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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Thumper
Active Member
Put in sell order at $784 for enough shares to match some earlier in the year long term losses. Price "scientifically" chosen to minimize number of shares sold and still cover loses. Will leave in plaace through year end even if it doesn't hit this week. Good luck to all.
Todd Burch
14-Year Member
The approximate $640 wall still seems to be there. Sure seems like there's something fishy about that level.
Today's acquiring game seems to be centered around EMA 9.
These buyers are so cute with their acquiring strategies, on Monday it was EMA 20.
Notice how QQQ is actually on a downturn since market open.
These buyers are so cute with their acquiring strategies, on Monday it was EMA 20.
Notice how QQQ is actually on a downturn since market open.
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mickificki
Member
After listening to robs dark pool video, I have come to the conclusion that the market has 99 ways to screw retail investors but hodling ain't one.
TheTalkingMule
Distributed Energy Enthusiast
Sent my mom a huge email on covered calls and how it might be good to have a plan in place in the event of a spike. Detailed certain scenarios at price points and strikes and illustrated the potential for premiums. She was like......"Yeah, I'ma just hold thanks."
It's easy to forget that 97% of the retail investor world either doesn't know inclusion is happening or doesn't give a sugarcube.
TheTalkingMule
Distributed Energy Enthusiast
I think Moderna is getting approved today for distribution and also the relief bill seems a lock. Not that it hasn't seemed a lock for the last 2 months.
My stocks are all kind of random today with no clear direction one way or another...except there was an ecomerenc boom yesterday for reasons unknown. Ebay, shop, square were all up massively.
Well, the SpaceX launch was postponed so I guess Papa is giving us a different type of launch.
gabeincal
Active Member
I have unloaded a third of my Mar 700c's this morning to
a) pay off my margin completely, anticipating a potential dip (and hopefully never go into margin again)
b) free up cash for said dip and taxes
c) avoid a meltdown of IV in the upcoming weeks
Perhaps a bad choice. Holding 2/3rd of them longer.
I'm still holding my sold 650c's for this friday (gulp).
a) pay off my margin completely, anticipating a potential dip (and hopefully never go into margin again)
b) free up cash for said dip and taxes
c) avoid a meltdown of IV in the upcoming weeks
Perhaps a bad choice. Holding 2/3rd of them longer.
I'm still holding my sold 650c's for this friday (gulp).
This might bite me in the a$$, but here's what I have done:
That's as clever as I get.
- I'm not clever enough about options to trade options. (As Clint Eastwood said in the Dirty Harry movies, "A man has got to know his limitations.")
- For about 20% of my TSLA shares owned, I put in a sell limit order in the mid $900's, GTC + Extended Hours.
- I then created three conditional orders that are triggered only if the above order executes. Those three orders each use 1/3 of the proceeds from the above sale and buy back in at about $700, $650, and $600. As with the initial order, these are limit orders GTC + Extended Hours.
That's as clever as I get.
jhm
Well-Known Member
This is very interesting. The thing that keeps an ETF tracking a particular index seems not to be so much the mix of what the fund holds as it is the obligation to be a counterparty to this creation/redemption mechanism.
Think of a fund as a kind of central bank that pegs the value of its currency (ETF stock) to a basket of other assets (all the stocks in the index as currently weighted by the index). It is always ready to exchange its currency for the actual basket of assets. (This transaction is actually tax neutral to eliminate any tax related friction.) Only authorized participants (AP) and the ETF can participate in these transactions, but that is enough to keep the value of the ETF stock pegged to the basket of securities.
Suppose the ETF is trading above the value of the basket. An AP can deliver the basket to the ETF in exchange for newly created ETF shares. Then AP nets the difference in value when it sell the new ETF shares in the open market. The fund also receives a perfectly weighted basket of shares. In this transaction, the fund does nothing to adjust rebalancing. So we Tesla is included, it is the AP that must buy or borrow Tesla shares to deliver a perfectly weighed basket. So if investors demand more SPY after Tesla is included and drive the price of SPY higher than the index, that AP will deliver perfectly weighted baskets to the fund. Note that if an AP thinks Tesla may crash after inclusion, it could borrow shares and close that short position later. There does not seem to be anything that explicitly disallows this. So an AP is not required to bid up the price of Tesla just to be able to form the basket of stocks.
Suppose the converse, that the value of the ETF is below the value of its basket. Now an AP can redeem ETF shares in exchange for a perfectly weighted basket of securities. At the time of inclusion, this obligates the fund to surrender a certain number of Tesla shares (along with all the rest of a perfectly weighted basket) to satisfy the transaction. So it is not necessary that the funds holding are perfectly rebalanced. They just need enough of underweight securities for redemptions. It seems the fund might be able to borrow shares for these transactions effectively shorting them, but this may take unnecessary risks for the fund.
The fund will want to do some rebalancing but it has some options. It can sell some overweight shares, but this incurs tax liabilities. Raising some cash this way, it could by Tesla or other underweight securities. Or it could just buy back its own stock. A buy back would raise the value of the ETF stock. It only needs to raise it high enough that it avoids redemptions. Creations are not problem for the fund, and could be satisfied buy ETF shares in treasury. The fund has options around buying Tesla shares or buying back ETF shares. Either way they can achieve rebalancing. If buying more Tesla drives up the index relative to the ETF stock price, then it may be less risky and more tax efficient to buy back ETF shares. The fund does have an incentive to maximize the number of its shares in circulation, so excessive use of stock buyback is not a strategy for growing your fund. But a buyback can protect against redemptions when the fund is out of balance.
So this is my reading on the situation. I may be missing a few points here and there. I do think it is helpful to think of an ETF as a kind of derivative. It is designed to be tax efficient and transactionally efficient. The securities that the funds actually hold never has to be perfectly weighted, just close enough that APs can't arb the crap out of it. Holding EFT shares in treasury is one way to moderate the value of its currency and may avoid the need for market shifting trades at times of rebalancing.
$640 is probably the level where speculative buyers start to unload knowing that the $650 resistance is nearing.
I think we could hit a new high today! New all time, new closing!
Not trading based upon it though.
Volume spikes are the tell. AM clear out of stops, then volume on the up move. Under normal circumstances it could just be the invisible hand of the market playing with chart chasers, I dont think these are normal times.
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