Is the Market mis-pricing TSLA?

Daily Plan 10-18-23

Despite the doom and gloom about sales and delivery margins, TSLA stock has remained buoyant and has had a good year. However, it comes nothing close to some of its peers like NVDA for instance.

Is the market not giving this stock enough credit?

Well, it will be clear tomorrow when they report after market close. However, I noticed a couple of things which I wanted to share.

First off, the implied volatility for this stock, historically speaking, is quite low. In past, the IV has been super high, which basically means you pay through the nose to have the pleasure of owning the weekly options for the earnings week at crazy premiums only to see the stock barely move as the MM perfect their MM option selling business.

This time around though, the IV is super low (compared to historic precedence) and option prices themselves are not too expensive, again, speaking relatively.

I think given everything else, we could see a large move in this stock tomorrow as the MM activity appears to indicate indifference.

Now if I dive deeper, I hear from the internet that everyone is short TSLA, but if that is true, then I would expect a heavier premium to be short, assuming folks using short term options to be bearish. This is why I think there is a chance for a large move and if resistance holds near 260, then this move could be on the downside. Ofcourse this is void if come Thursday, we open above 260. At the same time, I think due to the general market context at the moment, it may be harder sell below 215-220, if we get there.

Why 215? Because I do think regardless of margins and sales, you have to account for the increased sales with price cuts as well as when the gas prices remain endemic 4-5 dollars in the West, then you are forced to think about cheaper alternatives. This is why I think this could find support there, if it gets there. Headwinds? Financing cost at current rates I think is a big hurdle.

At time of this post we last traded 255.

Image: Business Insider.

In terms of actual earnings, the expectation is to come in at 73 cents per share.

Look, I am not some chart junkie sitting there plotting head and shoulders and inverted bats. Technically, yes it is true that TSLA is forming a tight range, so with or without options, it is setting up for a large move of 20-30% or more in next few weeks, I think.

I am using publicly available data to paint a scenario. It may be right, it may be very wrong. So take it with a grain of salt.

Let me know what you think about this?

On the emini side, I had great levels again. Both high of the day and low of the day were close to some of the levels I shared last night.

So for tomorrow, I think we remain in holding pattern for TSLA to share their quarterly info.

My key level for tomorrow?