Short-Term TSLA Price Movements - 2013

[deonb]

What probability do you think these two cases will happens? Also by what time frame? You indicated option play so the time consideration is a key factor.

Here are my thoughts for fun. Do NOT take this for investment advise - I'm just showing my thought train - plug in your own numbers and odds.

Assuming $140 on Wednesday:

a) 25% odds: Strong positive (5400, 25000 guidance, second line opening, 15c profit) - 15% gap up - opening $161.
b) 40% odds: Positive (5200, 22500 guidance, 3c profit) - 8% gap up - opening $151.
c) 20% odds: Meet / weak positive (5000, 21000 guidance, 5c loss) - 15% gap down - opening $119.
d) 14% odds: Negative (4800, lowering guidance, > 5c loss) - 33% gap down - opening $93.
e) 1% odds: Some magical set of numbers that causes TSLA to stay within $5 before and after ER. In related news, Nasa discovers Jimmy Hoffa still alive on Mars.

That's opening bell. After that over the next 2 weeks, I think:

(a) will trend further up (mild short squeeze, positive press + forced upward adjustments from analysts) to around $170. Could also trigger a violent short squeeze, in which case up to $255 (50% up) and back down to $110 over a matter of hours. After obvious short squeeze, enter a $110 to $130 range. If it doesn't go through an obvious short squeeze, enter a $150 to $170 range.
(b) will fill half the gap that day and then enter a $140 to $160 range.
(c) will drop further to about $100, find support and recover to enter a $100 to $120 range.
(d) will further drop down until it hits $70, then recover to enter a $80 to $100 range.
(e) Hoffa announces run for President.

 

[Cattledog]

erha - This is completely speculation on my part, but based on Elon's statement that they'll be producing 800 cars per week by end of 2014, the fact that they have already had weeks over 500 (I believe as much as 550) for some time now, the fact that they are running two shifts (shared on tour of 7/12), the recent price adjustments upwards that are an indicator to me that worldwide demand is strong, and their penchant for leaking numbers that end up being conservative.....I think they'll hit 800 cars per week some week during Q1 2014. FWIW.

 

[aznt1217]

With so many of us expecting it to go up... If Tesla misses the forecast, however unlikely it may seem, wouldn't that crash the price very very very very hard?

That's with the assumption many will sell. Doubtful of that. An earnings report doesn't fundamentally change anything. It's all history. What will matter is q+a and guidance.

 

[deonb]

So I'd like to know what deonb thinks of the strategy he posted in the advanced options thread a week or 2 ago, in isolation - purely as a 2-day play. I was thinking along the same lines, but that was when the stick was at $120. Last week I was guessing a gradual upswell of about $2/day til the 8th. Any thoughts on that strategy around a $145 base? Also am thinking your guesses for the weeklies on Wed based on previous weeklies could be a bit optimistic as there is likely to be heavier than usual demand considering the date 'n all. Anyway my newbie strategy would be: 10% break even either way, 75-80% weighted on the upside, with a Wed buy in. Might buy some August 17 calls too, depending on the price.

I think due to the runup, the upward opportunity now on even positive news is less than 10%.

I did acquire all of those strike prices I mentioned above, but ended up not waiting until the last day. I figured the same strikes can take advantage of the runup until earnings. My calls are now green by between 40% and 480% - My puts on the other hand look like a scene out of Saving Private Ryan. Oh well .

The downside to getting in early is that my overall position is up over 50%, so it could be tempting to sell before ER, but I doubt I would.


So I obviously couldn't get $140 or even $160 calls for 10c. Volatility is now so high that you pretty much can't get anything for 10c anymore - and that's not going to change again, unless they maybe release $210 calls.

I luckily managed to snag a hundred or so $190 and $200 contracts for 10c each earlier - ugh, in retrospect I should have put everything in them for a while - they're my highest performers. But with extremely risky options, I follow a "no more than a single hand in blackjack" rule, where for less risky but still short-term (weeklies and same month) options I follow a "no more than a paycheck on the table" rule - with the exception of bear put spreads.

If I had waited till Wednesday, I would have followed a similar strategy that I rolled out above, 10% up and down with some 30% up lotto tickets, but it will work out to be significantly fewer options.

 

[twinklejet]

wow is this kind of volume considered high or what...

 

[justdoit]

I think due to the runup, the upward opportunity now on even positive news is less than 10%.

But I still think a pop on positive news is highly likely mainly due to a possible squeeze more than anything else. Unless shorts are covering now, which I think is highly unlikely.

 

[Citizen-T]

Unless shorts are covering now, which I think is highly unlikely.

There seem to be plenty of suckers to take their place.

 

[RationalOptimist]

Here are my thoughts for fun. Do NOT take this for investment advise - I'm just showing my thought train - plug in your own numbers and odds.

Assuming $140 on Wednesday:

a) 25% odds: Strong positive (5400, 25000 guidance, second line opening, 15c profit) - 15% gap up - opening $161.
b) 40% odds: Positive (5200, 22500 guidance, 3c profit) - 8% gap up - opening $151.
c) 20% odds: Meet / weak positive (5000, 21000 guidance, 5c loss) - 15% gap down - opening $119.
d) 14% odds: Negative (4800, lowering guidance, > 5c loss) - 33% gap down - opening $93.
e) 1% odds: Some magical set of numbers that causes TSLA to stay within $5 before and after ER. In related news, Nasa discovers Jimmy Hoffa still alive on Mars.

That's opening bell. After that over the next 2 weeks, I think:

(a) will trend further up (mild short squeeze, positive press + forced upward adjustments from analysts) to around $170. Could also trigger a violent short squeeze, in which case up to $255 (50% up) and back down to $110 over a matter of hours. After obvious short squeeze, enter a $110 to $130 range. If it doesn't go through an obvious short squeeze, enter a $150 to $170 range.
(b) will fill half the gap that day and then enter a $140 to $160 range.
(c) will drop further to about $100, find support and recover to enter a $100 to $120 range.
(d) will further drop down until it hits $70, then recover to enter a $80 to $100 range.
(e) Hoffa announces run for President.

That, I think, is a brilliant summary of the landscape. Given the run-up there's real risk of major downside without a strong earnings beat. The aspect that makes TSLA unique is that every week a new group of wealthy, starry-eyed new owners/test-drivers comes on board craving some ownership. They are right to be in love. But it raises the stakes at earnings time. One way or another, this week will be wild. Buying a few OTM puts for Aug 9 is not terrible insurance if you're way long. If only for the psychology of it. It will reduce the sick feeling in the event of a 25%+ fall.

 

[Citizen-T]

See the shorts pushing this "news" about CA taking away credits for battery swap? It seems to be everywhere today. Last ditch bear-raid before earnings methinks. Too bad Elon had already preempted them with the options shake-up. It's like a chess match, but Elon's playing 3D chess and the bears still haven't figured out there is another dimension.

 

[FredTMC]

See the shorts pushing this "news" about CA taking away credits for battery swap? It seems to be everywhere today. Last ditch bear-raid before earnings methinks. Too bad Elon had already preempted them with the options shake-up. It's like a chess match, but Elon's playing 3D chess and the bears still haven't figured out there is another dimension.

what do you mean about "options shake-up"? What'd I miss?

TIA

 

[deonb]

what do you mean about "options shake-up"? What'd I miss?

TIA

Think parking sensors and fog lights, not straddles and spreads.

 

[twinklejet]

Think parking sensors and fog lights, not straddles and spreads.

That was ambiguous.. What will we close at today?

 

[100thMonkey]

... The aspect that makes TSLA unique is that every week a new group of wealthy, starry-eyed new owners/test-drivers comes on board craving some ownership. ...

and if only there were a way to gauge the depth of that market! I keep getting tempted to be a TSLA short termer but other than the big dip the day I bought, I've been rewarded to being a "buy and hold" guy. this whole thing is so unprecedented, IMHO, it's hard to find traction in any particular advice, it's a gamble in mass psychology it seems.

 

[aznt1217]

smart money would have noted in the last earnings call... Elon already mentioned they won't be getting the ZEV credits... we all knew it was going to disappear lol

 

[twinklejet]

What happened to the nasdaq?

 

[maekuz]

See the shorts pushing this "news" about CA taking away credits for battery swap? It seems to be everywhere today. Last ditch bear-raid before earnings methinks. Too bad Elon had already preempted them with the options shake-up. It's like a chess match, but Elon's playing 3D chess and the bears still haven't figured out there is another dimension.

And its old news from mid july: California may change fast-swapping ZEV credit rules, could hurt Tesla

A last attempted bear raid indeed.

 

[CyberDutchie]

The Forbes article this morning also bodes well for a post earning bump (if Q2 shows a profit that is). They reiterated the fact that Tesla is widely expected to post a loss:

Tesla Motors (TSLA) Loss Likely to Narrow

 

[DaveT]

Here are my thoughts for fun. Do NOT take this for investment advise - I'm just showing my thought train - plug in your own numbers and odds.

Assuming $140 on Wednesday:
a) 25% odds: Strong positive (5400, 25000 guidance, second line opening, 15c profit) - 15% gap up - opening $161.
b) 40% odds: Positive (5200, 22500 guidance, 3c profit) - 8% gap up - opening $151.
c) 20% odds: Meet / weak positive (5000, 21000 guidance, 5c loss) - 15% gap down - opening $119.
d) 14% odds: Negative (4800, lowering guidance, > 5c loss) - 33% gap down - opening $93.
e) 1% odds: Some magical set of numbers that causes TSLA to stay within $5 before and after ER. In related news, Nasa discovers Jimmy Hoffa still alive on Mars.

Thanks deonb. I've also been playing around with possibilities and probabilities in my head. I'll share my thoughts based on what you shared. I've also shared my Q2 forecast previously.

"a) 25% odds: Strong positive (5400, 25000 guidance, second line opening, 15c profit) - 15% gap up - opening $161."
I see the odds being 10% for this. I haven't seen any figures that have been convincing that Tesla could have delivered more than 5200 for Q2, maybe 5250. But above 5300 the possibility seems very, very low. Also, raising guidance to 25000 would mean 7000 cars in Q3 and 8000 in Q4 that they would need to deliver just to meet this new guidance. I don't think they'd want to put those type of numbers out.

"b) 40% odds: Positive (5200, 22500 guidance, 3c profit) - 8% gap up - opening $151."
Yes I can see 40% odds for this. I'm the most hopeful for this kind of scenario, coupled with good gross margin (14-15%). I see the stock responding well and I think $151 is reasonable.

"c) 20% odds: Meet / weak positive (5000, 21000 guidance, 5c loss) - 15% gap down - opening $119."
Yes, I can see 20% odds for this as well.

"d) 14% odds: Negative (4800, lowering guidance, > 5c loss) - 33% gap down - opening $93."
I see 5% odds for this. Production numbers were too high for this to be a 14% possibility. Also opening at $93 is a bit extreme with those numbers. I'd say $110-115.

"e) 1% odds: Some magical set of numbers that causes TSLA to stay within $5 before and after ER. In related news, Nasa discovers Jimmy Hoffa still alive on Mars."
This is where I disagree the most. I can see the following scenario possible. Maybe with 20-25% possibility.
5100 cars delivered, 22,000 cars guidance, 14% GM, 560m revenue, 1c profit.
In this scenario, I could see the stock open at +/- $10 of where it closed on earnings day.

Following earnings day, I think there are many factors of which I'm most focused on:
1. Shorts - will earnings cause significant amount of shorts to throw in the towel or not. If shorts cover (and there are few new shorts to take their place), then we've got a lot of upward price pressure.
2. Funds/institutions - in earnings I'm looking to see if TSLA has been de-risked at all and if fund/institutions might be encouraged to step up buying. A second profitable quarter with increased guidance could encourage this.

- - - Updated - - -

IBD Leaderboard updated their TSLA comments (fyi, TSLA has been on their leaderboard for some time).'
"UPDATED 11:01 AM ET | Tesla Motors hit an all-time high Monday. The stock has climbed more than 20% from its buy point at 115, which means investors should take at least some profits now. " [bold type is from IBD, not me]

Also, on their overall daily comments/email:
Updated 12:19 PM ET "Meanwhile, Tesla Motors (TSLA) attracted more buyers ahead of its earnings report Wednesday after the close, but the stock isn’t giving potential longs a chance to buy. Its last base breakout was in early April. To its credit, Tesla has been respecting its 10-week moving average but it’s still quite extended. Midday Monday the stock was up 3% in 35% stronger volume."

 

[Jonathan Hewitt]

It's like a chess match, but Elon's playing 3D chess and the bears still haven't figured out there is another dimension.

That is a quote worthy of framing!

 

[ShortSlaver]

What an amazing run!

I'm still on vacation in Europe and did a check this afternoon (morning in NYC) and saw how well behaved TSLA has been. I had to sell a bit of my position going into earnings but holding strong the rest.

Will buy some options tomorrow perhaps...

This has been magical.