The News: After registering to sell shares, over the weekend, Tesla (TSLA) Inc CEO Elon Musk polled Twitter on whether to follow through. His followers voted “Yes” to him selling 10% of its stake.
The Sale Process: While we are not provided the timestamps linked to the execution, you can extrapolate the timing by reviewing the execution prices filings. The sale execution started on Monday, November 8th and we will provide analysis of the trading activity yesterday, on November 10th.
The Price Action: The resulting movement of the stock, alongside the $5 billion in total stock sales, is quite interesting. Over the first two days of the week, Tesla stock was down over 17pct from its recent high of $1,243 per share to close on Tuesday night at $1,023.
The Options Impact: One might imagine that while the CEO is selling a large block of stock, the price would continue declining. However, this was not the case yesterday, and it would be incredibly helpful to have a system that helps analyze the movements and identify the real driver.
During these times, HIRO – SpotGamma’s proprietary indicator that analyzes the options market, is a gamechanger. HIRO analyzes all options trades and applies SpotGamma’s proprietary algorithms to assess direction and magnitude, and tells us if options drove the stock. Here, we feel confident that options drove the stock price despite Elon selling stock.
To illustrate this fact, here are three points during the day and how options pushed the stock:
Example one: In the morning, you can see large call buying and/or put selling took place based on HIRO, and the stock subsequently moved 8pct higher. As per ZeroHedge, this is when Elon sold the bulk of his shares, while the stock rose.
Example two: In the mid-afternoon, you can see large put buying and/or call selling took place based on HIRO, and the stock subsequently moved 6pct lower.
Example three: In the late-afternoon, you can see large call buying and/or put selling took place based on HIRO, and the stock subsequently moved 6pct higher.
Looking Forward: Based on the volumes promised to his Twitter followers, Elon is not yet done selling stock, and we believe the options market will remain a critical factor in determining the near term stock price.
HIRO is currently available through our partner Bookmap, and we will be launching HIRO directly through SpotGamma.com in the coming weeks. We will be offering limited access at first, so if you’re interested in joining our waitlist, please fill out the form below and be one of the first people to know when access to HIRO opens up.