Well, it's not as simple. Indeed, index adds/deletes are known in advance. However, many funds are mandated to only hold stocks that are part of the index and replicating ETFs are simply holding the actual index weights. So there is always some mechanical action around index rebalances and the bigger it is, the more impact it has.
How do you guys think the TSLA inclusion will play out?
- Thread starter spectastic
- Start date
This is my quandary as well. Every time people buy those indices TSLA may or may not be bought (depending on the given indices which are quite numerous. On the other hand, NOW TSLA will be free to move according to the true market forces. I am moderately bearish on TSLA with a bear put spread(leaps 2023) but now thinking that a near term bear credit call spread would be even better. I just hate to sell premium with TSLA options (scary I have lost money the spreads are wide, moving like t freight train, etc.
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How do you know? The rebalancing take place next week, who is to say index funds have not made purchases ahead of time?
The spreads are huge. A 10 strike call spread was $10.10 when I checked yesterday. It's hard to get in.
I shorted Tesla several Times when it was trading in range of 300-400 and made money, but recently i made a mistake and i loaded up huge on my short TSLA and i got caught.
I gave back all my profit because couldn't get out around 572 and at 5K $ lose now. I never knew so much hype and Craze was around Tesla.
I will not short again and won't buy unless drops back to low 400 ... I'm sure at some point all Retails TSLA buyers with a hope of 5 years hold to reach Moon, Price drop few hundered $ and will get burned.
I gave back all my profit because couldn't get out around 572 and at 5K $ lose now. I never knew so much hype and Craze was around Tesla.
I will not short again and won't buy unless drops back to low 400 ... I'm sure at some point all Retails TSLA buyers with a hope of 5 years hold to reach Moon, Price drop few hundered $ and will get burned.
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Is this true for SPY and Vanguard SP500 ETFs - I do not give a rats ass of the small index funds! In this case, I roll my option spread to next week. If this would be true TSLA would go up a couple of hundred points on Friday, but I seriously doubt that this is true...ever heard of an escrow account for something like this?
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Do Index Funds have the "ability" to spec on a stock that will be added?? Seems like that may be outside their scope/mandate
I just hate (LEAPS) option market makers (especially in TSLA). They marked my spread
down even when TSLA was down. Should IV thus price be higher today? It (TSLA) is jumpy for sure but does not look too strong.
With LEAPS you must be patient and unperturbed of the asshole MM's little games. Finally, I am only "down" $178 on paper.
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