Thread by @WizOfOps

Good Morning! I was going to do today's morning tweet on $TSLA, as it has shed roughly 74% from its ATH over the past year. When will it stop? Kevin already did some analysis but wanted to shed a little more light.

https://twitter.com/Fatty_Trades/status/1607976538816790530

First, that $100 positive vanna would be attractive to price, not repelling. They are also short puts for dealers, so there has been constant hedging on $TSLA all the way down. #volland changes on $TSLA every day, it is a very active stock. But I'll sum up here quickly.

This move in $TSLA is clearly not dealer hedging related. It reeks of margin calls, amd as @Forbes reported a while ago, $TSLA margin loans are collateralized at a 5-1 ratio. forbes.com/sites/johnhyat…

Musk has been selling $TSLA until recently when he tweeted he was done selling. I responded to that tweet that if $TSLA drops any more, he won't have much choice. I think we have been there. This might be the financial capitulation of Musk and $TSLA we feared.

There are also reports Twitter is now collateralized with $TSLA shares, primarily because banks can't find investors for Twitter debt. bloomberg.com/news/articles/…

This all points to major margin calls, perhaps on Musk himself. I haven't poured over his SEC filings, maybe one of my followers has to perhaps calculate when the knife stops falling from Musk himself, but his fall from grace has been swift.

So to answer the question, when will the $TSLA knife stop falling, and when it does, what will happen? Options show customer hedging constantly, with IV at its highest level ever, which is saying something for $TSLA. The positive vanna shows a flat distribution...

So basically when $TSLA does stop dropping and IV drops instead, we will see a massive bounce. It won't get $TSLA back to $400, that ship has sailed, but back to $150-$160 area would be the target right now and from these levels, a 50% pop is not a bad haul.

As it turns out, $TSLA has turned out to be the largest $GME meme stock ever. It held its levels and rise because it is a healthier (sort of) company than $GME or $AMC and it was perpetuated by Musk himself masterfully.

But in the end, it is a meme filled with bad debt and collateralized with worse debt. But that doesn't mean it won't have a few face-ripping rallies along the way, and we might be due for one soon back up to the $150 level. Not investment advice... obviously.