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Motley Fool's John Rosevear, my fave car guy, introduced this piece by Ross Hendricks to me on my Twitter feed:

https://twitter.com/john__rosevear/status/144389477196195840...

John Rosevear Flag of United States
@john__rosevear

Read this.

$TSLA on fundamentals is worth roughly $20 (bear case) to maybe $70 (bull case). Every $ above that is gamma squeeze and wishful thinking.

If you lived through 1999-2002 and still think otherwise, you should know better.



Here is the article he references and it is replete with graphs, charts and infographics, and I will qhote from a section subtitled "The Age of Weaponized Gamma" as it pertains to :


https://therossreport.substack.com/p/the-most-dangerous-stoc...

When a speculator buys a call option to bet on higher stock prices, the market maker who sells the option becomes net short the underlying stock. That means the options dealer will often hedge their short position by purchasing the underlying stock.

Importantly, because of the convexity inherent in options, this hedging is a dynamic process. The higher the share price goes, the larger the dealer’s short position becomes. The Greek term used to denote this relationship, between the stock price and option price sensitivity, is known as “gamma”. Without going too deep into the weeds, here’s the bottom line…

As the stock price rises, call option gamma increases, forcing the dealer to buy more stock to hedge their growing short position. With enough options activity, you can imagine how this process becomes self-reinforcing. That is, the more call options speculators buy, the more stock the dealer must purchase as a hedge. The dealer’s buying pressure can send the share price higher, which in turn, creates an even greater need to hedge, etc. etc.

This self-reinforcing cycle is known as a “gamma squeeze”. Gamestop (GME) provided a textbook gamma squeeze examples earlier this year. It all started with monster call option volumes, as The Wall Street Journal explains…


Ross (the writer of this piece) then goes on to explain how the gamma squeeze forced a run up on $GME stock earlier this year.

Again, here's the link to "The Most Dangerous Stock Market Ever".

Take note $TSLA investors. The next subtitle in this article is "Tesla: the Greatest Gamma Squeeze of All Time?" With everything happening in the EV space you'll want to read this section and put on your thinking caps.
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