The Rolling Naked Tesla Short

[deonb]

i'm wondering if i really need to pursue this any further? by now pretty much everyone should understand what's going on.

Do you mind to keep posting these trades until after the earnings announcement? As we assume it's a short seller, it would be good to know when this seller finally "gives up".

We have very few other indication on how much short covering activity is currently driving the stock, seeing that Nasdaq only publishes open short interest every 2 weeks .

 

[DonPedro]

Do you mind to keep posting these trades until after the earnings announcement? As we assume it's a short seller, it would be good to know when this seller finally "gives up".

We have very few other indication on how much short covering activity is currently driving the stock, seeing that Nasdaq only publishes open short interest every 2 weeks .

This is not the right request if you want to get real time on short interest. The "three stooges" trade won't tell you much about short interest. What will give you information on that are the borrowing rates and the anecdotal "shares available for shorting" information luvb2b (God bless him) posts in this thread.

 

[luvb2b]

Do you mind to keep posting these trades until after the earnings announcement? As we assume it's a short seller, it would be good to know when this seller finally "gives up".

We have very few other indication on how much short covering activity is currently driving the stock, seeing that Nasdaq only publishes open short interest every 2 weeks .

right so it is probably a short seller, as he gets the most economic benefit, but it doesn't have to be a short. it could be a big investment house that can loan the shares out to their customers doing the trade.

the way the stooges theory works, the larry & moe characters could be shorts, big brokerage firms who can monetize the shares they get to lend, or even a stat-arb type hedge funds.

 

[luvb2b]

today is tuesday, so you should be seeing a bunch of activity again. especially with the move the stock has had, wow! a lot of strikes became deep in the money and with the lending rate over 50% larry & moe will get paid well to keep screwing shemp.

 

[luvb2b]

the stooges have gone absolutely wild today. check out the insane volume in the june $40 call, among others. huge volume in deep in the money may strikes. huge volume in deep in the money june strikes.
my guess is they are going to do about 45,000-50,000 contracts again today.

 

[DonPedro]

Holy macaroni. That is so... much more than my trading volume :-D

 

[kenliles]

the stooges have gone absolutely wild today. check out the insane volume in the june $40 call, among others. huge volume in deep in the money may strikes. huge volume in deep in the money june strikes.
my guess is they are going to do about 45,000-50,000 contracts again today.

Last week of their play before earnings report- where they may be betting their play will have to change (or not) in some way so they're doubling up this week... perhaps

 

[viperboy]

The June 22nd, $40 call:

Option Volume

Exchange Price Volume Time ​ PHO 16.00 22.76 k 11:38

WOW

 

[deonb]

I know earlier there was a question about whether there were other stocks that behave this way.

I found the following - maybe it's worth seeing if this is also a Tuesday effect on them (I don't know of a way to look up historic open interest):

High Call Volume vs. Low Open InterestOptionCast | OptionCast

Here are the top 10 in case the site changes daily:

.	Ticker	Company Name	Expiry	Call Strike	Open Interest	Volume

.	QQQ	PowerShares QQQ	13Jun	71	36404	114333
.	TSLA	Tesla Motors Inc.	13Jun	40	6352	23275
.	PCS	METROPCS COMM INC	13Nov	14	7	20422
.	QQQ	PowerShares QQQ	13Jun	75	3345	15123
.	EFA	iShares MSCI EAFE Index	13Dec	71	180	15000
.	MBI	M B I A INC	13Jun	11	522	12155
.	PSX	Phillips 66	13May	67.5	1818	10262
.	VIX	CBOE VOLATILITY INDEX#index	13Oct	24	172	10250
.	YHOO	YAHOO INC	15Jan	30	2506	10189
.	UA	UNDER ARMOUR INC	13Jun	60	193	10050
.

 

[smorgasbord]

Take a look at the Open Interest for various Jan 2014 strikes - I've never seen anything like this:

For instance, the $35 Calls have an OI of 2,183, but the $34 and $36 Calls have an OI of zero. The $49 Calls jumped $2.34 in value, but the $50 Calls declined 9 cents.

I don't know what to make of this. Clearly some kind of programmed trading at specific strikes. Any got a good explanation?

 

[K Hall]

I bought a bunch of the Jan 40's when they were $3.00 about a month ago. Then I bought $45's and 50's and 55's as the stock kept running. The leverage is insane. I keep adding them to my IRA account as a long time play but the gains have been immediate.

 

[Nicu.Mihalache]

For instance, the $35 Calls have an OI of 2,183, but the $34 and $36 Calls have an OI of zero. The $49 Calls jumped $2.34 in value, but the $50 Calls declined 9 cents.

I don't know what to make of this. Clearly some kind of programmed trading at specific strikes. Any got a good explanation?

$35, $40 calls were available since Nov. 2011 or so. The intermediary strikes are newer, as the share price increased in this territory and we are approaching expiration, so more liquidity is needed.

Those price variations are compared to the last trade. There may have been no trade yesterday in $49 calls, therefore the price jumped compared to last week or earlier, there's nothing fishy here.

 

[DonPedro]

I'd say these are artifacts of lacking liquidity. The calls that jumped in value may last have been traded during yesterday's upturn, whereas the others were traded after it took a dip into the red.

 

[luvb2b]

For instance, the $35 Calls have an OI of 2,183, but the $34 and $36 Calls have an OI of zero. The $49 Calls jumped $2.34 in value, but the $50 Calls declined 9 cents.

I don't know what to make of this. Clearly some kind of programmed trading at specific strikes. Any got a good explanation?

usually in the longer dated options people doing large positions will do multiples of 5. that's because there tends be a bit more liquidity in those strikes as more people trade those 10's and 5's strikes. not surprising at all and i would even say somewhat common.

 

[luvb2b]

it's tuesday. expect the stooges to be out in force today. the stock's upward movement has put a lot of strikes in the money.

 

[DonPedro]

They are saving pennies on this trickery and losing dollars on the market moving against their short positions.

The persistence of this activity reduces the likelyhood of the "stooges" explanation being the right one, since many shorts are probably covering (with new shorters taking positions). However, in the absence of an alternative explanation this still looks like the best hypothesis.

 

[deonb]

it's tuesday. expect the stooges to be out in force today. the stock's upward movement has put a lot of strikes in the money.

They're back indeed today, May 39 to 45, Jun 32 to 41, Sep 34 to 38, with every strike in between. 33'611 contracts so far.

 

[luvb2b]

They're back indeed today, May 39 to 45, Jun 32 to 41, Sep 34 to 38, with every strike in between. 33'611 contracts so far.

and all those as big blocks on the phlx right? that would be the stooges for sure.

- - - Updated - - -

They are saving pennies on this trickery and losing dollars on the market moving against their short positions.

The persistence of this activity reduces the likelyhood of the "stooges" explanation being the right one, since many shorts are probably covering (with new shorters taking positions). However, in the absence of an alternative explanation this still looks like the best hypothesis.

it could also be a market maker or prop trading desk that can earn the full rebate for lending out the shares.

 

[deonb]

and all those as big blocks on the phlx right? that would be the stooges for sure.

Actually I can't see which exchange. It would be better if you double-check this.

 

[luvb2b]

Actually I can't see which exchange. It would be better if you double-check this.

a quick glance shows me at least 20,000 contracts on phlx. nasdaq.com has a tool that will allow you to see volume by exchange, go to nasdaq.com quotes and then option chain.