TSLA Market Action: 2018 Investor Roundtable

[neroden]

Further to my #37480 above, here is a slight rework with analysis of the per-minute TSLA trading data provided by NASDAQ (on the Interactive Chart, click the 'grid icon' top-right of the toolbar, then click the 'Export to Excel' button):

View attachment 336238

The NASDAQ data shows a $12.41 drop in the first minute 11:43 am. This is different to my experience. I was watching the live chart on Google which updates every 10s or so. On my terminal, TSLA when from about $300.43 to about $282.xx in a single refresh.

There would be no opportunity to trade. Anyone with a Sell limit order below $300 would be automatically cashed out at market price, which was an average $288.53 during the 11:43 trading minute.

You're thinking of stop orders. That's not how limit orders work. Anyone with a sell *stop* order would be cashed out.

This is why nobody should ever use stop orders. Sweeping out the money from people who use stop orders is an old Wall Street tradition.

This automatic sale could be massively below the limit price, which apparently dropped $12 instantly, according to what I witnessed displayed on Google Stock Charts. This is legal theft.

Note that 853,709 shares traded during the 11:43 minute. And the SP bottomed out -$24.53 at 11:56 a.m. EDT. More than 4 M shares traded in 15 min. This is market manipulation on a massive scale.

#BloombergBareRaid

*No, that's not a spelling mistake, it's a SEC Inforcement mistake. That's 'bare' as in naked criminality.

 

[TradingInvest]

Are you certain? That's 30 million shares short equivalent... That's a lot of money ...

Depending on the balance to calls on that date, the market makers who have written those options might now have a couple of million TSLA shares short on inventory, as a hedge against those PUTs, even if the options are out of the money. As the options expire worthless the market makers will re-balance their hedges and liquidate those short positions...

That should add quite some buying pressure as the expiry date gets closer. Do you know the average strike price by any chance?

Majority of those Puts were bought earlier, they have dropped to 1 cent now, big loss for those Put holders. I can only imagine how angry they are. I guess John Thompson and David Einhorn owned some of those Puts. Deserve it.

There are still sizable Puts around $300. For shorts, fighting against the chart is not easy. I'm not worried the next 2 days. As I said, if they rig it, my answer is more purchase. Tesla has been delivering a lot of cars recently, they know it, and they know how great the car is, although they pretend to not know.

 

[neroden]

One of the (many) things I have since wished I kept an exact quote and citation for was more than a decade ago when Bill Gates publicly stated that he'd happily backdoor Windows for the USG. I was surprised at the time that there wasn't any fuss over the statement. Fast forward to today and I'm surprised that anyone cares a company in a line of business will do that business.

Well, Windows was already basically providing enough backdoors that every installation was controlled by the Russian mob (probably still is) so.... Microsoft also invented the macro virus and the email virus, and should be in some sort of hall of shame for it.

Several other companies, particularly ones using open source software, came out to declare that they certainly wouldn't put in backdoors for anyone because their business was selling security and their reputation was not worth compromising for anyone.

 

[winfield100]

if you go to Max Pain | Maximum-Pain.com and add up (painfully) Open Int up to a strike of $300, I get ~289,000 put OI
Is that significant? ( i suspect its a _big_ bucket of money but i'm clueless. are these what expire worthless? do they get "rolled over" or just "rolled" who in their right minds buy these?

 

[geneclean55]

if you go to Max Pain | Maximum-Pain.com and add up (painfully) Open Int up to a strike of $300, I get ~289,000 put OI
Is that significant? ( i suspect its a _big_ bucket of money but i'm clueless. are these what expire worthless? do they get "rolled over" or just "rolled" who in their right minds buy these?
View attachment 336479

As stated by @TradingInvest people lost a lot of money on those sub 200 strike puts when they bought them way above their current pennies price. My understanding is that most of the delta erosion has already taken place with these so wouldn't be contributing much to price support now. Others might know better though.

 

[neroden]

I've been in short 292.5 sept for over a week now, pretty confident now we won't be called.

9/21 or 9/28 expiration, sold calls with $292.50 strike price? You're gonna have your stock called away. (I'm sure you've set up so that that's a profitable trade for you; you seem to know what you're doing.)

 

[winfield100]

9/21 or 9/28 expiration, sold calls with $292.50 strike price? You're gonna have your stock called away. (I'm sure you've set up so that that's a profitable trade for you; you seem to know what you're doing.)

probably "nekkid"

 

[TrendTrader007]

When they rig it, my answer is 2021 Call Options. This stock has a floor, I don't care about their FUD. I think shorts are weak. What if this recent island reversal turns out to be a real one? That would be fun, they can stay on the island for the next 10 years.

Exactly my thoughts
As of yesterday morning all my $TSLA position was in $250 and $300 J2019 calls
I was down close to 60% on my entire $TSLA positions which is a sizeable loss for some traders
As soon as I noticed that J 2021calls were available I couldn’t resist it
I immediately sold everything at a significant loss of 63% of my total capital and put everything in $TSLA $400 J 2021 calls
Since yesterday I’m up about 23% and if I’m guessing right then $TSLA shorts will hand me 10 to 20X return sometime over the course of next 28 months, perhaps even better. Just look at $TLRY which has lower % of its float shorted than $TSLA
The single best trade in my opinion is to buy 2021 calls and sit tight for the next 9 quarters
Of course I could be totally wrong so clearly this is all still a fantasy unless and until proven otherwise
Anyone who takes this as an advice is totally irresponsible with their money and has no one else to blame than themselves if they lose it all if $TSLA goes to zero as predicted by Chanos and gang

 

[capster]

Not sure, but we’ve seen things building towards that over the last few weeks. The primary remaining hope of those wanting to sink the company is to do to Tesla what was done to Apple when Jobs was removed.

Yes, those carrying the shorts water have been playing the man more than the ball recently.

Hard not to chuckle the irony of the situation (if you are long). Presumably if you were a weak enough long to allow these clowns to erode your trust in Elon Musk, you'd have sold; leaving much of the stock in the safe hands of those who do believe in him.

And, as I recall, it is the stockholders rather than the shorts or the general public who have a vote on Musk's on-going leadership. Thus, the act of attacking the man helps cement the support for him from those who remain and continue to have an actual say.

BTW, he has had my vote in the past and he will have my vote for as long as he wants it. Oh, is that too much information?

 

[neroden]

It looks like that's not an option for about ~30m shares short interest: those are the "permashorts" who kept their short position open for 1-2 years, while the stock was in the $250-$380 range.

Another weird thing is that only about half of the 35m short interest seems to have deep out of the money long term call option hedges. The convertible notes offer about 2.5m more hedges in principle.

How is the rest, more than 10m TSLA short position protected against sudden rises? If they are truly non-hedged and leveraged, that seems awfully risky to me.

There are an awful lot of options out there, and we may not have tracked down all the options hedges. Maybe some of them are using in-the-money call option hedges, or reloading their call option hedges every month, or have private (unlisted) options hedges? All would seem like undesirable, unprofitable moves but they wouldn't be unlimited-loss situations like an unhedged short position is.

 

[neroden]

if you go to Max Pain | Maximum-Pain.com and add up (painfully) Open Int up to a strike of $300, I get ~289,000 put OI
Is that significant? ( i suspect its a _big_ bucket of money but i'm clueless. are these what expire worthless? do they get "rolled over" or just "rolled" who in their right minds buy these?
View attachment 336479

These expire worthless. Their buyers lost money. Their sellers (usually market makers, occasionally someone like me) made money.

 

[Unpilot]

Exactly my thoughts
As of yesterday morning all my $TSLA position in my taxable account was in $250 and $300 J2019 calls
I was down close to 60% on my entire $TSLA positions which is a sizeable loss for some traders
As soon as I noticed that J 2021calls were available I couldn’t resist it
I immediately sold everything at a significant loss of 63% of my total capital and put everything in $TSLA $400 J 2021 calls
Since yesterday I’m up about 23% and if I’m guessing right then $TSLA shorts will hand me 10 to 20X return sometime over the course of next 28 months, perhaps even better. Just look at $TLRY which has lower % of its float shorted than $TSLA
The single best trade in my opinion is to buy 2021 calls and sit tight for the next 9 quarters
Of course I could be totally wrong so clearly this is all still a fantasy unless and until proven otherwise
Anyone who takes this as an advice is totally irresponsible with their money and has no one else to blame than themselves if they lose it all if $TSLA goes to zero as predicted by Chanos and gang

The chance of Tesla going to zero In the next nine months ...is...um... ZERO!

 

[Duffer]

Exactly! Now that production hell is over, Model 3 is shipping in numbers that keeps breaking all records, they know Tesla will report profitable quarters, so their only hope to break the company is to get rid of Musk. They also know that there are a lot of longs who believe in his vision and that makes the company valuable. Without him Tesla would indeed become "just another car company" and would be valued based on sales and revenue, i.e. much lower than today. So that is the last best hope of the shorts to get EM removed from leadership. Do they have enough power to make that happen ? I doubt it. Talk in the media is cheap (literally! fully paid for by big Oil and big Auto). But getting him removed would need convincing the majority of the investors, which would take a lot more than some useful idiot talking heads.

Unless you can ensure that the government does the dirty work for you. Petro dollars have paid for politicians all over the world, now is the time that there is a return on the "investment".

For those outside of the U.S. and not familiar with our political system it is perfectly legal, and expected, to provide bribes to politicians provided you use the magic phrase "campaign contribution".

 

[tivoboy]

if you go to Max Pain | Maximum-Pain.com and add up (painfully) Open Int up to a strike of $300, I get ~289,000 put OI
Is that significant? ( i suspect its a _big_ bucket of money but i'm clueless. are these what expire worthless? do they get "rolled over" or just "rolled" who in their right minds buy these?
View attachment 336479

80+% of options expire worthless. That’s the math.

It’s crazy. But my new M3 thanks you.

 

[tivoboy]

9/21 or 9/28 expiration, sold calls with $292.50 strike price? You're gonna have your stock called away. (I'm sure you've set up so that that's a profitable trade for you; you seem to know what you're doing.)

9/21 292.5. Probsbpy won’t be called really since someone bought them for 11.50$. So we’ll see.

 

[Fact Checking]

A while back I saw there were lots of Put Options expiring on Sep 21, 2018. More than 300,000 Puts. I thought shorts would do something to fight for it. They tried a few times, seems to me yesterday was their last try and failed.

This made me check the options chains, here are the various low strike price PUT expiry dates:

• 2018:
  • Sep 21: 200k PUT options below $200 strike price
  • Oct 19: over 100k PUT options below $200
  • Nov 16: 20k PUT options below $200
  • Dec 21: 20k PUT options below $200
• 2019:
  • Jan 18: crazy high, around 300k below $200
• 2020:
  • Jan 17: 130k PUTs under $200

The other dates pale in comparison.

Lots of short losses coming up if SP stays high.

 

[TrendTrader007]

The chance of Tesla going to zero In the next nine months ...is...um... ZERO!

Not if you listen to Bob Lutz and Chanos and Spiegel or whatever who are all highly respected members of society and their opinions carry huge weight in my trading activity

 

[Fact Checking]

My understanding is that most of the delta erosion has already taken place with these so wouldn't be contributing much to price support now. Others might know better though.

Yes, agreed: their stock-equivalent risk is roughly their current pennies value - very little hedging required.

Even Jan 2019 which has about 300k sub-$200 PUTs has a combined current risk of less than 1 million shares, so shouldn't be significant either.

I checked all the other expiry dates as well: the only other significant expiry is 2020 Jan 17, with less than 1 million shares-equivalent PUT interest open.

I.e. much of the current 35m short interest seems to be held by shorts, not by market makers - which is a surprise to me.

This should magnify any short squeeze (if it triggers) because MMs liquidate gradually and according to risk algorithms - while human shorts usually liquidate in stampeding herds...

 

[neroden]

9/21 292.5. Probsbpy won’t be called really since someone bought them for 11.50$. So we’ll see.

I'm slightly confused. Are you saying you'll close your options position before your stock is called away?

If you hold your position to expiration: I think it's possible, but unlikely, to see a close below $292.50 on Friday; the indicators are against it.

So I'm guessing they'll be called and you'll make money on it. If the stock's over $304 at close Friday, you lose money, but that seems unlikely to me.

If I'm understanding it correctly, you sold calls for a premium of $11.50 at a $292.50 strike, so if the stock closes at $299 on Friday, your stock gets called away at $292.50 but you can buy back the stock at $299, for a theoretical instant loss of $6.50 on the stock vs. a gain of $11.50 on the option == gain of $5. (Though if your stock was held long term you lose your holding period, which is actually the reason I don't screw around with covered calls except on stock I plan to sell anyway.)

 

[TrendTrader007]

If I were a $TSLA short I’d be looking at my future in this chart