Tesla is a unique company in so many ways. Forget for a moment the product, the policy impact, and the leadership. The stock itself is easily one of the most polarizing among investors and traders. Just about everyone has a strong opinion about TSLA and where the price is heading. It’s either the epitome of the Robinhood and stimulus-fueled meme stock bubble, or the misunderstood tech company poised to overtake all of the FANG stocks. The only thing everyone seems to agree on is that it won’t stay exactly where it is today.
The 2022 TSLA New Year Greeting
How does a stock jump 13% on the first trading day of the new year? Easy, they release their 2021 shipment numbers on January 2nd, Sunday afternoon before markets in Asia open. Given that everyone seems to be on the waiting list for a Model 3, X, or Y, is it any surprise they beat all Wall Street expectations? It looks like they are shipping 930,000 cars a year now, with the vast majority in the 3 and Y category. Almost one third of that came in just the last 3 months of the year, showing accelerating production capabilities.
Is Elon Done Selling?
The stock hasn’t been entirely straight up in 2021. After reaching all-time highs in early November 2021, CEO Elon Musk mentioned he was planning to sell a bunch of the stock to pay taxes on…. all of his gains from his TSLA stock options! That caused a tumble for a week or so. However, starting December 21st, the stock rebounded even more violently. In less than 10 trading days, it was up 300 points, clocking in a gain of over $300 billion dollars in market cap!
Why the recent run up BEFORE the delivery numbers? Some say it’s because Elon announced he was done selling his shares…
Bulls, Bears, and Vol Traders Placing Bets
Whether bullish or bearish, it seems all trades are taking positions in TSLA. It is again a WallStreetBets favorite name to follow. Even the research team that created the RealtyHop Mortgage Center is publishing complex videos on executing Tesla option combo trading strategies. Personally, the video seemed a bit long-winded and verbose, but it seemed to be an interesting albeit risky way to profit from the mania.
The trade involves simultaneously buying out of the money call options on Tesla but also selling twice as many call options even further out of the money. It can work brilliantly if Tesla only gradually glides upwards. It even does well if the stock lingers where it is and when it drops. However, if Tesla were to announce another 5 to 1 stock split, would an army of traders rush in to pump the stock up 50% overnight? It sure worked for them in July 2020…