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$TSLA am not an expert on shorting stocks, just your average Joe with a Casio calculator. But for the 1st time ever, the time looks ripe for a short. Let me elaborate. To start, if you read my previous post, it established a troubling fact pattern that is a good premise. (1/N)
Let’s clear one basic thing first. The issue that I raised in my previous thread would be unnoticeable if it wasn’t coming on the back of one of the most grossly overvalued stocks EVER. Let the numbers speak for themselves. (2/N)
If I was to highlight one number everyone should be focusing on, it’s FY21 EV/Sales against street’s uber-bullish 19-22 CAGR est. That multiple was in the high teens at 900, in-line with the CAGR regression for tech, auto and clean energy. Except, margin est. are going 
(3/N)
(3/N)
So it might have grown quickly but top $ is already being paid while estimates are uber-bullish and about to roll-down. That said, focusing on valuation is lame, and this was never neither a growth nor a multiples story. (4/N)
The reality is that $TSLA was the mother of all delta squeezes and thanks to the idiocy of index committee members, it passed from the options bubble to the passive bubble through S&P inclusion. As such it sits at the core of not 1 but 2 reflexivity loops. (5/N)
As late as early January, options ADV notional was over 300% of underlying shares, up by 150% yoy for a total daily traded notional of circa $ 140 bn. This ladies and gents made it this bubble’s Nr 1 Yolo stock. But these were not RH basement traders. This was coordinated. (6/N)
Led by large funds. Proof? I had run a screen on small size contracts trades (that were as high as 95% of total daily notional on some names) and $TSLA was nowhere to be found. Ok, how is that relevant? Why the delta squeeze on the way up through MM hedging works both ways (7/N)
And surprise surprise, after the index inclusion, and against the overall market trend, option positioning flipped very bearish. And if $TSLA is probably a fraud, this fact pattern of ramping the stock up, passing it over at $ 800 bn. to the Vanguard moms and pops (8//N)
Then shorting it big time is no less criminal. So what kind of numbers are we talking about? There is currently circa $ 190 bn of calls OI and over $ 250 bn of puts OI, that’s a staggering $ 60 bn of put skew. It’s a massive position. (9/N)
To put it in context it is equal to the combined $AAPL and $AMZN bullish skew or if you’d rather to the combined $BABA, $FB, $MSFT, $GOOG and $WMT combined. Now obviously some of the OI and the put skew will unwind on the 19th OpEx but far from all.
(10/N)
(10/N)
As some of this bearish position transpired yesterday, those who looked carefully would have seen that the deep OTM puts were populated across maturities and not concentrated on Feb. here is the Vol surface showing the skew.
(11/N)
(11/N)
Now why is this alarming? Well, first it’s clearly an idiosyncratic view, because the overall market positioning is getting increasingly skewed towards calls, on higher volumes (now over 120% of cash volumes) but also because the Vanna effect that squeezes on the way up
(12/N)
(12/N)
Works exactly the same in reverse. All it needs is a catalyst and the inferno machine of MM gamma-driven hedging will go in full gear. As OTM puts gets less OTM they will need to be increasingly hedged. It doesn’t stop here, for there will not be only 1, but 2 doom loops.
13/N)
13/N)
The 2nd one being passive funds that are now dominant. Since the inclusion, active managers have been net sellers and passive have ramped-up in the shareholding register. Here is a summary of the largest reported moves.
(14/N)
(14/N)
What is the passive doom loop? Many have covered this, none as extensively or better than @profplum99 , but a simple way of understanding how it’s relevant to $TSLA is that these strategies are momentum auto-pilot like. In technical terms negative gamme like.
(15/N)
(15/N)
Passive funds are divergent in that they profit from price continuation. If there is a reversal and the weight of the stock in the index goes down, they will be sellers. The more it goes down, the more they will sell. That applies not only to $TSLA but the market overall
(16/N)
(16/N)
The important part of @profplum99 analysis is his work on the multiplier effect. In simple terms, as index funds have to buy immediately and on cap-weighted terms and stocks have limited floats (80% in case of $TSLA) their effect on the share price is convex.
(17/N)
(17/N)
If that was not bad enough, I am sorry to say that it does not stop here. As the two doom loops are inter-connected. Academic studies have shown a clear relationship between high passive ownership and higher volatility/mediocre liquidity, just as MM might 
put hedging.
(18/N)
put hedging. (18/N)
But what about a potential short squeeze? Well just as the yolo call delta hedging is done and has reversed, passive funds are done buying, it is all too obvious that shorts are cleaned and it will take a mere day to cover what is out there
(20/N)
(20/N)
To conclude, the very last chapter of this scam seems to be going to press as I type. Now that the bag holders are Vanguard pops and moms, that the positions with acceleration mechanisms are in place, all was left to find was the final liquidity providers for a final trap
(21/N)
(21/N)
It looks like they were found this morning, as r/wsb boards were seeded with some $TSLA pump chatter. Needless to say, the same playbook that was used to manipulate $SLV and $GME is being used...again.
(22/N)
(22/N)
Well some smart hands seem to have connected all these dots as it escaped no one that a large staggered maturity deeply OTM cluster of puts was planted yesterday. An intuition tells me that whoever is behind that bet, is not only smart, but prolly good looking too.
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