There are lots of questions about my note from a friend post. Here's a bit of perspective.
* My friend did not mention strike price or expiration date. I would guess that omission was intentional. I'm not going to ask.
* The note made it very clear that Blackrock wanted to buy the calls written by my friend. I find it somewhat strange that a deeply funded organization such as BlackRock would be asking wealthy individuals to write call options to them and since $10M worth of TSLA is really a drop in the bucket to such a company I also feel that many individuals were solicited simultaneously. Clearly, BR wouldn't be buying call options if they weren't expecting TSLA to run higher.
* Market makers are in a unique position to see the efforts being employed by themselves, other MMs, and hedge funds to keep a volatile stock such as TSLA from rising considerably higher. When those efforts are proving unsuccessful at keeping TSLA below a key resistance point such as 200, they get nervous.
* Part of the dilemma of market makers is that as TSLA moves higher, there's more call options purchased, which requires more delta-hedge buying by the market makers, which in turn pushes TSLA up even higher. It's hard to get ahead of the game when TSLA is heading higher because acquiring options or shares when you're that big just pushes TSLA higher.
* We have seen rallies of TSLA that take on a character of their own, where rising stock prices lead to massive call option buying, which in turn requires massive delta-hedge buying but it's really hard to keep fully hedged when the stock price is moving upward very quickly and new call option requests keep pouring in. That's a nightmare scenario for a market maker and a reason why MMs might want to be long TSLA, to be ahead of the game just in case another such rally gets going.
So, in a nutshell, a big organization which knows the inner workings of the market such as BlackRock wanting to increase their TSLA long position is itself bullish. For a market maker to be concerned enough to avoid the usual market channels to buy call options is unusual. I see nothing wildly bullish about the note in itself, but I do think the scenario is reasonably bullish and should be considered with all the other information out there when considering what is possible in the not-so-distant future.
* My friend did not mention strike price or expiration date. I would guess that omission was intentional. I'm not going to ask.
* The note made it very clear that Blackrock wanted to buy the calls written by my friend. I find it somewhat strange that a deeply funded organization such as BlackRock would be asking wealthy individuals to write call options to them and since $10M worth of TSLA is really a drop in the bucket to such a company I also feel that many individuals were solicited simultaneously. Clearly, BR wouldn't be buying call options if they weren't expecting TSLA to run higher.
* Market makers are in a unique position to see the efforts being employed by themselves, other MMs, and hedge funds to keep a volatile stock such as TSLA from rising considerably higher. When those efforts are proving unsuccessful at keeping TSLA below a key resistance point such as 200, they get nervous.
* Part of the dilemma of market makers is that as TSLA moves higher, there's more call options purchased, which requires more delta-hedge buying by the market makers, which in turn pushes TSLA up even higher. It's hard to get ahead of the game when TSLA is heading higher because acquiring options or shares when you're that big just pushes TSLA higher.
* We have seen rallies of TSLA that take on a character of their own, where rising stock prices lead to massive call option buying, which in turn requires massive delta-hedge buying but it's really hard to keep fully hedged when the stock price is moving upward very quickly and new call option requests keep pouring in. That's a nightmare scenario for a market maker and a reason why MMs might want to be long TSLA, to be ahead of the game just in case another such rally gets going.
So, in a nutshell, a big organization which knows the inner workings of the market such as BlackRock wanting to increase their TSLA long position is itself bullish. For a market maker to be concerned enough to avoid the usual market channels to buy call options is unusual. I see nothing wildly bullish about the note in itself, but I do think the scenario is reasonably bullish and should be considered with all the other information out there when considering what is possible in the not-so-distant future.