Options positioning signals only a 31% probability that the shares will rise by more than 12.5% over the same period, Refinitiv data showed. Traders are leaning toward bearish bets in Tesla options, with pricing implying a 53% probability that the stock will fall more than 12.5% over the next three months.
"Some shorts are certainly cashing out their gains while new shorts may be cycling in on the hopes that the downtrend continues," said Evan Niu, an analyst at Ortex, which tracks real-time short interest data.
That was the best year ever for Tesla short sellers, but they have recouped only about a quarter of the $60 billion in estimated losses from 2010 to 2021. Tesla is America’s most hated (shorted) stock. Their scramble to buy only adds to the upward pressure on the stock's price. market, earning $15.85 billion in paper profits for investors, according to S3 data. A short squeeze occurs when a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall to buy it in order to forestall even greater losses. This forces short sellers to cover their short. In 2022, Tesla was the most profitable short trade in the U.S. A short squeeze for Tesla occurs when it has a large amount of short interest and its stock increases in price. We haven't seen that in Tesla yet," he said. "As the stock price hits a floor or expected value for short sellers, they will start trading positions to realize their profits. "It looks like shorts are thinking the stock has some more downside risk," said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners. The stock is down about 9% so far this year.
Shares in Tesla tumbled as much as 7.9% on Friday to $101.81, its lowest since Aug. The decline accelerated after Musk decided to buy social media network Twitter, a move that some investors saw as a distraction for the billionaire chief executive.
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