trading

[FrankSG]

Do explain: “not even at all”? How could buyers not show up? TSLA IS being added, they DO have to buy at some point...we should see this in the volume no matter what happens with the price, yes?

I'm referring to buying that's not from front-runner to index fund. Although I still don't think it's very likely, it's impossible to rule out the possibility that front-runners currently hold approximately the exact number of shares that indexers need, and that the stock price will more-or-less stay flat through the end of the year.

I'd be very surprised if that happens, and very curious to find out how it happened through the next wave of 13Fs in February, but it's not impossible.

 

[chuyoujia]

I'm referring to buying that's not from front-runner to index fund. Although I still don't think it's very likely, it's impossible to rule out the possibility that front-runners currently hold approximately the exact number of shares that indexers need, and that the stock price will more-or-less stay flat through the end of the year.

I'd be very surprised if that happens, and very curious to find out how it happened through the next wave of 13Fs in February, but it's not impossible.

Frank, is it very unlikely that Tesla's stock price will reach $800 by the end of this week? And, you hinted that it's still likely that we can see the stock price reach $700 by the end of this week?

 

[FrankSG]

Frank, is it very unlikely that Tesla's stock price will reach $800 by the end of this week? And, you hinted that it's still likely that we can see the stock price reach $700 by the end of this week?

Probably unlikely to see $800 this week, but I wouldn't rule anything out, and I still think it's quite likely by the end of the year. Just one person's opinion though, and I could be wrong.

I didn't say that $700 is likely this week, I just stated that I think that, if big buyers show up, the stock will reach $700 pretty fast. I thought that on Monday, and still think that. But it looks less likely now that big buyers will show up before Friday's closing cross.

 

[Criscmt]

Probably unlikely to see $800 this week, but I wouldn't rule anything out, and I still think it's quite likely by the end of the year. Just one person's opinion though, and I could be wrong.

I didn't say that $700 is likely this week, I just stated that I think that, if big buyers show up, the stock will reach $700 pretty fast. I thought that on Monday, and still think that. But it looks less likely now that big buyers will show up before Friday's closing cross.

If it’s buying just at closing cross, then price very likely will not move much from here, except Friday AH, right?

 

[FrankSG]

If it’s buying just at closing cross, then price very likely will not move much from here, except Friday AH, right?

Big buyers aren't going to buy Friday AH. In my opinion, the only way it gains a lot Friday AH is if it's clear that index funds are short a lot of shares, and speculators buy after hours to accumulate those shares.

Index funds clearly haven't bought yet. They would like to and may try to buy most during Friday's closing cross. The question is whether suppliers of liquidity during the cross have enough shares to do so or not.

If they do, it's a question of whether they have approximately the right number of shares or too many. If they have too many, it should drop next week barring active funds buying or something along those lines.

If they do not, it's a question of when that difference between supply and demand will be made up and at what price. Will it be today? Tomorrow during market hours? Crazy squeeze 10 mins before cross tomorrow? Buying and continued run-up next week?

Time will tell.

 

[Davidzhao365]

It's obviously looking more likely that buyers won't show up in big numbers before Friday's closing cross, and that it stays flat, drops to $600, or gets stuck below $650 on low volume. One would think that if a lot of buying still had to be done, volume would be picking up by now.

However, if buyers do show up in decent numbers, I do think it'll run-up very easily. I'd hate to be a MM this week. Pin-risk this week would keep me up all night every night as we get closer and closer to Friday's close.

The question is will buyers show up or not. I think that the data from my prediction model is still the most reliable data I have, so that's what I continue to believe in for the most part.

I wonder if there's any way that buyers do have to buy a lot of shares, but have basically decided that doing so extremely carefully for most of this week is the best way to go about it. If I had to buy a lot of TSLA, and I was the only one that had to do so, I wouldn't just start buying a ton on Monday. I would do pretty much exactly what is currently happening. Buy tiny amounts here and there, let the stock drift down slightly, hope some people panic sell to me, scoop up some shares from MMs reducing their delta inventory, etc. I can always start buying in bigger volume at the very end of the week. People who won't sell until $700 won't until $700 regardless of whether it happens on Monday or Friday, but speculators and options holders might get scared and cash out during the week if it's quiet, whereas otherwise more and more might pile on.

The big problem with this theory is that there's almost certainly not just 1 buyer. So it'd require all the buyers to be cooperating, or at least that they all understand the same thing: that it wouldn't help them to drive the price up early.

So on one hand there's my prediction model, which I think is still the most reliable information, but on the other hand the low volume this week sort of points to there somehow some way not being any real buyers right now, and perhaps not until Friday's cross and next week, or perhaps even not at all.

I trust your model and I think your model covers both the passive fund and active funds. So one possibility is passive funds can bring us to $600 and active funds will take us to $800.

It just takes time for active funds to make a plan to enter after Tesla is part of the index officially.

I plan to hold my Jan 21 calls to end of next week and then roll to Jun 21 to allow some time for active funds to get in.

My other long term Leap and core shares did pretty well in the last 30 days, so overall I am very happy!

 

[Davidzhao365]

Btw my portfolio is as follows

20% Jan21 $500 call
30% Jun22 $600 call (leap)
50% shares

2% spare cash which is enough for a year of cost of living.

 

[Criscmt]

I trust your model and I think your model covers both the passive fund and active funds. So one possibility is passive funds can bring us to $600 and active funds will take us to $800.

It just takes time for active funds to make a plan to enter after Tesla is part of the index officially.

I plan to hold my Jan 21 calls to end of next week and then roll to Jun 21 to allow some time for active funds to get in.

My other long term Leap and core shares did pretty well in the last 30 days, so overall I am very happy!

One would think active funds will try to buy at a price which they see as a better price than what passive funds buy at.
If we go by that logic, IF active funds are not buying right now, are they expecting the price to be more attractive/lower than where it is today?
@FrankSG ?

 

[FrankSG]

One would think active funds will try to buy at a price which they see as a better price than what passive funds buy at.
If we go by that logic, IF active funds are not buying right now, are they expecting the price to be more attractive/lower than where it is today?
@FrankSG ?

Maybe some do, but others probably don't. I don't agree with (the phrasing of) David's statement that passive funds will buy first. I think there's many different types of active funds, and they'll all behave very differently. And in general I'm more conservative on buying from active funds, and I'm not counting on it being significant compared to passive fund buying.

 

[Criscmt]

IV Crush after 12/18?

Should one expect a significant IV drop after the event 12/18?

@FrankSG @adiggs

 

[vikings123]

IV Crush after 12/18?

Should one expect a significant IV drop after the event 12/18?

@FrankSG @adiggs

I’m not expecting an orderly exchange of shares on Friday due to the size of the trades. You have to believe there is going to be a lot of volatility in AH Friday and going into next week. There is no way in my mind that this will be a non-event.

So my vote is IV goes up considerably or worst case stays at these levels.

edit: I hope it goes low like pre S&P inclusion announcement so I can load up on LEAPS again.

 

[FrankSG]

IV Crush after 12/18?

Should one expect a significant IV drop after the event 12/18?

@FrankSG @adiggs

I'm not an IV expert, so take this with a grain of salt, but it doesn't seem all that high to me right now. IF it is somehow a complete non-event (very big if), I'd guess it might drop a little more over time, but not any sort of crazy IV crush imo.

According to @generalenthu 's table, IV is currently 82, IV was 84 before Q1 ER, 78 before Q3 ER, and over 100 before Q2 ER. Basically, IV will likely be at a similar level, if not higher, before Q1 ER in a few weeks. This is pretty insane to me.

 

[saniflash]

my plan for my trading account -- which is 100% ITM LEAPS -- around the inclusion is becoming more and more clear

1. my conviction that no significant buyer will show up before Fri closing cross is getting deeper and deeper for reasons I laid out in another post in the main investor thread.

as I see this hypothesis confirmed over today Thu and tomorrow Fri,

2. I will be watching the auction action on Fri very closely (I just set up my IBKR TWS accordingly and will be testing today) starting from 3.50pm onwards

3. If I see a strong buy-side imbalance, I will assume a substantial climb AH & next week (like Twitter inclusion -- see below). Consequently, I will convert a portion of my LEAPS into common stock so I can unload during CC or AH.

4. Remaining LEAPS unloaded next 1-2 weeks.

5. If no strong buy-side imbalance, or even sell-side imbalance, I will take no action. Enough macro + TSLA-specific catalysts in the cards for the next couple of weeks (stimulus deal, Biden administration EV support / FSD, Q4, FY21 guidance,...).

NOTE: As the closing cross information is public, it is very quickly priced in -- I came across a study whose abstract said that the mechanism is very efficient for price discovery. Thus if a large buy side imbalance is published, price will increase/jump very quickly at 3.50pm

 

[FrankSG]

I just set up my IBKR TWS accordingly and will be testing today

How did you do this? I was planning to do the same today.

 

[saniflash]

How did you do this? I was planning to do the same today.

1. In your TWS, ideally create a new tab of type "Watchlist"

2. Add TSLA IMPORTANT: Select "Stock (Directed)" and NOT "Stock (SMART)" like below (you might need to click on the small arrow at the bottom of the list). In the window that opens, select ISLAND which stands for NASDAQ.

3. Add all columns from the section "Auction" to the view

4. Go to your market data subscriptions in the User Settings on ibkr.com and select NASDAQ TotalView-OpenView

According to their hotline, that should do the trick. Will see if it works during the Opening Cross at 9.30 EST, i.e. in ~3.25 hours from now

 

[saniflash]

@FrankSG worked for me, actually also on the SMART market data line

 

[FrankSG]

@FrankSG worked for me, actually also on the SMART market data line

View attachment 618452

Same:

Thanks so much for this in-depth tutorial. Super helpful!!

 

[FrankSG]

Was considering some 31Dec $750s during pre-market today. Picked some up as soon as I saw TSLA going up after 9:45AM. Didn't buy a huge amount, but just a couple for a decent price between 9:45AM and 10:00AM.

 

[Davidzhao365]

Was considering some 31Dec $750s during pre-market today. Picked some up as soon as I saw TSLA going up after 9:45AM. Didn't buy a huge amount, but just a couple for a decent price between 9:45AM and 10:00AM.

That is fast!

 

[ReddyLeaf]

Thanks again for the advice. Just a quick update. A couple more of those preset sales of the 700c and 900c closed today for a bit more profit, enough to buy another 200 shares. I got my money back and then some and will let the rest ride for the week. So I’m down to sleeping level. I should clarify that the “boat load” of those 12/18 700c was less than 5% of my accounts. Definitely a lot by my trading standards, but probably not by most people’s. Since I’ve sold down some of the calls, the potential gains are more modest, but should still be enough to be generous in the future when I’m able to access the IRAs.

Update: Given the past week or so of flat to down trading, I’m extremely happy that I sold most of these calls. Unfortunately, it’s looking like I should have sold them all. The 10 remaining 12/18 700c are down so far they’re nearly worthless and the 10 remaining 900c 12/24, 12/31 aren’t much better. Unless we have a major meltup on Friday I won’t realize anything from the remaining. I’ve got a GTC sale order in but I’m not hopeful. If they don’t sell during a run up, I’ll dump them 3:50 pm Friday. I’m planning to dump the 900s next Monday. Holding OTM options is just too stressful. My 12/24 545c are much easier to hold, but will sell those on Monday as well. Definitely learning that ITM options are much easier to have, and will adjust my trading to sell OTM and buy ATM-ITM. Unfortunately, I’m cash-limited due to mostly owning shares, so will need those calls to provide at least $60k so that I can sell one cash-secured put. I’m still wary of selling covered calls until after the January earnings announcement.