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

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OT: Any of you smart folks figured out yet why Elon said the Air Force should use remotely piloted Jets with AI assist?

Hint: He has a very vested interest in that suggestion coming true.

A few reasons. Pilots are no longer risking death. The plane can fly much harder (pull more G’s as pilot safety is no longer an issue). And they could have almost instant relay with the upcoming SpaceX Satellite system
 
OT: Any of you smart folks figured out yet why Elon said the Air Force should use remotely piloted Jets with AI assist?

Hint: He has a very vested interest in that suggestion coming true.

As far as I know, he has never said the Air Force should use drones instead of pilots, he said they will use drones instead of pilots. Big difference.

Elon is what people in history called a "seer". He doesn't make these predictions with magic or divinity. His brain is such a sponge and functions in such a way that he can load everything he knows about the world and run the simulation multiple times with different assumptions. If they all basically end up with drones instead of pilots then he says that's how it will be. :cool:
 
Consider the market making needs of the option writers Friday: The stock price ranged from $611 to $690, trimming that a bit to options in the $620 to $680 strike range assuming that outside that strike range both puts and calls were already fully hedged before the day's trading and delta didn't change much, we find (from Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable) that there were 15,516 open put contracts in that range, representing 1,551,600 shares of put hedging. On the call side, there were 3,228 open contracts in the strike range of $620 to $680, representing 322,800 shares of call hedging.

So -1,102,200 x (avg put delta) + 322,800 x (avg call delta) was dynamically hedged throughout the day. If we assume the same average delta for calls and puts (not a great idea but I can't think of a better approach) that means they would short 779,400 x delta shares. If the 301,960 shares exempt shorting represents those hedges, that would produce an average delta of 0.387 which seems possible.

Every call contract $660 and below closed ITM and the MM will need shares to deliver to those call holders (1,688 contracts or 168,800 shares). All the puts $670 strike and above ended ITM, and the MM will be expecting delivery of that stock (4494 contracts, or 449,400 shares) when the puts are exercised. That nets 280,600 shares expected to be delivered to them, which doesn't quite fully cover their 301,960 shares they shorted over the day, so they could be expected to buy 21,360 shares to close their short. That the net stock delivered to them from the options with strikes over the day's trading range matches pretty close to the net exempt shorting is additional evidence that the day's exempt shorting may well be mostly legitimate market making activity.

Additionally because the after-hours price crept up, it is possible many of the $670 call holders could request exercise even though it was OTM at the close. That represents up to 44,400 additional shares to purchase. At the same time, some $670 put holders could request that their puts not be exercised, but since exercise is automatic for them unless they take action I think this would be fewer. Still this would not bring the net after-hours covering anywhere close to the after hours buy that you identified.

In summary, on the one side, shorting 301,960 shares throughout the day seems potentially plausible as a legitimate market making activity. On the other hand, if hedged correctly you would expect little need to re-balance after the close (21,360 shares + up to 44,400 more bought by my estimate) which does not match up with the after hours purchase. So the two share sizes could just be a coincidence.

Did you have time to catch up on your reading yet? Specifically, did you read about the Fri Feb 28, 2020 Daily Short Selling Report from FINRA?

The "Uptick Rule" curcuit breakers were in effect for both the Thu and Fri sessions, yet naked short selling spiked to significant highs. This is EXACTLY the circumstance that the uptick rule is designed to prevent, in order to give investors time to assess their positions without the undue selling pressure of short selling. Naked short selling by MMs below the last trade price with the uptick rule in effect, simply to ease their exposure, is a plain violation of Regulation SHO. #SEC

Further, the close match which occurred between Friday's naked short volume and the single 7:07 pm After-hrs trade indicts that it is a very likely a SINGLE MARKET MAKER that was responsible for Friday's illegal proprietary naked short selling.

If there is truely a single bad actor amongst the ranks of MMs, it is the job of the #SEC to stop them, and remove their ability to distort the market.

Let's do one last piece of analysis to try to further characterize the entity responsible for Friday's naked short selling. We know that:
  • there were 301,960 naked short shares sold on Friday (via FINRA)
  • Friday's VWAP during the Pre-market and Main session was $645.95
  • the 301,654 shared that traded at 7:07 pm sold at $674.00
Friday's naked short shares could have traded above or below the days' avg SP, but selling them ENABLED all the other short selling which occured on Fri simply by dropping the most recent sale price (thus a MM was circumventing the "uptick rule). So as a simple approx. let's just use the diff. btwn the VWAP and the After-hrs trade SP to estimate their net lost on Friday's naked shorting:

( $674.00 - $645.95 ) * 301,960 = $8,469,978​

If #SEC investigation proves that there was in fact a single MM who conducted Friday's naked shorting, then we can also reasonably ask why they felt is was important enough to spend some $8.5M dollars late Friday evening to cover their naked shorts. Are they scrambling to avoid an akward 'Failure-to-Deliver' (FTD) event?

$8.5M isn't a embarrassing amount of money for a large Wall St. broker, is it? Big investment banks like GS or MS have literally trillions of USD under managment. They don't need to scramble late at night to cover a few million bucks. No, the big banks would do it on Monday, when the Sun is up. The Rules allow 2 day settlement, they have time to located shares. Who was scrambling to cover naked shorts in the late After-hrs session on Friday, when the big players have already gone home for the weekend?

This is starting to smell like a small fish. Perhaps a medium-sized Hedge fund, one with an outsized exposure to losses in TSLA? Who has appeared on CNBC recently that might fit that M.O.?

The inference which can logically be made, and which must now be investigated by the #SEC, is that that same entity is also responsible for market-distorting naked short selling on 3-5 Feb, as well as 27-28 Feb, 2020. Every crime needs a motive. Profit, or rather fear of a large loss, is a powerful motive to commit securities crime.

Regards,
Lodger
 
Herein lies the dilemma for our time, do 'news' outlets report all 'news' or selectively report news that benefits their sponsors, and hence provides increased profit to 'news' outlet organizations.
No? You seriously believe "the news" reports the news? The News has NEVER reported the news. And I mean never. At least not any newspaper in the public domain. I am not making fun of you. Your perspective is that of the common man...but I do not think much of the common man. You and him just believe what you are told. Unfortunately the idea that "the news" is this grand institution of honesty is pure Bull sugar. Newspaper are out to make money. There is no honor in the news industry, period.
The corona virus is not news. The news industry is making it news. They understand what people will read. A good bombing, a plane goes down, some other man of power starts getting called out by all the women that slept with him to get something from him 40 years ago and the corona virus will no longer be news. If Trump tweets "the F-word" and NOTHING else will be news tomorrow.
And the WHO? are you kidding me? they believe they are the *sugar*. That all should bow down to them for they save the world... give em a microphone or a spot light and they will tell you they are the savior.
Even the few people that try to tell you the truth fail on a regular basis for their own reasons.
Go and read newspaper from the past... they were always about sensationalism, perversion, entertainment. And some facts on page four.
 
Remember there is going to be a jump in the share price when the media finally starts reporting on imminent Model Y deliveries. CNBC, Bloomberg, Yahoo, and Reuters have said nothing so far. Maybe seeing cars on transport trucks will finally get them to do their jobs.

Well, at some point there will be a big jump. There will be the “every Y sold is a 3 not sold” narrative. Keenly awaiting the Q1 delivery report.

The narrative will be difficult to quash, because until Tesla has spare battery production capacity, years away, a Y does steal the pack from a 3. (The Q mob will allege it stole the buyer - need a way to prove that false).

Yes, there’s a bonus $4k margin on the Y. That’s a nice consolation, but even better will be to have all lines maxed. Panasonic have added cell lines and sped up lines, but it hasn’t been fast enough for Tesla.
 
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We have such a recent survey from China - got buried in the PMI news:

China's manufacturing PMI drops in February amid epidemic - Xinhua | English.news.cn

"As of Feb. 25, the work resumption rate in NBS surveyed large and mid-sized enterprises nationwide has reached 78.9 percent, and it is expected to climb to 90.8 percent by the end of March, according to the NBS."​

Previous estimates were around 30% work resumption, so this was a positive surprise, while the PMI was a big miss.

Looks like it wasn't as buried as I thought: while futures opened down there was a big rally and bounce-back in Asian markets:

"The Shanghai Composite is soaring ahead, up nearly 3% after the lunch break to be at 2963 points while the Hang Seng Index is up by 0.8% to 26349 points, bouncing off January’s low."

"Japanese share markets have seen a neat bounce in line with a mild selloff in Yen with the Nikkei 225 gaining just over 1% to 21359 points."​

Dow futures up 150 points - we'll whether the sentiment sustains into European and U.S. trading.

For example on the negative side there's "peak FUD" about the coronavirus on social media, on the positive side I'm not sure the Fed chairman announcement from Friday is fully priced in.
 
Previous estimates were around 30% work resumption, so this was a positive surprise, while the PMI was a big miss.

Looks like it wasn't as buried as I thought: while futures opened down there was a big rally and bounce-back in Asian markets:

"The Shanghai Composite is soaring ahead, up nearly 3% after the lunch break to be at 2963 points while the Hang Seng Index is up by 0.8% to 26349 points, bouncing off January’s low."

"Japanese share markets have seen a neat bounce in line with a mild selloff in Yen with the Nikkei 225 gaining just over 1% to 21359 points."​

Dow futures up 150 points - we'll whether the sentiment sustains into European and U.S. trading.

For example on the negative side there's "peak FUD" about the coronavirus on social media, on the positive side I'm not sure the Fed chairman announcement from Friday is fully priced in.

Nasdaq 100 Futures - Mar 20
Real-time derived
8,587.00 +133.00 +1.57%
02:49:22 - Real-time derived data.
Currency in USD
 
Nasdaq 100 Futures - Mar 20
Real-time derived
8,587.00 +133.00 +1.57%
02:49:22 - Real-time derived data.
Currency in USD

Looks like this old rule of Wall Street is still strong:

Dont-fight-the-fed-940x675.png


If TSLA bounces back today significantly then the options market delta hedging effect is going to magnify the price action in the other direction: a lot of protective and short-position puts are going to move out of the money and a lot of speculative calls like that of @SpaceCash in the money are closer to the money.
 
TSLA just spiked to $717 in Frankfurt trading, on medium volume (according to their own volume levels - it's light by Nasdaq standards), and pulled back to around $695 on similarly low volume.

(EUR/USD has risen significantly to ~1.1085, if you calculate it manually.)

This is a ~4% rise from Friday's close so far.

edit: numbers are hard ...
 
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