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

[kanweg]

Fewer shares available would indeed make manipulation easier. But with the inclusion other players enter the market. Benchmark funds that try to beat the index. They will take advantage of artificial highs and lows, making the spiel harder. They are not necessarily in the business of manipulation the SP themselves, unlike MMs. Second, there may be a constant stream of money from pension funds. They will prefer to buy low and are not in the business of speculating and manipulating either. So, that would mean two gorillas that have a stabilizing effect.

disclaimer: I really do not know what I’m talking about.

 

[StealthP3D]

EM needs to start dropping update bombs today!
Wider FSD.
CT!
Another factory announcement!
China designed car.
Battery powdering success (or whatever process they were working on still)
Range updates
Charge updates
New CT glass display, allow visitors to throw!
Or even, he needs to buy more shares!

Let me guess.....you have calls expiring soon?

 

[Runarbt]

Why the pop? it was pretty sudden...

If we are to reach $1000 by friday, the pops have to come more often than this.

 

[chrsk]

If we are to reach $1000 by friday, the pops have to come more often than this.

Would be more than happy if we achieve 700 by Friday!

Max pain is currently 500, but atm 600 looks to be where the MM wants it. Will be interesting to see how this changes during the week.

 

[MABMAB]

Let me guess.....you have calls expiring soon?

No. I don't gamble like that and find much of the short term call discussions dangerous for the youthful and ill informed, ranted against one such poster and got banned for a week. At most, 5% of my port is in LEAPS, the only thing I am willing to own. I set a limit of about 20% premium for them, go as far out as possible, ITM only. I have to have some guaranteed value.

Comment made because there are lots of reasons for price to move this week and end of year, why not tighten the screws. If the action were due to short squeeze I think EM would do such a thing, maybe not when it could screw over indexers ie mom and pop at home.

But it would be fun...

 

[Tslynk67]

Really, really low volume so far today, should pick up in an hour when main PM opens. Waiting to see who blinks first...?

Talking of waiting, where's Kolodny's "Tesla Fires" hit-piece, what's the betting it's published 5 min before main market?

Edit: apologies for all the typos - you'd think I wasn't a native English-speaker or had some kind of learning difficulty, but neither is true (although my wife might argue the latter)

 

[kbM3]

So excited to see this part play out!

Robs' analysis is second to none!

• at least 15% of available shares are disappearing permanently into index funds
• up to 22% of available shares are disappearing likely permanently into benchmarked funds

‘To be clear, those shares don’t permanently disappear. Should SP500 index funds fall out of favor, and owners start selling them, the funds will sell Tesla as well as the other 499 companies to pay out the withdrawals.

Of course the more likely case is that money keeps flowing into the funds forcing buying of more shares of Tesla over time.

 

[Nocturnal]

Would be more than happy if we achieve 700 by Friday!

Max pain is currently 500, but atm 600 looks to be where the MM wants it. Will be interesting to see how this changes during the week.

Hard to imagine the MMs will have much sway at all on the stock this week.

 

[TheTalkingMule]

nasdaq is saying there were still 46.5M shares short as of Nov 30. That's ~$28.6B. Is there any indication of how much covering has been done since?

 

[Chenkers]

For anyone considering writing long dated covered calls at an inclusion peak, please be mindful of how IV can vary for these calls. The IV30 we generally track here can be very volatile, currently sitting around 100, up from about 55 when inclusion was announced. But for longer dated calls the IV is much less volatile and may not move very much over coming weeks. Since IV is a large factor in options pricing it may be that a shorter dated covered call will result in a better short term write/buy strategy. (This is something I hadn't properly considered in some earlier calculations.)

The following graph is something IB's trader workstation can generate that illustrates the varying volatility in IV for different option expiry months and illustrates what I'm trying to describe:

 

[wnorris]

nasdaq is saying there were still 46.5M shares short as of Nov 30. That's ~$28.6B. Is there any indication of how much covering has been done since?

https://twitter.com/garyblack00/status/1338103995336957953

$tsla current short interest consists almost entirely of delta hedges by investors who are long $tsla converts. Because they are hedged, the shorts’ convert value goes up $1 for $1 with their short positions, so no need to close.

 

[cyclingthealps]

nasdaq is saying there were still 46.5M shares short as of Nov 30. That's ~$28.6B. Is there any indication of how much covering has been done since?

Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

 

[UkNorthampton]

A question I've seen come up a few times over the past few weeks, including here on TMC, is how will the upcoming index funds required holding of TSLA on an ongoing basis impact TSLA's price from a supply and demand perspective.

If we could isolate the increase in TSLA's share price due strictly to index buying in this period we are entering, will the indexes effectively pulling these shares off the market (as long as TSLA is in the S&P) equate to a decrease in supply that supports an underlying boost in the share price that will remain regardless of the other events that will move the stock price over time.

I think the answer to this question is yes and no, because we can theoretically think of, at the extremes, two markets for TSLA shares.

The first theoretical market is the one the indexes are the most extreme example of (along with Elon Musk). In this market, TSLA shares are a one-of-a-kind item for which there is not a substitute. These indexes will have to hold about 1.5% of their assets in TSLA. They can't own "the next Tesla," or an ETF of EV companies instead. For these index fund's, it's got to be TSLA. For Elon, and any theoretical '100% cultists' or '100% TSLA HODL buyers' it's the same. TSLA is strictly a market of TSLA, and 15% of TSLA stock being taken off the market is a 15% reduction in supply for the item they are in the market for.

The second theoretical market for TSLA, at the extreme, is those for whom TSLA is a commodity. For the investment/trading, portion of funds available to them, all their investment/trading options are basically commodity items. Whether using TA exclusively, or a mechanical, financial metric only valuation process, etc, they chose a stock w/out any attention to the people or business behind the ticker symbols. For this group, the S&P pulling 15% of TSLA off the market, is not removing 15% of the supply of the item they are in the market for... it's an infinitesimal reduction in the supply of the far larger commodity of all investment/trading options they have.

Of course, in reality, there's only one market for TSLA shares. Most people are probably a mix of the two theoretical extremes of viewing TSLA's market. There actually are TSLA shareholders who basically are in that first theoretical market, but, they are probably a small minority of TSLA shareholders (even if that's not the case on this thread), though about to grow by the index funds being forced into that group.

So, as I see it, yes, supply/demand is going to impact the TSLA price by the index buying, but, not to anything like the extent it would if the whole universe of potential TSLA buyers saw TSLA exclusively as the entire market of a one-of-a-kind, irreplaceable offering.

I asked previously if Index funds can lend shares to shorters to earn income. I was told yes. On that basis, Indexers aren't locking away shares. Thoughts?

 

[TheTalkingMule]

https://twitter.com/garyblack00/status/1338103995336957953

$tsla current short interest consists almost entirely of delta hedges by investors who are long $tsla converts. Because they are hedged, the shorts’ convert value goes up $1 for $1 with their short positions, so no need to close.

I find it hard to believe that 6.5% of the float is short purely as a hedge. Does that math even pencil out?

 

[FrankSG]

I asked previously if Index funds can lend shares to shorters to earn income. I was told yes. On that basis, Indexers aren't locking away shares. Thoughts?

These shares are only directly available to buyers through a 3rd party (short seller). You can't buy a share from a long who's only willing to lend it to you, you can only borrow it from him. I also don't believe available shares have been a limit on shorting TSLA since last year.

Last but not least, I read through a couple of index fund prospectuses a few days ago, and some of them do lend out shares, but some of them don't.

 

[FrankSG]

I find it hard to believe that 6.5% of the float is short purely as a hedge. Does that math even pencil out?

As early as a year ago, @ReflexFunds talked about 6-7M (iirc) shares of the short interest being attributable to convert holders. Those are pre-split numbers, and would be about 5% of the float.

 

[NicoV]

The Netherlands is rumoured to go in lockdown this evening. If the lockdown measures prevent Tesla to deliver cars, it could mean about 2000 cars can’t be delivered this year. Germany already announced a stronger lockdown, so Tesla may not be able to deliver cars there too.
Edit: the 2000 cars is my guestimate based on how the delivery graph looks like this quarter so far.

 

[chrsk]

Based on the pre market it looks like it will be yet another low volume day. Hopefully I'm wrong

 

[strago13]

Very light volume in the premarket and light volume in this thread...Calm before the storm?

 

[Knightshade]

So excited to see this part play out!

Robs' analysis is second to none!

• at least 15% of available shares are disappearing permanently into index funds
• up to 22% of available shares are disappearing likely permanently into benchmarked funds

The first number (give or take a % or two) is pretty well known as fact.

That second # continues to make no sense to me.

Benchmark funds have 0 requirement to buy TSLA ever.

Those that thought it would outperform the overall index would've already bought (ARKs funds for example)

Those that think it won't outperform the index won't magically do so now if they still think it won't....and even if they did- doing so during what everyone expects to be a temporary spike in prices would be the dumbest possible time to do so.

Then again remember buffets bet? Most active funds don't beat the index, so I guess they're mostly run by idiots and expecting them to not do the dumbest thing possible is a fools errand?