TSLA over $1,000/share

I sold a small lot and applied for a margin account to short NKLA. But if TSLA comes close to $830/share, I may just buy TSLA with an extra share. In effect, increasing that trade by 20% more TSLA shares.

As for NKLA, I suspect we may not yet be close to the ‘Come To Jesus’ moment. Just a value judgement.

Bob Wilson
 
Well, don't let yourself get burned with a long term short. I used to short sometimes on a day trade, or at most a few days swing trade. NKLA could be bought out by someone or get a big pocket partner, and you would be hooped. For that matter, I don't like long term longs either. I did get some good buys back in March and just now selling them (two last week). But only because they were such obvious opportunities. NKLA, and even TSLA are way too risky for me.
 
I agree that going SHORT has risks so my plan is to have a 20% reserve to 'exit stage left.'

As for NKLA assets, their patents are aging and IMHO, over-scoped. Worse, excessive subcontracting looks fast at the start but defers the hard problems to integration and test when it becomes very expensive to fix. When you own both sides of a 'connector', you can make an optimum solution. You can choose the lowest cost, least risk solution . . . you don't have to negotiate whose 'ox to gore.'

Bob Wilson
 
I am retired, too, and a way more conservative now with my investing/trading. Don't make as much money anymore, but enough to live well and no stress. When I was younger, I traded very aggressively at times, and made a pile of money. But also had some big "learning experiences". Fortunately, I had time, and a good job (financial security) to recover. The old adage of risk little, gain little is quite true, though. But at this stage of my life, am happy with little. And some of these "little" opportunities lately have been very profitable.
 
I only know the theory, since I've never played the stock market. But as I understand it, in theory there is no limit to how much money you can lose shorting a stock.

Long term, it seems inevitable that Nikola's stock price is a bubble that will sooner or later collapse, as it becomes more and more clear over time the company is (almost certainly) a sham. The problem is that anyone buying a short position there could lose a lot of money before the stock does eventually collapse.

I view playing the stock market as a form of gambling. Shorting a highly volatile "bubble" stock like Nikola's... that's an especially risky gamble.
​
 
Playing the stock market is certainly a gamble for some. But the odds even for them is usually a lot better than Vegas.
 
I have yet to receive a margin account from my brokerage. The money from the small lot sale at ~$1,020/share is still in the account.

If TSLA goes as low as $833/share, it closed at $935/share on Friday, I can re-invest and gain a 'free' share. Alternatively, I could buy a TSLA share at a substantial discount. For example, at $850/share, I could add ~$80 for an extra TSLA share.

I still want to SHORT the NKLA stock with a long term position. The only question being how much cash to hold in reserve. Initially, I'm thinking 20% but have no problem with raising the reserve to 50%. I understand I may get a 2x leverage with say $1,000 in cash getting $2,000 of borrowed stock. But it is a race.

NKLA appears to be a 'rapid prototype' shop because they announce so many peripheral vehicles. Lacking a serious production goal, they fritter their labor hours on expensive 'hobby' vehicles. They apparently think manufacturing can be outsourced and then gather profits from the sales. It is a terribly flawed business plan so I have no problem with fleecing the NKLA investors.

Bob Wilson
 
Lesson's learned:

June 10, 2020

Applied for a "margin" account. Was told it would take 2-3 business days and I would get an e-mail notice. Sold ~$5,000 of TSLA stock to have money for the account.

June 15, 2020

Had not received confirmation of approval for a margin account. Logged into discover:
  • ~$5,000 - Available balance, the TSLA stock sale on June 10.
  • ~$7,300 - Funds available to trade
  • ~$14,700 - Buying power which requires a daily interest of ~2.5%
  • No e-mail notice of approval . . . Huh!
So I asked if I could buy 100 shares of NKLA, ~$6,500? Answer, "we don't have any available. Call us tomorrow."

Well that was unexpected. It never occurred to me that SHORT shares might not be available.

What next?
  1. Buy back TSLA at a slightly lower price than previously sold - This preserves capital.
  2. Apply for "options" account - This allows me to use a secondary, stock speculation method. I could buy/sell a time limited option for NKLA at a given price.
Is this approach risky, H*LL YES! But it also has the potential for a significant profit if I can guess right.

Bob Wilson
 
Yeah, that is pretty common. A heavily shorted stock often has all their shares "lent" out. They will become available again to sell after the stock starts dropping and short sellers start covering (buying back). I have run into that many times in the past. You have to be early, or pick on a large cap that has more shares in the market.

I used to short companies that were not the leaders in their sector (but nowhere near being in trouble) but were overbought because the sector and markets went up recently. Remember, 70% of a stock's price movement on a normal day (no company news) is due to the markets, 20% due to the sector, and only 10% due to the company itself. So when the does market drops for whatever reason, these tend to drop harder and faster, and can be a very profitable day trade. Even if another big stock in that sector has bad news, that can bring down the other stocks in the sector as well. Fedex and UPS are good examples. If one or the other has good or bad news, the other usually follows them for that day.
 
Thanks! That makes sense.

I have no illusions about whether or not I have any special insights to what 'the market' is doing (I don't!) But I do have insights to what NKLA is doing.

Autoline TV and others have reported that NKLA is planning to announce who will get the privilege of building the NKLA electric/fuel cell pickup truck. But NKLA has no demonstrated integration and test skills. They build prototypes, not manufactured vehicles. I've been on both sides and know the difference.

NKLA has one known asset, Case 2:18-cv-01344-GMS, their original patent design, suit against Tesla. It is a case that has been transferred to Northern District of California, "New Case Number: 3:18-cv-7460" or "IPR2019-01646".

There is merit in defending a patent as Mahindra learned from making a copy of a jeep. Just in this case, the NKLA design elements claimed are overly broad: a profile driven by aerodynamics; one piece windshield; center seat, and; side door. There are previous examples of each which weakens the NKLA case.

Bob Wilson
 
Well, let us know when you get some NKLA shares sold short. Could be some available today (some current shorts bailing out) by the way the markets are looking pre opening.
 
I was able to submit the "Short Sell" order this morning. It probably won't execute until the market opens.

Bob Wilson
 
Near as I can tell is the fees associated with SHORTing NKLA are too high. So I've put in a TSLA buy over the next 60 days.

Bob Wilson
 
Last edited:
R P said:
What fees!?
Click to expand...
In a Wednesday phone call to my Vanguard broker, the interest rate ‘-99%’ exceeded their threshold, ‘-1%’. Then on Friday, I found a financial article reporting the NKLA holders were demanding higher fees’ and it clicked. Knowing NKLA is a pile of fecal matter, those who could loan NKLA stock are fleecing potential SHORT sellers.

Bob Wilson
 
bwilson4web said:
In a Wednesday phone call to my Vanguard broker, the interest rate ‘-99%’ exceeded their threshold, ‘-1%’. Then on Friday, I found a financial article reporting the NKLA holders were demanding higher fees’ and it clicked. Knowing NKLA is a pile of fecal matter, those who could loan NKLA stock are fleecing potential SHORT sellers.

Bob Wilson
Click to expand...
Sorry, I don't understand that. I just use an online broker, never a live one (their fees are always outrageous), and my online fees ($10/trade) are always the same whether for buying or selling (incl short selling). Of course I need a margin account, and it needs to be backed up by my holdings/cash assets (which far exceed any requirements I ever ran into). However, the margin interest rate is always the same. They either have shares of a particular stock available for shorting or they don't, simple as that. I have never been denied because of insufficient assets.

Having said that, I don't play risky stocks like NKLA or TSLA. My shorts are usually blue chip stocks during a market downturn as I have explained before, and I rarely hold a short more than one day.
 
I sold some of TSLA to have a cash balance for a margin account. But for a week when I tried to SHORT the stock, I kept getting a pop-up that it was not available. So I made the phone call and saw the article.

I put in an order to rebuy the TSLA shares with a small profit.

Bob Wilson
 
You must log in or register to reply here.
Back
Top