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WHAT HAPPENS TO TESLA?

Here we go. TESLA quotes $2,000 today. Yesterday, Thursday, August 20, the stock rose 6.2 percent, closing at $2001.83 to be precise. The psychological threshold has been reached. Who knows what Boss Elon will tweet now?

Elon Musk, founder and CEO of Tesla
Elon Musk, founder and CEO of Tesla

Let us remember that today will be the stock split. For each share held, the investor will receive five shares of the same cumulative value. Could this entail something in the minds of speculators? Could a lower price “seem” more attractive to small retail investors who had previously failed to get into the stock? It might. But watch out for the trap effect. We shall see with today’s openings.

But why did Tesla’s stock go up so much?

Some strange activity in options trading may be the cause of these latest movements. According to GLJ Research founder Gordon Johnson, MANY Tesla out-of-the-money (OTM) options are currently being bought with expiration right on today’s date, 21/08/2020, with strike $2100. This, again according to Gordon, would push the price up.

Significant volumes were recorded for Tesla on Thursday. 45 billion volumes on the stock. On the options side, there were 55616 contracts on the call options with a $2000 strike and 22892 contracts on the calls with a $2100 strike, both expiring on 21/08/2020. In the two strikes we have open interest of 14798 and 5091, respectively.

According to manager Mark Spiegel, an assiduous Tesla shorter, “Someone” is pursuing a strategy of massive OTM call buying. This would force the sellers of these calls to buy stocks to cover their position. Spiegel states that this mechanism is a kind of spiral.

If so, the price would be supported by a house of paper.

Certainly this cannot be the only reason. And Tesla is not the only one going up. See Amazon, Apple and company.

Tesla’s rating

In any case, however it goes, many shorters have been hurting on the stock. This is because we are often led to think within patterns. Sell high and buy low. But here sell is often understood as “sell short.” As philosopher N.N.Taleb teaches, black swans do not have to be negative. And they don’t have to be immediate. That Tesla is a black swan I cannot state with certainty, rather the entire electric sector could be, with Tesla leading the way.

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