TSLA rises and sell shares as TSLA drops. This is called 'delta hedging' - where 'delta' is the rough calculated (and often realized) risk the MM is exposed to at any given TSLA price level.

So the point of the table I posted is that as TSLA rises rapidly, the sum of 'delta' of all open call options contracts of all future expiries rises rapidly as well - we are talking tens of millions of TSLA shares strong "delta inventory" force here, which market makers will buy as the value of the call options appreciates.

So it makes sense to estimate this force - which is the purpose of the table and my post.

So, you’re saying it’s better to make hot chocolate, pancakes, scrambled eggs and cake with milk rather than water because tastes better.

While this is excellent advice, I think you should take your cooking topic to another forum before you get banned.
 
Curious why if you believe that you bought calls at $420 and not at $460 ?

[not meant as a criticism, I don't know much about options and would never buy calls for that reason (among others)]
Better risk/reward if the stock shoots up another $100 in the next 10 days. I got really lucky with some lotto calls and am using a small % of those profits to buy more
 
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Via @ArnoGlatz