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

[ByeByeJohnny]

I'm afraid there's something I just don't understand about this conversation. What I think I understand is that you have in-the-money call options, but not enough capital/margin to exercise them on close. But if they're in the money, just sell them before close? Or sell enough of them to raise cash to exercise the rest? Note that "liquidate" in this context just means they sell them for you... you don't lose them or anything.

He wants to be able to keep them until the last 5 minutes. Brokerage will force sell them hours earlier.

 

[Johan]

Some here have speculated about a post inclusion sell off. If that happens, the indexes need to buy more shares in order to re-balance at that 1 1/2 percent? Right

Example; if they bought at $750 and it drops back to $650. Would they need to buy more chairs? And vise versa; if it continued to rise they would need to sell chairs to maintain that %...correct?

Not correct. If the close today is at $750 and that's where the indexers buy, then if TSLA drops to $650 well then the SP500 index goes down with it, the same number of shares held drop in value accordingly and the funds are still tracking the index correctly by holding on to the same number of shares. So this is why it's so very important what today's close is.

 

[Silent Ludicrosy]

Asked this in the trading thread as well, but it may receive a bit more bandwidth here...

Does anyone know if there's any functional difference between a Limit on Close and a Limit Day order in so far as participating in the closing cross is concerned? I would assume both would be considered equally (with the only difference being the Limit Day could fill anytime between 9:30 AM and 4:00 PM, and the Limit on Close could only fill exactly at 4 PM), but I don't know if there's any special consideration for the Limit on Close in that closing cross auction.

You could get a better price for limit on close order if the closing cross price is above your limit. If you just do a limit order, you can only get your limit price.

 

[Cherry Wine]

Margin calls yes maybe. Short term traders traying to again front-run the whole thing? I agree probably not the index funds. Did you see my question about your DITM calls being excercised? Maybe a lot of people experience this and perhaps are holding such positions naked - so they need to go out and actually buy the stock in order to deliver???

That was the first time I've had covered calls exercised. In this case I was the one holding the stock; I find it interesting because it implies that perhaps the MM needed the shares rather than the long call. The calls had 0 time value despite being dated 2022 expiry, so I suppose it makes sense from that perspective.

 

[CyberDutchie]

Not correct. If the close today is at $750 and that's where the indexers buy, then if TSLA drops to $650 well then the SP500 index goes down with it, the same number of shares held drop in value accordingly and the funds are still tracking the index correctly by holding on to the same number of shares. So this is why it's so very important what today's close is.

Only true if all S&P names drop the same percentage. If TSLA drops more relative to other names, index funds will have to sell some TSLA at the next rebalance. Similarly, if TSLA drops less relative to other names, they will have to buy more TSLA.

 

[Davidzhao365]

Opening cross
https://twitter.com/davidzhao365/status/1339941309499392000?s=21

 

[Driver Dave]

Light the candle!

 

[Cherry Wine]

Wow that’s a lot of sell orders at <=$700.

 

[JustMe]

TSLA is rising and I’m getting that special feeling again!

 

[TheTalkingMule]

Might have to sell these 12/24 $700's today if things go well. Already a nice premium 5 minutes in.

 

[Davidzhao365]

A lot more large orders

https://twitter.com/davidzhao365/status/1339942318409875463?s=21

 

[KMCC]

8,000,000 shares traded in the 1st 5 minutes

 

[EV forever]

910K shares matched this morning - no idea if that is higher or lower than everyday.
But I woke up bright and early in CA just to watch that Also took the day off, it will be zero productivity day at work anyways.
TSLA is putting on a fabulous show this morning (no drinks yet, need my morning coffee first)

 

[FrankSG]

I'm afraid there's something I just don't understand about this conversation. What I think I understand is that you have in-the-money call options, but not enough capital/margin to exercise them on close. But if they're in the money, just sell them before close? Or sell enough of them to raise cash to exercise the rest? Note that "liquidate" in this context just means they sell them for you... you don't lose them or anything.

I have one position in $760s (a very large one), and a smaller one in $650s. I may decide I would like to hold them until late in the trading day. Especially the $760s, if the stock price is hovering around $760 or $765, I would likely prefer to hold them until a few minutes before close, and see what the closing cross brings.

if the problem is cash/margin < cost to exercise the simple answer is if ITM, OCC rules are auto-ex anything .01 or more ITM

then you’d end up in deficit
but IB credit manager would automatically liquidate portfolio positions until the deficit was neutralized +/- haircut (buffer) depending upon portfolio margin, reg T margin, and concentration of assets within portfolio

the mid-day explanation from service desk may mean that they actually anticipate the credit deficit prior to exercise, and will manage it prior to close, meaning they’d rather liquidate portfolio positions during regular trading than after hours when liquidity is tighter.

i’d imagine this is a standard automated procedure and that they aren’t handholding specific scenarios like tesla inclusion for example. i doubt they have the manpower to manage one-offs, and i imagine other e-brokers are similar, or worse, they don’t even have automated credit managers

Thank you for this information. This is very helpful. I will keep these things in mind when I talk to them again later.

I'll try to ask if I can put in MOC orders for the options. If that doesn't help, I suppose the best I can do is to ask for exact details about when and how the positions will be liquidated, and to then roll them over if they are ITM.

 

[SOULPEDL]

It's almost as if no one really knows what will happen It's already +2.5% premarket and climbing.

I hate to break the HODLer ranks around here, but I'm planning to sell 10-20% of my holdings between today and Monday. I "need" to buy a lot of expensive toys next year, and hell, after all YOLO, and you can't take it with you when it's all over.... And I don't subscribe to the people saying you will regrets selling and buying CyberTruck (for example), because in 5 years you'll say it costs you 500,000. Maybe true, maybe not, but whatever, I'd rather have it now and enjoy it, and not worry about where the price will be tomorrow or borrow too much against that. Who knows what will happen in future..

OK, since we're honest, after getting them back earlier this week, I sold 100 shares at 667 again this AM in prehours. Selling more up to $850, but keeping 2/3 for next year! No leverage, only shares. Market in general looks good today too.

This is fun!

 

[Etna]

Newly minted Teslanaire here this morning .

 

[dakh]

You could get a better price for limit on close order if the closing cross price is above your limit. If you just do a limit order, you can only get your limit price.

Are you sure? This makes no sense to me. Closing price is calculated and all eligible open orders get filled at that price. If regular limit orders are eligible (they are), they should get filled at the official closing price.

 

[strago13]

IV on my Jan 15 2021 calls has gone from 82% to 88.99%

 

[Davidzhao365]

I have one position in $760s (a very large one), and a smaller one in $650s. I may decide I would like to hold them until late in the trading day. Especially the $760s, if the stock price is hovering around $760 or $765, I would likely prefer to hold them until a few minutes before close, and see what the closing cross brings.



Thank you for this information. This is very helpful. I will keep these things in mind when I talk to them again later.

I'll try to ask if I can put in MOC orders for the options. If that doesn't help, I suppose the best I can do is to ask for exact details about when and how the positions will be liquidated, and to then roll them over if they are ITM.

You mean call IB? Can they respond so quickly?

 

[ZeApelido]

At current rate of appreciation (4% in 10 minutes), I confidently estimate TSLA will reach $1833 by close.