Short-Term TSLA Price Movements - 2014

[Curt Renz]

...Does anyone use this info for trading purposes and is there any data/studies to back up the "manipulation" claim?

I have seen no detailed studies but instead have recollections of how frequently options tend to expire at popular strike prices. Often there is a surge in trading volume of a stock during the minutes prior to an options expiration that pushes the share price to a key strike level. I was first alerted to this pattern over twenty years ago when I was daily interviewing market makers and floor traders at the CBOE for my TV financial news program.

Regarding the situation this week for TSLA and its options, note that the 247.50 and 250.00 strikes exhibit nearly identical pain levels.

 

[sub]

I have seen no detailed studies but instead have recollections of how frequently options tend to expire at popular strike prices. Often there is a surge in trading volume of a stock during the minutes prior to an options expiration that pushes the share price to a key strike level. I was first alerted to this pattern over twenty years ago when I was daily interviewing market makers and floor traders at the CBOE for my TV financial news program.

Regarding the situation this week for TSLA and its options, note that the 247.50 and 250.00 strikes exhibit nearly identical pain levels.

Thanks Curt. I've done some reading since that post, it's an interesting topic.

 

[Chickenlittle]

I agree that Jonas is losing his marbles, trying to put myself in his shoes of being the most powerful auto analyst on The Street and letting the power get to me and feed my ego for many years now I've come up with a theory:

I wouldn't be surprised if this is some type of 'lost his mind' attempt at posturing by Jonas....like "you made me look bad with your Falcon Wings door update email right after my note about it potentially being a problem, well I can drive your stock price down with a note of my own if you mess with my reputation like that, don't make me look bad again".

If Tesla released their update to X reservation holders on the Falcon Wing doors a week or few weeks from now it wouldn't have been as embarassing for Jonas and perhaps he wouldn't have felt as compelled to strike back showing his power over the TSLA stock. He feels that they need him to help keep the stock high enough for another capital raise at some point in the future, but by then I don't think we will need Jonas is my opinion, and perhaps that is the opinion of Tesla management at ths point.

long term as predictions fail he will be come moot. nobody will follow, he only hurts his own reputation

 

[Curt Renz]

long term as predictions fail he will be come moot. nobody will follow, he only hurts his own reputation

He seemed to want to either create the impression that he is privy to inside information, or that he is very good at putting 2 and 2 together. The problem this time is that his conclusion was 3. On Monday he published pure speculation about the falcon wing doors. Apparently that was either based on his “intuition”, or from guesses distilled from message boards such as this one. That note may have been to soften the blow and provide backing for his Wednesday report. By publishing speculation, he trapped himself.

 

[chickensevil]

"Tesla is a Top 4 pick in our ranking of N. American auto stocks" - I guess that's a bit of damning with faint praise.

Wait... what? How does that make ANY sense... there are like only 4 NA auto companies... of course it would be in the top 4...

 

[mynameisjim]

And fiat is rated higher?

 

[chickensevil]

I have seen no detailed studies but instead have recollections of how frequently options tend to expire at popular strike prices. Often there is a surge in trading volume of a stock during the minutes prior to an options expiration that pushes the share price to a key strike level. I was first alerted to this pattern over twenty years ago when I was daily interviewing market makers and floor traders at the CBOE for my TV financial news program.

Regarding the situation this week for TSLA and its options, note that the 247.50 and 250.00 strikes exhibit nearly identical pain levels.

Isn't it a little be preemptive to be trying to drive the price to in between 247.50 and 250 for a Friday expiration? This stock EASILY moves by $2-5 swings every day... so we could be as high as 260 and as low as 240 by the end of the week and I wouldn't be shocked on either number... so why would they put forth all this effort today to hit that level when we still have 2 more trading days?

 

[Johan]

Isn't it a little be preemptive to be trying to drive the price to in between 247.50 and 250 for a Friday expiration? This stock EASILY moves by $2-5 swings every day... so we could be as high as 260 and as low as 240 by the end of the week and I wouldn't be shocked on either number... so why would they put forth all this effort today to hit that level when we still have 2 more trading days?

I would think that most US style options are not held to expiration but sold or bought back in advance. Closed out is a better term. And who is the middleman or many times on the other side of the trade? The market makers. So it's in the MM's interest to stay close to max pain as traders are closing out their positions.

 

[Curt Renz]

Wait... what? How does that make ANY sense... there are like only 4 NA auto companies... of course it would be in the top 4...

Jonas also follows automotive suppliers and considers them to be part of the "auto" industry. He concluded his Tesla Motors report today with this comment, "We would look for any hiccups/delays as an opportunity to increase exposure to what we believe is the most important manufacturer in global autos."

 

[Robert.Boston]

SO Morgan Stanley predicts 53,000 deliveries for 2015, when we have a production rate of over 1,000 cars per week right now? Anyone else find that stupid?

The factory doesn't run 52 weeks; as I recall, it's closed for a couple of weeks around Christmas/New Years and at the beginning of Q3. These shutdowns allow maintenance + holidays. So, 53,000 in 49 weeks = 1,062/week. Doable, but requires some modest pick-up in the production pace.

 

[Johan]

The factory doesn't run 52 weeks; as I recall, it's closed for a couple of weeks around Christmas/New Years and at the beginning of Q3. These shutdowns allow maintenance + holidays. So, 53,000 in 49 weeks = 1,062/week. Doable, but requires some modest pick-up in the production pace.

Rember AJ's (not not Jonas the clown but Andrea James) research note early in October. I quote: "So far, Tesla has only discussed its production run rates, not its actual factory capacity. Tesla has communicated that it would end 2014 at a little more than 1,000 units produced per week and that by the end of 2015, production would be just over 2,000 units per week". Do we have reason to doubt this? Does it really matter if it's Xs or Ss coming off the line so long as demand is there??? Super simple calculus would give us a 2015 total production of 1500x49=73500, a couple of thousand cars in pipeline so say 70k for the year?

 

[Chickenlittle]

Rember AJ's (not not Jonas the clown but Andrea James) research note early in October. I quote: "So far, Tesla has only discussed its production run rates, not its actual factory capacity. Tesla has communicated that it would end 2014 at a little more than 1,000 units produced per week and that by the end of 2015, production would be just over 2,000 units per week". Do we have reason to doubt this? Does it really matter if it's Xs or Ss coming off the line so long as demand is there??? Super simple calculus would give us a 2015 total production of 1500x49=73500, a couple of thousand cars in pipeline so say 70k for the year?

actually it does matter what is coming down the line. i suspect margin to be higher on the S rather than X. there is always a learning curve on a new model.

 

[Johan]

actually it does matter what is coming down the line. i suspect margin to be higher on the S rather than X. there is always a learning curve on a new model.

OK, I agree with this. The S P85D will probably have high ASP and good margins. But I would expect the same with the early Xs, people will often max them out and they could add new extras to the X with very nice margins. My main point is there is absolutely no reason to expect 50k S/X in 2015 when Tesla themselves more or less have guided for 70k.

 

[Chickenlittle]

The factory doesn't run 52 weeks; as I recall, it's closed for a couple of weeks around Christmas/New Years and at the beginning of Q3. These shutdowns allow maintenance + holidays. So, 53,000 in 49 weeks = 1,062/week. Doable, but requires some modest pick-up in the production pace.

why would you assume that production rate for the year. already announced that they will exit 2015 at 2000 cars per week (100,000 a year) by end of 2015. i doubt they would just double production in one swoop at end of year. i expect continued ramp up, perhaps third shift?

 

[Curt Renz]

I would think that most US style options are not held to expiration but sold or bought back in advance. Closed out is a better term. And who is the middleman or many times on the other side of the trade? The market makers. So it's in the MM's interest to stay close to max pain as traders are closing out their positions.

Indeed that seems to be the case. Most especially it would be for quarterly expirations, almost as much for monthly expirations, and a bit less for weekly expirations. Particularly in the most popular issues from Wednesdays through Fridays, options traders are closing out their positions. Today is the Wednesday prior to a monthly expiration. It would not be surprising if market makers and hedge funds had interests in manipulating the share price during the final hours today. That could be repeated during the next two days, albeit with possibly different strike prices as targets.

 

[CyberDutchie]

See, I knew this (in bold) was going to happen the minute I read Jonas' note on Monday. Investor's Business Daily:

Tesla Motors (TSLA) shares fell 3.9% to 247.74 after Morgan Stanley cut its forecast on Model X deliveries to 5,000 next year, well below an earlier estimate for 15,000 vehicles. There are reportedly problems with the double-hinged "falcon" doors. Morgan Stanley cut its earnings outlook for '14 and '15.

 

[jhm]

The Model X may well increase ASP. We have recently learned that this model will be the first EV to tow trailers. Customers seeking the X for this capability will also want to buy a version with a 110 kWh or higher battery. They will also want the power of the P85D. They will pay quite a premium for an X P110D. I also anticipate that a 60 kWh version will not be offered.

I look forward to watching the MX P110D in a truck pull with any pickup on the market. Long before Tesla makes a truck, the MX will be able to pull competitor trucks off the road.

A nice touch would be for the MX to have power outlets.

 

[Auzie]

why would you assume that production rate for the year. already announced that they will exit 2015 at 2000 cars per week (100,000 a year) by end of 2015. i doubt they would just double production in one swoop at end of year. i expect continued ramp up, perhaps third shift?

I would be surprised if these expensive robots are idle due to no people available. More likely than not, production constraint is related to something other than people.

 

[AlMc]

The Model X may well increase ASP. We have recently learned that this model will be the first EV to tow trailers. Customers seeking the X for this capability will also want to buy a version with a 110 kWh or higher battery. They will also want the power of the P85D. They will pay quite a premium for an X P110D. I also anticipate that a 60 kWh version will not be offered.

I look forward to watching the MX P110D in a truck pull with any pickup on the market. Long before Tesla makes a truck, the MX will be able to pull competitor trucks off the road.

A nice touch would be for the MX to have power outlets.

The MXP110D will have plenty of torque, but to keep the weight down the chassis and suspension will not be heavy duty enough to support towing large trailers or 'pulling'. It will be scary fast and blow away all other competitors (Audi, BMW, MB) SUVs but don't expect lots of towing capacity. An F250, GMCs in the '2000' class and a Toyota Tundra will be able to tow much more weight. The MX will be a lot of things to a lot of people, but in a 'tractor pull' it will lose.

 

[DrGuest]

I agree that Jonas is losing his marbles, trying to put myself in his shoes of being the most powerful auto analyst on The Street and letting the power get to me and feed my ego for many years now I've come up with a theory:

I wouldn't be surprised if this is some type of 'lost his mind' attempt at posturing by Jonas....like "you made me look bad with your Falcon Wings door update email right after my note about it potentially being a problem, well I can drive your stock price down with a note of my own if you mess with my reputation like that, don't make me look bad again".

If Tesla released their update to X reservation holders on the Falcon Wing doors a week or few weeks from now it wouldn't have been as embarassing for Jonas and perhaps he wouldn't have felt as compelled to strike back showing his power over the TSLA stock. He feels that they need him to help keep the stock high enough for another capital raise at some point in the future, but by then I don't think we will need Jonas is my opinion, and perhaps that is the opinion of Tesla management at ths point.

[FONT=arial, sans-serif]I think the Gig is up for these "anaylists" It looks like they just read a script to manipulate the Market , kinda like the "reporters" at Fox news manipulate the masses, time will tell. I hope there are some arrests and jail time.[/FONT]

[FONT=arial, sans-serif]Goldman, Morgan Stanley And JP Morgan Named In Commodity Manipulati[/FONT]on Investigation - Forbes 11/19/2014

http://www.forbes.com/sites/maggiem...amed-in-commodity-manipulation-investigation/