Not sure of the reason but I've been a lot less cranky the past few weeks. Clueless as always and still old.
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
I don’t fully understand delta hedging but it is obviously a very interesting concept.
Should we continue to expect this kind of pattern/trend to continue for TSLA in the near to short term; gap up because of delta hedging, manipulation from MMs, stabilize for a week or two and rinse repeat.
Should we continue to expect this kind of pattern/trend to continue for TSLA in the near to short term; gap up because of delta hedging, manipulation from MMs, stabilize for a week or two and rinse repeat.
The basics are pretty simple - any financial product including or built on a security will change in value by a certain amount (delta) as the security does, so if you want to have a neutral position on the security (e.g. you make no bets on whether it goes up or down), and just want to profit on the bid-ask spread and the like, then you need to buy/sell a mix of products based on that security (commonly including the security itself) that balance out to net-zero delta. And constantly rebalance over time to keep delta at zero
The implications of delta-hedging are where it gets complicated
Pezpunk
Active Member
OT:
my plates here in VA used to read simply “PEZPUNK”. I had them for years, then one day I got a letter from the DMV saying they were taking them away for being offensive (???). There was an appeal process where you could write an explanation. I wrote “Pez is a type of candy and punk is a genre of music”. Appeal denied. No further explanation. That was almost 20 years ago and I’m still confused.
Certainly a double edged sword, and is working in our favor now.The basics are pretty simple - any financial product including or built on a security will change in value by a certain amount (delta) as the security does, so if you want to have a neutral position on the security (e.g. you make no bets on whether it goes up or down), and just want to profit on the bid-ask spread and the like, then you need to buy/sell a mix of products based on that security (commonly including the security itself) that balance out to net-zero delta. And constantly rebalance over time to keep delta at zero
The implications of delta-hedging are where it gets complicated
One Brazilian source about their government reaching out to - exactly who they keep secret but then they say:
Source is NSC Total: Google Translate
American automaker of the highest technological standard, which has been revolutionizing the sector in recent years.
Freitas just says that it is one of the most valuable car manufacturers that will be able to open one of its units in South America within up to three years. On Wednesday, the 12th, the deputy met with the Minister of Science and Technology, Marcos Pontes, to outline a plan for approaching the company, with the objective that the federal government would show advantages to enable his coming to the Brazil. And then, if that happens, make the efforts for the factory to be installed in Santa Catarina.
Source is NSC Total: Google Translate
@KarenRei did a very credible job on Brazil considering she probably has no special reason to be so thorough.
FWIW, gasoline prices are somewhat more expensive than those averages. As a general rule the average is around US$1,25/liter but that is for 'commun', which is not suitable for high compression modern cars. Most cars run on 'additivada' which averages around US$US$1,55/liter. Both of those are 27% ethanol, so give less fuel economy than does 100% gasoline. Electricity, OTOH usually is cheaper, but varies depending on season and water levels supporting hydrelectric plants, I pay at present US 12.5 cents kWh.
Also, by far the largest two States for autos are Sao Paulo and Rio de Janeiro. Both offer IPVA (annual road tax) reductions for BEV, .5% for RJ vs 7% for ICE. Nearly complete import duty exemption can be achieve by a combination of local assembly and import from duty-free regimes (Mexico, for example). To be specific, if a Model 3 were to be sold at US$60,000 annual road tax would be US$4200 if ICE and US$300 if BEV.
Now for sales volumes. I cannot disclose my source nor hint, but here goes. The 2019 new car sales in Brazil alone were around 2.4 million, lowest in several years. The 'luxury' portion rose to >6% 150,000. The luxury portion is slightly arbitrary because it is not purely brand-specific. BMW, Mercedes-Benz and Audi, for example have their sales distorted by their lowest-spec lines which are below the luxury definition. The luxury class is growing rapidly with Volvo, JLR, Hyundai, Toyota, Mitsubishi, Audi, BMW et al all rapidly repositioning to higher spec vehicles. The change is most evident in leased vehicles where such vehicles as more expensive, less ostentatious models abound. Anyway that market is, at minimum, 150,000 per annum.
Next, major new interest is suddenly appearing for renewable energy. Press reports are now showing large solar plant installations, and panels are now even made in Brazil. My neighborhood now has quite a few solar panels in evidence with outside signage bragging about it. My own don't have signs, but also were installed ten years ago. As that happens press reports about BEV appear every few weeks, mostly positive. Now there is new press reporting about a plan brewing to bring Tesla factory to Brazil. I link to the English translation in Rio Times:
Minister Marcos Pontes Negotiating Tesla's Plant in Brazil | The Rio Times
This is too long. However, some version of a Tilberg-style operation is likely to happen soon , for battery, stationary storage, solar panel, auto or something more. There is far too much opportunity to let it waste, far too little to justify a GF.
I may be wrong. I have been reflecting on our old phrase: "Brazil is the country of tomorrow, and it always will be!"
FWIW, gasoline prices are somewhat more expensive than those averages. As a general rule the average is around US$1,25/liter but that is for 'commun', which is not suitable for high compression modern cars. Most cars run on 'additivada' which averages around US$US$1,55/liter. Both of those are 27% ethanol, so give less fuel economy than does 100% gasoline. Electricity, OTOH usually is cheaper, but varies depending on season and water levels supporting hydrelectric plants, I pay at present US 12.5 cents kWh.
Also, by far the largest two States for autos are Sao Paulo and Rio de Janeiro. Both offer IPVA (annual road tax) reductions for BEV, .5% for RJ vs 7% for ICE. Nearly complete import duty exemption can be achieve by a combination of local assembly and import from duty-free regimes (Mexico, for example). To be specific, if a Model 3 were to be sold at US$60,000 annual road tax would be US$4200 if ICE and US$300 if BEV.
Now for sales volumes. I cannot disclose my source nor hint, but here goes. The 2019 new car sales in Brazil alone were around 2.4 million, lowest in several years. The 'luxury' portion rose to >6% 150,000. The luxury portion is slightly arbitrary because it is not purely brand-specific. BMW, Mercedes-Benz and Audi, for example have their sales distorted by their lowest-spec lines which are below the luxury definition. The luxury class is growing rapidly with Volvo, JLR, Hyundai, Toyota, Mitsubishi, Audi, BMW et al all rapidly repositioning to higher spec vehicles. The change is most evident in leased vehicles where such vehicles as more expensive, less ostentatious models abound. Anyway that market is, at minimum, 150,000 per annum.
Next, major new interest is suddenly appearing for renewable energy. Press reports are now showing large solar plant installations, and panels are now even made in Brazil. My neighborhood now has quite a few solar panels in evidence with outside signage bragging about it. My own don't have signs, but also were installed ten years ago. As that happens press reports about BEV appear every few weeks, mostly positive. Now there is new press reporting about a plan brewing to bring Tesla factory to Brazil. I link to the English translation in Rio Times:
Minister Marcos Pontes Negotiating Tesla's Plant in Brazil | The Rio Times
This is too long. However, some version of a Tilberg-style operation is likely to happen soon , for battery, stationary storage, solar panel, auto or something more. There is far too much opportunity to let it waste, far too little to justify a GF.
I may be wrong. I have been reflecting on our old phrase: "Brazil is the country of tomorrow, and it always will be!"
The basics are pretty simple - any financial product including or built on a security will change in value by a certain amount (delta) as the security does, so if you want to have a neutral position on the security (e.g. you make no bets on whether it goes up or down), and just want to profit on the bid-ask spread and the like, then you need to buy/sell a mix of products based on that security (commonly including the security itself) that balance out to net-zero delta. And constantly rebalance over time to keep delta at zero
The implications of delta-hedging are where it gets complicated
Are you telling me we should all buy as many options as we possibly can on market open to pump up the stock!?! brb, placing my order for 1,880 calls now.
BTW, a last Brazil point. There are surprising pools of engineering talent in several cities and States. There are also some excellent auto suppliers, and a significant aerospace industry. (I admit my bias, my family members have been participants in those sectors.) Despite the popular image of ppor people and carnival we are a bit like China in that the popular image ignores the reality.
They are all not important!
Consider their upgrades forced by current share price to not look too stupid and their underlying thesis is in most cases as it was when they said it has a bear case of $10.
The only reason why it still may matter is because many investors who have no clue still listening to them and buy or sell accordingly and with a few bears now upgrading the public may believe a good opportunity to buy.
So, don't get me wrong I am very bullish for TSLA but never ever think they made their homework and came up with a realistic price target.
Ark Invest did and they are still considered a maverick.
Well, if people in the US want an excuse to buy options: if you have any shares that you purchased during the earlier even-higher spike, and want to loss-harvest them now rather than risk them going into a gain, you can exploit the wash rule to do so:
1) Sell the stock, triggering the loss.
2) Buy 1 cheap far-OTM call for every 100 shares of stock. This washes the loss from the stock into the call.
3) Buy back the stock later in the day or a subsequent day (ideally the latter, to make the net transaction order clear on paperwork). Such a "doubling up" does not "unwash" the previous wash
4) Wait >30 days
5) Sell the cheap call to harvest the loss.
"Doubling up" like that is a common strategy I've seen in a number of places that the IRS apparently considers perfectly cromulent. And has the side benefit of adding another call for MMs to have to delta-hedge
(Iceland has no wash rule - yeay! Unfortunately we also have no loss carryforward - boo! :Þ Also, gains / losses on stock have to be paired with stock, and options with options... can't mix and match :Þ)
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These increases are messing with my strategy. My trading shares were intended to be held now, and probably buying more after Q1 if it dips. Now though...
Yes do that. (*sneaks off to buy 1800 calls)
Adam Jonas had a price range of 10-500 dollar. And he was still wrong with such a wide range. Now that his upper bound has been increased to 1200 dollar, we can probably expect that he is still wrong.
When I make a gazillion dollars on TSLA - I’m going to buy TMC and turn off the damn pop asking for my email all the time.
I think Alex Potter at Piper Sandler gets and understands Tesla better than any other Wall Street analysts. Alex said on the Tesla Daily Podcast interview that he was going to install solar with Powerwalls at his house because he believed in the sustainable energy and also for "research purposes." I guess he's happy with his new solar roof.
It's scary when one has a little information on a subject and sees the errors reported on that subject everyday.
Might be a profit opportunity there.
Might be a profit opportunity there.
NSC Total is not quite so coy. On another site I showed the entire lineage of the article. It is Tesla, and emirates from Santa Catarina. Florianopolis, not coincidently, has three of the handful of Teslae that have been imported to Brazil.
The article was planted by a local politician who is trying to foment activity. This has not been repeated in numerous other places and is beginning this morning to generate activity.
Until today nobody here has said much about my incessant Tesla/SpaceX bleating. This morning there is sudden interest and I am expected suddenly to know something.
The basics are pretty simple - any financial product including or built on a security will change in value by a certain amount (delta) as the security does, so if you want to have a neutral position on the security (e.g. you make no bets on whether it goes up or down), and just want to profit on the bid-ask spread and the like, then you need to buy/sell a mix of products based on that security (commonly including the security itself) that balance out to net-zero delta. And constantly rebalance over time to keep delta at zero
The implications of delta-hedging are where it gets complicated
thank you @KarenRei and @generalenthu for your amazing insights. How big is that delta for Tesla? Short interest and margin investing are also contributing factors. There aren’t enough shares available for trading and that shortage will get amplified when institutional investors buy and hold. Am I getting this right?
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