Tesla vs. the Shorts

Alan · February 3rd, 2020, 9:43 pm

Reminds of great Gordon Gekko quote from Wall Street '87:

It's not a question of enough, pal. It's a zero-sum game: somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.

From Jan 16, 2020 Tesla just became the most shorted stock in the US, again (TSLA)

tw · February 3rd, 2020, 10:57 pm

TSLA_60.png

Reminds of great Gordon Gekko quote from Wall Street '87:

It's not a question of enough, pal. It's a zero-sum game: somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.

From Jan 16, 2020 Tesla just became the most shorted stock in the US, again (TSLA)

Extraordinary.

Elon Musk famously has huge stock option compensation. IIRC it was conditional on market cap > 100bn plus revenue and EBITDA targets
over longer term periods.

It must be an interesting hedging decision for him.

WIth the kind of moves observed recently it must be mighty tempting to lob out some calls, but what are the chances he could end up
short, if the targets get missed but the market remains bullish on the stock.

FaridMoussaoui · February 4th, 2020, 12:19 am

From Jan 16, 2020 Tesla just became the most shorted stock in the US, again (TSLA)

The short percent float of TSLA is around 18.5% but you should check short interest in BABA (market cap ~ $570 B).

On the other side, the market cap of Tesla ($140 B, it was up 20% yesterday (03-02) !!!) is more than BMW and Daimler AG (Mercedes Benz) combined (€ 86 B ~ $95 B) while it has never had a profitable year and producing a fraction of Germans automakers cars. The first profits ever were in the last 2019 Q4 (and it ended 2019 with a loss of $862 m).

FaridMoussaoui · February 4th, 2020, 12:41 am

Following finviz the short interest in BABA is 12.44% so it is the most shorted stock.

FaridMoussaoui · February 4th, 2020, 12:55 pm

so TSLA added $16B to market cap today (premarket at $890)

tw · February 4th, 2020, 2:51 pm

Following finviz the short interest in BABA is 12.44% so it is the most shorted stock.

Do these stock shorting figures have the equivalent of OI in them?

If one short stops out and buys back from several others, (but the stock lender is the same) does that get reported as an increase in open interest somehow?

Alan · February 4th, 2020, 10:05 pm

Speaking of "one short stops out", I will admit to an unsuccessful short attempt today. Shorted 10 shares at $915, stopped out at $945 (well, really just capitulated, didn't have an actual stop) -- so never made it 'till the selloff at the close. Oh well. Looking back, I had a nice (profitable) covered call position entered at 223, which was my last one in TSLA.

Kind of reminds of bitcoin, except I would never short BTC as there are no metrics for that + it is manipulated. Well, I should really say I haven't shorted it yet.

tw · February 5th, 2020, 12:27 am

Speaking of "one short stops out", I will admit to an unsuccessful short attempt today. Shorted 10 shares at $915, stopped out at $945 (well, really just capitulated, didn't have an actual stop) -- so never made it 'till the selloff at the close. Oh well. Looking back, I had a nice (profitable) covered call position entered at 223, which was my last one in TSLA.

Kind of reminds of bitcoin, except I would never short BTC as there are no metrics for that + it is manipulated. Well, I should really say I haven't shorted it yet.

Well I am sure there will be ample opportunity re-capture a $30 move over the next few weeks... Bon chance!

I must say, these weekly option markets on the US exchanges for these hyper-volatile stocks are like crack-cocaine.
100%+ vol on a 1 week expiry is a 5-6% return. If one were skilful at calling the moves that would start to compound reasonably rapidly...

I just don't get BTC whatsoever. Every time there is a big move it all seems to be because of some scam that involves the most lurid criminal
activity and was "obvious" to all the market commentators after the fact..

FaridMoussaoui · February 5th, 2020, 10:29 am

There is a chart comparing BTC 2017 to TSLA now: link to marketwatch

The Saudi sovereign wealth fund, the 3rd largest holder of TSLA shares sold out more than 8m shares (99.5% of its position) as of 31 Dec 2019. The average price was $325. May be they were fed-up with Musk's "funding secured".

The "best" short squeeze (for meaningul stocks) was Volkswagen in 2008 (from €200 to €1005 in 2 days then back to €200 when Porsche made an additional 5% of the VW shares outstanding available to buy).

FaridMoussaoui · February 5th, 2020, 11:34 am

tw, short interest only with commons. (afaik). Every short holder (through their broker) have to report their short position twice a month (increase or decrease).

tw · February 5th, 2020, 2:54 pm

tw, short interest only with commons. (afaik). Every short holder (through their broker) have to report their short position twice a month (increase or decrease).

Thanks!

So how would you characterise what is going on? The most shorted stock ever gets even more shorted but the price keeps going up?

I am used to a more futures trading world where one can related the behaviour of OI to stop out regimes but I can't quite figure out what the
data interpretation here is. Perhaps one or two giant positions get liquidated but the volumes are taken up by new, smaller shorts?

And what would advise Mr Musk to do, here?

FaridMoussaoui · February 5th, 2020, 3:26 pm

Lots of options being boughts, we are now 45 minutes since the market is open and we have 300K calls/puts being traded. That's huge (just compare with the spyder which is at 850K right now).

TSLA is a heavily shorted stock. There is a lot of OTM calls bought => market makers buy more shares as the stock surges to remain neutral delta hedge.....

Alan · February 5th, 2020, 8:01 pm

Speaking of analogies with bitcoin, BTC is famous for the "Bart Simpson" chart pattern, created today in TSLA (bottom chart), and above that, the pattern in BTC:

[attachment=0]TSLA_5.png[/attachment][/font]

I grabbed the BTC chart from:
https://beincrypto.com/what-causes-the- ... t-pattern/

tw · February 6th, 2020, 6:21 pm

Speaking of analogies with bitcoin, BTC is famous for the "Bart Simpson" chart pattern, created today in TSLA (bottom chart), and above that, the pattern in BTC:

tradingview_btcusd_chart_bart_pattern.png
TSLA_5.png

I grabbed the BTC chart from:
https://beincrypto.com/what-causes-the- ... t-pattern/

Very droll.

Bart will eat his shorts (short sellers, that is)

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