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

[mongo]

@Artful Dodger , @TheTalkingMule was trying to draw your attention to a $10 or 1.5% typo. It has nothing to do with EDGAR since your spreadsheet has the correct data. Stock price was never $66x.xx yesterday.

Close: $665.90 / VWAP: 102.11%

Close was $655.90, no?

EDGAR data source doesn't retroactively update their downloadable 'per-minute' data. There's also usually a few thousand share discrepancy between their total shares traded number and the final number reported in NASDAQ History.

It all averages out though, it's the trend we're trying to capture. And that trend is UP!

Cheers!

 

[Rande]

IVV does not hold TSLA as of 17 Dec.
(Neither does SPY, in case you missed that.)

Source:
iShares Core S&P 500 ETF | IVV

 

[Johan]

So today is when the 100 million sellers show up right? To sell their shares at the same price they were yesterday? Or is there something I'm not understanding here?

Very early pre-market action (practically zero volume) would suggest that currently there are more willing buyers than willing sellers...

 

[hobbes]

Looks promising...

 

[vikings123]

So today is when the 100 million sellers show up right? To sell their shares at the same price they were yesterday? Or is there something I'm not understanding here?

Very early pre-market action (practically zero volume) would suggest that currently there are more willing buyers than willing sellers...

Yep the markets are efficient. At around 4 PM today we will for sure get matching shares from buyers and sellers for 120 million shares. It’s clear to me. It should be a straight forward transaction, nothing to see here.

/s

 

[Nolimits]

Well today is here and some premarket action already in our favor. Enjoy the show everyone. I didn’t buy any calls or puts so this will be pure entertainment. I am sure it’ll stir up great convo for the weekend and hopefully grand finale fireworks for Monday.

 

[FS_FRA]

I did say I was looking for 3% / day - and then 30% afer 12/17..... not looking too bad so far at average of 3.1%:


(apologies for non-US date and comma/period format )

Whelp... here we are. We've averaged 2.3% / trading day since announcement. Not quite the 3% per day I was hoping for, but I'll take it.

Now: the big ask I made was +30% from 12/17... so everyone do you part Thanks.

Open Close +/- 2,3%
16.11.20 $ 408,09
17.11.20 $ 460,34 $ 441,61 8,2%
18.11.20 $ 448,05 $ 486,64 10,2%
19.11.20 $ 492,00 $ 499,27 2,6%
20.11.20 $ 498,00 $ 489,61 -1,9%
23.11.20 $ 503,34 $ 521,49 6,5%
24.11.20 $ 540,45 $ 555,36 6,5%
25.11.20 $ 550,16 $ 574,00 3,4%
27.11.20 $ 581,84 $ 585,60 2,0%
30.11.20 $ 602,42 $ 567,60 -3,1%
01.12.20 $ 597,77 $ 584,76 3,0%
02.12.20 $ 551,32 $ 568,82 -2,7%
03.12.20 $ 590,76 $ 593,38 4,3%
04.12.20 $ 591,31 $ 599,04 1,0%
07.12.20 $ 604,53 $ 642,00 7,2%
08.12.20 $ 624,00 $ 649,88 1,2%
09.12.20 $ 653,80 $ 604,48 -7,0%
10.12.20 $ 574,35 $ 627,33 3,8%
11.12.20 $ 614,87 $ 609,99 -2,8%
14.12.20 $ 618,42 $ 639,83 4,9%
15.12.20 $ 643,05 $ 633,25 -1,0%
16.12.20 $ 628,28 $ 622,77 -1,7%
17.12.20 $ 628,59 $ 655,90 5,3%

 

[hobbes]

My closing cross knowledge isn’t any more extensive than anyone else’s here, but the price can’t move by more than 10%, right?

So, if it’s at 650 at 3:55, it can’t go to more than 715 for the crossing price. Do I have this right, or did I make it up?

I would set a LOC order at 9.5% higher than the price at 3:55 in that case, if that was a price you wanted to sell at. The index funds are going to enter many millions of MOC orders, so it may take it up to your limit. I think that’s a fine strategy if you’re trying to play the closing cross, but I await corrections to my ”facts”.

I just researched the 10% limit - the FAQ says:

At 4:00 p.m., the Closing Cross is initiated and the on-close book and the continuous book are brought together to create a single Nasdaq Closing Cross. Nasdaq closing prices are distributed to the consolidated tape immediately after the Closing Cross.

I think the exact timing is important. It sounds to me as if the 10% up limit is with regard to the share price at 4pm (which is not yet the closing price). From there, the 10% is applied and the closing cross is executed with the on close orders. The outcome of that becomes the closing price.

&TLDR - I read this as the price may go anywhere until just before 4pm, it is not limited to 10% rise after 3:50pm. Not advice.

EDIT: Frank beat me to it: Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable
Leaving this here for the link to the FAQ though.

 

[JBRR]

Keep in mind that quadruple witching takes place on market open. Prepare for a dynamic day.

 

[hobbes]

If I read this right, the way it'll work is regular limit orders are also considered in the closing cross, so say if there's a bunch of sell orders at $1K limit, the price discovery that starts at 3:55 will keep bumping the price up until those are triggered as well. It might get ugly in how high it'll have to jump but hopefully "liquidity providers" are prepared with adequate amount of shares and we'll just see the final smaller adjustments to the closing price.

So overall I see a few scenarios playing out with fairly distinct action items:

1. Adequate liquidity is sitting there waiting to be deployed, there will be a slight adjustment to the stock price in the last 5 min for the final fine-tuning of the balance, huge volume at close and it is all over. Nothing to do here.

2. Substantial sell side deficit, but still adequate liquidity available. Price spikes 5 min before close, enough shares change hands at that price to satisfy index funds, and price returns roughly back to pre-3:55 levels on Monday. This means one would need to participate via on close order or within ~4 min of close time to take advantage of the price spike.

3. Inadequate liquidity, price spikes last 5 min, but also stays high on Monday opening cross and possibly through Monday with big volume. This means there will be a substantial time frame to participate in an elevated stock price, at least both Fri close and Mon open.

4. You say it's not very likely, but listing it here for completeness: buy side deficit, price drops into close. Probably stays down on Monday? Not sure.

Personally I don't see how #3 is likely, price will simply have to keep going up coming into close since it's a simple arbitrage, even if the price is $10K at 3:57 it still makes sense to buy if Nasdaq cross data still says there's not enough sellers. You can then be sure that if you turn around and place a sell MOC order on those shares it'll settle at higher than $10K. The only way I see #3 happening is that entities with a lot of shares that would be willing to sell at a certain outrageously high price simply aren't set up to participate in the closing cross.

EDIT: now that I think about it, we can easily tell which scenario is it going to be at maybe 3:56. If it stayed the same/ went up/went down and stabilized, it is respectively scenarios 1, 2, 4. If it went up and kept going up all the way to 4PM, we're in #3 since that means the closing cross is still out of balance. There's of course also the opposite of #3 where it goes down and keeps going down, which would indicate a gross oversupply on the sell side.

That would suggest that any crazy high run-up late in the day (without stabilizing) would likely lead to a similarly high price come Monday (like in TWTR case posted above, only more so), so no need to set very high limit orders to catch a spike, right?

 

[larmor]

So today is when the 100 million sellers show up right? To sell their shares at the same price they were yesterday? Or is there something I'm not understanding here?

Very early pre-market action (practically zero volume) would suggest that currently there are more willing buyers than willing sellers...

Actually I heard they’re going to show up five minutes before market close and they are going to demand to sell their Shares at yesterday’s closing price because they did not take economics 101 and hence do not understand supply and demand. Because of this lack of understanding those rules don’t apply to them.

 

[hobbes]

Keep in mind that quadruple witching takes place on market open. Prepare for a dynamic day.

Isn´t it the closing price that is relevant for options expiry?

 

[Johan]

Actually I heard they’re going to show up five minutes before market close and they are going to demand to sell their Shares at yesterday’s closing price because they did not take economics 101 and hence do not understand supply and demand. Because of this lack of understanding those rules don’t apply to them.

Yeah I heard something similar. And when they all show up at 15.55 and get offered $800 for their shares they'll of course do the responsible thing and say "Oh no sir, I couldn't accept that kind of premium, I'm here to supply the market with ample liquidity, my job is not to make money but to make sure the index funds can buy all the shares they need at a stable price point".

7:38 AM and almost 0,5 million shares tradet pre-market up $3 from yesterday's ATH close.

 

[jerry33]

Question:
Isn't it feasible for the powers-that-be to use naked shorting to satisfy any lack of shares that show up during the closing cross tomorrow ? Effectively eliminating any chance of a runaway squeeze on Monday to satisfy the appetite of index fund that came up short of their goals ? Just a nasty thought that crossed my mind...

I don't believe it would help them to do that. They are selling to investment firms which are "stockholders of record". I don't know if you can obtain that status without having the actual shares in your hot little hands. So all it would do is move the spike (if any) a couple of days. I also don't think even the SEC could look the other way if they did this.

 

[H Mak]

Meh, I'm positioned for the next three weeks, other than a 31 Dec $900 call I bought as a lottery ticket (before the IV crush, so in the red right now).

After dwelling on all the possibilities, I decided I didn't want the stress of waiting to the close tomorrow, then seeing what I could get out of it. Wouldn't surprise me at all that the closing cross will satisfy the demand - you can be sure there are many well-financed players in this game who are looking for profit from this event and they've had a long time to prepare for it. I suspect most retail will be left holding the baby.

So I'm guessing a flat day today and the SP dropping a little post-inclusion as retail speculators cash-out.

But like everyone else around here, I have no idea, I'm just bringing five years of watching this stock to bear - most of the time, the big sharks win this game.

Interesting. Also what I've been thinking.

The inclusion was announced 16th November when TSLA closed at $408. Based on pre-market this morning that's a 60% rise. In the absence of any news, a 60% rise in just over a month is staggering. Which leads me to the think that maybe the "inclusion game" has already been played out, with the winners and losers already established. The winners being the hedge funds, other front-runners, and the investors on this board, and the losers being individual investors who have missed out on those gains, and will likely be acquiring their piece of TSLA when it sits at an all time high.

I'm not saying I'm not looking forward to watching this evening's action, but as well as being braced for fireworks, I'm prepared for a damp squib. And I would add, I'm extremely satisfied with what has happened over the last month.

 

[Words of HABIT]

So today is when the 100 million sellers show up right? To sell their shares at the same price they were yesterday? Or is there something I'm not understanding here?

Very early pre-market action (practically zero volume) would suggest that currently there are more willing buyers than willing sellers...

I'm HODLing.

 

[CyberDutchie]

Interesting. Also what I've been thinking.

The inclusion was announced 16th November when TSLA closed at $408. Based on pre-market this morning that's a 60% rise. In the absence of any news, a 60% rise in just over a month is staggering. Which leads me to the think that maybe the "inclusion game" has already been played out, with the winners and losers already established. The winners being the hedge funds, other front-runners, and the investors on this board, and the losers being individual investors who have missed out on those gains, and will likely be acquiring their piece of TSLA when it sits at an all time high.

I'm not saying I'm not looking forward to watching this evening's action, but as well as being braced for fireworks, I'm prepared for a damp squib. And I would add, I'm extremely satisfied with what has happened over the last month.

More like a 40% rise, if you consider the NASDAQ went up 7% over that period, and TSLA typically will do 2.5-3.5x NASDAQ.

Plus a couple of upgrades by influential analyst firms (Morgan Stanley, Goldman Sachs).

 

[generalenthu]

As we stare into how the day is going to unfold, here is an update on the delta hedge inventory. The hedge need estimate (Using 60% or raw numbers below) is a bit shy of 150 million shares (corresponding to the 245 million number today in the table below)

While this is high, we have seen higher levels. This was as high as 290 million raw hedge need, right after the announcement of the stock split. So 245 million is not off the charts number, and we will perhaps hit that threshold if we see prices around 800.

Interesting to note that almost 50% of the gamma (increasing delta with price phenomenon) is from options expiring today (~35 percentage points) and next week (~14 percentage points). As holders of these options sell, that should provide some additional liquidity to the index buyers. I'd say these option holders are well positioned to profit off and provide liquidity at the same time. They represent anywhere from 21 to 36 million shares (net) in at prices ranging from here to 800 (raw numbers would be 35 to 60 million). As a bonus I am also publishing the hedge need by expiry for large moves as things stand today.

 

[HG Wells]

Yesterday my psychic or psychotic side said we would cross 650 and we did.
Today, my paranoid side says we will cross 650 again.

Not advice. Not even a little bit.

 

[chrsk]

Yesterday my psychic or psychotic side said we would cross 650 and we did.
Today, my paranoid side says we will cross 650 again.

Not advice. Not even a little bit.

On the way down then?