Question: why does having a lot of puts at $400 make it a lure? (If by lure you mean attractive stock price to approach?) Anything above those keeps them from being executed, so it seems more like it would be more of a support point than attraction point.
Not sure how much weight I put on Tesla stop using maps. From the numerous FSD beta videos I have seen, it's mostly incorrect map data that causes Tesla to want to make turns its not suppose to, turn on blinkers randomly, trying to run through road closure signs or accelerating toward space not drivable.
Agreed, but for puts the stock price needs to be below the strike to pay out, with the lower the price (wider gap) the more the loss to the writer.While I'm no Options trader (thanks for the question though), my understanding is the wider the gap betwen the Closing SP at Options expiry, the more Options writers (mostly MMs) have to pay out for PUT contracts. So the motivation is to move the SP to lower the amount owing to PUT holders.
Of course this depends on who ACTUALLY wrote the put contracts, which we can never know. It's a tacit assumption that it was mostly MMs, but even then there are ~28 different MMs for TSLA, so if even 1 or 2 have dramatically different stakes, it could affect their motivation to move the SP.
The balancing force would be open CALL contracts at the same strike, but as we can see from the chart below, there are very few open calls below the $640 - $660 strike prices
I'm very open to other interpretations, this is far from simple tea-leaf reading. Here's today's Open Interest update issued at 07:00 EDT (we do see that Max Pain moved up $15 to $465 since yesterday, even with the down day for the SP)
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Paging @Lycanthrope or other Options experts. TIA.
Cheers!
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Agreed, but for puts the stock price needs to be below the strike to pay out, with the lower the price (wider gap) the more the loss to the writer.
So writers like a SP lower than the calls and higher than the puts (max pain). A high open interest put wall would set a floor for SP as it renders more calls OTM but creates more ITM puts. Getting to 400 SP would result in a lot of payout on the $600 strike puts with little impact on the call side, so it doesn't seem beneficial (on average).
(I like a $600 floor better too vs $400 , no bias or anything
I've observed that MM's are pretty happy to have sold puts executed, they don't fight hard for the stock to rise up to Max Pain, but they tend to be quite intolerant of selling shares via calls
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There is only one real chart pattern: The batman-formation. And i don't see it here.
