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

[SOULPEDL]

Maxpain is an estimate of the stock price at which MM’s make the most money from all of the puts and calls they have sold. They win.

So the fact that SP is a bit high now against Max Pain, the MM for TSLA is selling their own stockpile of shares to bring it back to 400? But they can't do it at this moment bc buying is too strong. So MM is weak today against bigger forces? Cuz they blew it all on MMD attempts this morning, but it didn't pan out? (Speculating a relationship there.)

This is fascinating stuff, but everyone here probably knows it. Sorry if OT.

 

[LN1_Casey]

This GM micro car overtakes Tesla Model 3 to become the most-selling EV in China

Seems like a fair comparison

In other news, Toyota sold more Camrys than Bugatti sold Chiron.

 

[Bet TSLA]

Maxpain is an estimate of the stock price at which MM’s make the most money from all of the puts and calls they have sold. They win.

Puts make money when the stock goes down. Calls make money when the stock goes up. There exists a middle ground where basically the vast majority of the gamblers don’t make big money and the house wins. Maxpain.

I think the key fact you may be missing is MMs themselves sell a lot of options. Hence they have a large financial incentive to move the SP and the ability to do so.

Of course this all ignores that since there isn't just a single market maker, they all have different holdings and therefore different goals. What you see is just an average, and it's constantly changing as new positions are opened and old ones closed. The whole thing is a fairly meaningless theory as to how you can predict where the stock price will be at the end of the day. It is, if you do the analysis, perhaps slightly better than random. And that is on days with no news that might actually move the relevant stock. If you ignore it you'll be slightly less stupid than people who pay attention to it. Either way, if you pretend to have the inside dope on where any particular stock will end the day, you'll likely lose if you bet on it.

This belongs with other voodoo like technical analysis and has nothing to do with Tesla or TSLA. Just more noise to be ignored.

 

[humbaba]

So the fact that SP is a bit high now against Max Pain, the MM for TSLA is selling their own stockpile of shares to bring it back to 400? But they can't do it at this moment bc buying is too strong. So MM is weak today against bigger forces? Cuz they blew it all on MMD attempts this morning, but it didn't pan out? (Speculating a relationship there.)

Thanks, but I still don't see something...

Look at it this way: if keeping the stock price pinned to $400 has a payout of $X while a stock price of $405 has a payout of $X - $Y then if you can cap the stock price for less than $Y it is to the market makers advantage to do so. Similarly, if the payout for $395 is $X - $Z and you can prop the stock price for less than $Z... and, naturally if you can pin it to $400 for less than then lesser of $Y or $Z then by all means do it. Manipulate how? By buying and selling in order to achieve the goals.

Of course you don't want to have spent $Y and have the stock price still close over $405 so I expect there is some more subtlety to the amounts a market maker is willing to spend and they most likely do so strategically (e.g., if it goes above then try to exaggerate any dip in order to bring it below).

edit: fixed broken post

 

[ZsoZso]

On a side note:

Europe: Plug-In Electric Car Sales Increased In August 2020 By 171%

View attachment 592161
View attachment 592162

This cannot be accurate. Are you telling me that in August the Model 3 was the #1 selling EV in Europe ?
But, but, but, Gordon Johnson said Tesla is losing market share in Europe bigly...
Are you alleging that he was not telling the truth ?!?!

 

[Nocturnal]

It's funny seeing the usual suspects complain about the CA mandate to ban new gas cars by 2035. As if anyone will be able to buy a new gas car in the US by then, or even want to.

There will be some stubborn holdouts who manage to buy them out of spite I suppose. Just like we see with LEDs vs incandescent bulbs.

 

[Tslynk67]

So the fact that SP is a bit high now against Max Pain, the MM for TSLA is selling their own stockpile of shares to bring it back to 400? But they can't do it at this moment bc buying is too strong. So MM is weak today against bigger forces? Cuz they blew it all on MMD attempts this morning, but it didn't pan out? (Speculating a relationship there.)

This is fascinating stuff, but everyone here probably knows it. Sorry if OT.

I'm suspecting that today's MP has shifted to $405...

 

[M|S|M MYP]

Yes it’s “27 hp electric motor hooked up to a compact 13.8 kWh battery pack” and top speed of just 62 mph (100 km/h) is sure to convince Tesla enthusiasts to change their minds. I’d love to see it’s crash test results!

At 1/10th the price of a Model 3 I guess it does have some appeal as a city runabout or second vehicle. I’d consider it more of a moped competitor than a Tesla killer.

I often wish there were a different metric used for comparing car sales data such as total kWh sold or $ sales rather than just units. Then we’d get a much truer picture of Tesla’s impact on the industry.

Glorified electric version of the 'smart' car.

 

[SOULPEDL]

I'm suspecting that today's MP has shifted to $405...

Nice. So is this chart real-time or just a daily update?

 

[woodisgood]

Of course this all ignores that since there isn't just a single market maker, they all have different holdings and therefore different goals. What you see if just an average, and it's constantly changing as new positions are opened and old ones closed. The whole thing is a fairly meaningless theory as to how you can predict where the stock price at the end of the day. It is, if you do the analysis, perhaps slightly better than random. And that is on days with no news that might actually move the relevant stock. If you ignore it you'll be slightly less stupid than people who pay attention to it. Either way, if you pretend to have the inside dope on where any particular stock will end the day, you'll likely lose if you bet on it.

What you said is exactly why Maxpain is usually not a perfect estimate to the dollar, though sometimes is.

In my mind it’s similar to Bollinger bands. They don’t predict support or resistance with perfect accuracy or in all conditions, but they can help make slightly safer bets (how many folks here have recently bought at the lower BB on our recent dips?). They aren’t perfect estimates of what the stock price will do, and anyone would be a fool to make an “all or none” bet on them.

Similarly, in the absence of news or overwhelming macro conditions, maxpain gives you an idea of what the SP will do on Fridays. It’s good enough for me to know MMs would benefit most from the 405 range today.

Use the tools you find useful. As endearing as your grouchy wisdom is, I’m not sure why you’ve consistently been on a tirade about Maxpain. Personally I’ve watched it enough to believe it has a significant impact. Not one I’d bet my life savings on in one trade though. Just because it isn’t THAT good doesn’t mean it has no value.

 

[Nocturnal]

Model Y cars are eligible for the 2k performance upgrade now. Nice little bit of incremental revenue and profit there.

My man Chicken Genius doesn't get lots of love here. I like his channel a lot. He dips into TA a bit but is usually pretty accurate.

 

[JBRR]

Highly recommend this.
There are some especially good insights @13:58 with Vivas Kumar who used to work at Tesla.

 

[humbaba]

Nice. So is this chart real-time or just a daily update?
View attachment 592174

That chart reflects yesterday's positions.

Also note that while I would be very surprised if market makers didn't nudge toward max pain where relevant it is also a kind of self-fulfilling prophecy.

For example, if you buy a call that pushes max pain higher -- but it also induces the market maker to buy the shares (as a hedge) which will push the stock price higher. In a stock like $TSLA where there is reputedly more options trading than usual* then it will have a larger effect than with a stock with less active options trading.

However, it is important to note that the market makers are not perfect. Being a market maker they will naturally have plenty of shares to buy or sell at any given time so they are not likely to actually buy stock for every call sold -- especially if the call is so high they cannot conceive of it being reached. And this is apparently what happened in the run up last fall: the market makers were not sufficiently hedged for the high calls that were sold around, say, May or June because $TSLA had traded around $300 for years and never hit above about $380 so a call at $600 was safe. Until it wasn't -- and they started buying, which pushed the stock price higher, which put more calls into needing hedging, which resulted in more buying...

Anyway, my point is that it is more complicated than a simple max pain number and the market makers sometimes make mistakes.

* reputedly, I've heard this here, but have no information to confirm or deny it
edit: @Cherry Wine provides a link to show that it is very high volume. This would address one objection that some have: if maxpain is "real" then why aren't other stocks affected? The answer is that it in order for the delta in value to be worth the effort there would have to be lots of options at stake. Most stocks probably don't have enough delta to be worth bothering with

 

[computerchuck]

Tesla Model Y Dual Motor AWD gets paid Acceleration Boost upgrade

Doing my part for Q3.

 

[Cherry Wine]

That chart reflects yesterday's positions.

Also note that while I would be very surprised if market makers didn't nudge toward max pain where relevant it is also a kind of self-fulfilling prophecy.

For example, if you buy a call that pushes max pain higher -- but it also induces the market maker to buy the shares (as a hedge) which will push the stock price higher. In a stock like $TSLA where there is reputedly more options trading than usual* then it will have a larger effect than with a stock with less active options trading.

However, it is important to note that the market makers are not perfect. Being a market maker they will naturally have plenty of shares to buy or sell at any given time so they are not likely to actually buy stock for every call sold -- especially if the call is so high they cannot conceive of it being reached. And this is apparently what happened in the run up last fall: the market makers were not sufficiently hedged for the high calls that were sold around, say, May or June because $TSLA had traded around $300 for years and never hit above about $380 so a call at $600 was safe. Until it wasn't -- and they started buying, which pushed the stock price higher, which put more calls into needing hedging, which resulted in more buying...

Anyway, my point is that it is more complicated than a simple max pain number and the market makers sometimes make mistakes.

* reputedly, I've heard this here, but have no information to confirm or deny it

TSLA options volume is consistently very high. Usually second only to AAPL, which has 17x the shares outstanding.

Most Active Stocks Options - Barchart.com

 

[M|S|M MYP]

This cannot be accurate. Are you telling me that in August the Model 3 was the #1 selling EV in Europe ?
But, but, but, Gordon Johnson said Tesla is losing market share in Europe bigly...
Are you alleging that he was not telling the truth ?!?!

GJ is still harping on how Tesla peaked in Q3 2019.....in 2020!

 

[ggr]

That chart reflects yesterday's positions.

Also note that while I would be very surprised if market makers didn't nudge toward max pain where relevant it is also a kind of self-fulfilling prophecy.

For example, if you buy a call that pushes max pain higher -- but it also induces the market maker to buy the shares (as a hedge) which will push the stock price higher. In a stock like $TSLA where there is reputedly more options trading than usual* then it will have a larger effect than with a stock with less active options trading.

However, it is important to note that the market makers are not perfect. Being a market maker they will naturally have plenty of shares to buy or sell at any given time so they are not likely to actually buy stock for every call sold -- especially if the call is so high they cannot conceive of it being reached. And this is apparently what happened in the run up last fall: the market makers were not sufficiently hedged for the high calls that were sold around, say, May or June because $TSLA had traded around $300 for years and never hit above about $380 so a call at $600 was safe. Until it wasn't -- and they started buying, which pushed the stock price higher, which put more calls into needing hedging, which resulted in more buying...

Anyway, my point is that it is more complicated than a simple max pain number and the market makers sometimes make mistakes.

* reputedly, I've heard this here, but have no information to confirm or deny it

One last thing to bear in mind is that there isn't just one market maker, there are a number, and they don't always agree on where Max Pain is for each of them.

 

[asburgers]

GJ is still harping on how Tesla peaked in Q3 2019.....in 2020!

He said "essentially" right?

 

[M|S|M MYP]

He said "essentially" right?

Only 420 times in a 10 min interview....

 

[hobbes]

Other news on battery tech: Daimler unveils electric bus with 441 kWh solid-state battery pack - Electrek

Daimler has unveiled an electric bus equipped with a solid-state battery pack — probably becoming the first planned production EV with a solid-state battery.

Interesting, I was thinking that solid state batteries where not ready for prime time yet. Does someone know any characteristics that would make it eligible for buses/trucks but not regular cars? Wonder where the cells come from.

Also interesting timing shortly after battery day.