TSLA Market Action: 2018 Investor Roundtable

[Fifield]

One possible reason $360 has been a tough nut to crack is the block of 6 million shares underlying the Feb'14 convertible senior notes that convert at $359.87 in 2019 and 2021. An equal number of shares to the underlying are likely shorted as part of a risk-free convertible hedge: Convertible Hedge, plus another 3 million likely still short from the senior notes issued last March: Convertible Payoff Table, with a total of 11 million shares likely short TSLA as part of all combined senior note issuances.

Tesla also has hedges of its own on these convertible senior notes in the form of long call options, with the greatest incremental jump in its hedge between $360 and $380 pps. This may have an affect on TSLA pps, though not sure to what extent, as I'd imagine the writers of these call options would have hedges of their own in place. If they have interest in capping TSLA, the $380 level appears to offer the greatest incentive.

@ValueAnalyst linked to a twitter exchange about this in December. Any conclusions based on this info might be wrong, so please point out anything that could be corrected.

 

[bdy0627]

Who also think we will be in the 330-360 range until after Q1 production numbers?

Yes, though I have less confidence about staying in that range as we get to the last week or two leading up to the production numbers. Market may take it up if there is indication that the new module line is finished and starting production.

 

[EnzoXYZ]

Yes, though I have less confidence about staying in that range as we get to the last week or two leading up to the production numbers. Market may take it up if there is indication that the new module line is finished and starting production.

I hate to say it but I see another slide after Q1 production numbers though temporary. Q2 will be when we break 400.

 

[ValueAnalyst]

One possible reason $360 has been a tough nut to crack is the block of 6 million shares underlying the Feb'14 convertible senior notes that convert at $359.87 in 2019 and 2021. An equal number of shares to the underlying are likely shorted as part of a risk-free convertible hedge: Convertible Hedge, plus another 3 million likely still short from the senior notes issued last March: Convertible Payoff Table, with a total of 11 million shares likely short TSLA as part of all combined senior note issuances.

Tesla also has hedges of its own on these convertible senior notes in the form of long call options, with the greatest incremental jump in its hedge between $360 and $380 pps. This may have an affect on TSLA pps, though not sure to what extent, as I'd imagine the writers of these call options would have hedges of their own in place. If they have interest in capping TSLA, the $380 level appears to offer the greatest incentive.

@ValueAnalyst linked to a twitter exchange about this in December. Any conclusions based on this info might be wrong, so please point out anything that could be corrected.

I don't quite understand how this works either, and it's not clear to me if anyone does. Hedging strategies are complex and not constant, and I think we're only talking about a couple of million shares, so I don't know if it's even that material in the grand scheme of things.

I know one thing: I am adding to my position.

 

[Tenable]

I don't quite understand how this works either, and it's not clear to me if anyone does. Hedging strategies are complex and not constant, and I think we're only talking about a couple of million shares, so I don't know if it's even that material in the grand scheme of things.

I know one thing: I am adding to my position.

I'm hoping for $327 at which point I'll begin adding shorter term calls.

 

[Nate the Great]

Everything is red.

 

[bdy0627]

I hate to say it but I see another slide after Q1 production numbers though temporary. Q2 will be when we break 400.

It's awfully difficult to predict but I think the stock will climb towards the Q1 production numbers and then sell the news when it's apparent the ramp is progressing conservatively. Just a guess.

 

[ggr]

Low volume and tracking NASDAQ. I'm not worried.

 

[SPadival]

A little unexpected

007 on Twitter

 

[The Blue Owl]

A little unexpected

007 on Twitter

He posted about this on the macro thread.

 

[Tenable]

A little unexpected

007 on Twitter

My heart breaks for him. I've had a forced liquidation due to lack of planning, its the worst and I hated myself at the time. Most of us have had to learn the hard way, be careful not to follow the bullishness of random internet posters. I hope he recovers and positions appropriately to join us for the ride up.

 

[Jayjs20]

Can someone explain why so many people are fixated on 280? The SP has bounced off of 290 so many times and refuses to stay under 300 for very long. Wouldn't something like 295 be a better jumping in point?

 

[AlMc]

For about two years our trading range was bounded by 180-280. Once we broke free of 280 and pushed up to 380 our new boundaries have become 280-380. I am sure there are some chartist who can back that up but that is my quick explanation to you @Jayjs20 .

280 became our new longer term support.

 

[bdy0627]

Can someone explain why so many people are fixated on 280? The SP has bounced off of 290 so many times and refuses to stay under 300 for very long. Wouldn't something like 295 be a better jumping in point?

Based on the way the stock has traded over the last 9 months, I think so. I think it's very likely you wouldn't get in if you were waiting for $280. Anything under $305 gets you close enough in my opinion with a much higher likelihood of adding. Put it this way, I think there is a much higher chance of regretting waiting for $280 instead of $300. If it's that critical to wait for the stock to drop through the $290s before adding then the future for this stock is very different than what we all estimate it is.

 

[bdy0627]

A little unexpected

007 on Twitter

That is shocking but maybe it shouldn't be. What a sad turn of events, particularly in light of where the stock is likely to be in just a few months.

 

[bdy0627]

I used the day today to unload some April calls once we got above $340. I've got a few April $320s and April $300s left but not a whole lot. Mostly in shares and J19 LEAPs now. I used to wait longer to sell them on a climb and I just wasn't getting out of them in time. If it keeps going up, I'll unload the remainder of my April calls and then start looking at my June calls. If it goes down, I'll sell my shares and buy April/June/Sep calls.

 

[avoigt]

A little unexpected

007 on Twitter

If true than thats sad news....but would explain why we have not heard from him/her ....

 

[Esme Es Mejor]

For about two years our trading range was bounded by 180-280. Once we broke free of 280 and pushed up to 380 our new boundaries have become 280-380. I am sure there are some chartist who can back that up but that is my quick explanation to you @Jayjs20 .

280 became our new longer term support.

I read our new trading range as 290-390. We’ve been above 290 for over 10 months now, and the ATH is 389 and change. I figure we stay in this range until volume production is clearly demonstrated— and possibly until nice gross margins on volume production are demonstrated.

 

[Esme Es Mejor]

I had large day trading buy orders at 330.50, never even got close. Stupid TSLA

It hit 331.50.

 

[bdy0627]

I read our new trading range as 290-390. We’ve been above 290 for over 10 months now, and the ATH is 389 and change. I figure we stay in this range until volume production is clearly demonstrated— and possibly until nice gross margins on volume production are demonstrated.

And buying anywhere in the $290 to $310 range is about as "safe" as you can do it with TSLA. If you're going with leverage, it makes the most sense to go with it there and, because of TSLA's tendency for dramatic and rapid drops, lighten up on the leverage once it climbs 10-15% from there. We might as well take what the market is giving us at this point.