The biggest black update is here!
After a week of brainless rise, the lying-win combination of the seven giants of TFAANMG has risen to a doubtful life. It seems that there is nothing to stop the rise of US stocks, but the dark tide is surging under calm.
Wake up early in the morning on the weekend, a blockbuster news completely swept the screen, that is, Musk launched a vote on Twitter, planning to sell 10% of the outstanding shares, almost 23 billion U.S. dollars in stocks. This in itself is not a big deal, but it may be triggered. The chain reaction has to make us pay attention.
Because it wrongly underestimated the market's enthusiasm for the giants. Throughout October, super giants such as TFAANMG started a super rising wave. TSLA alone contributed about 3 points to the entire stock index.
The reason why U.S. stocks broke through the box in October largely relied on the abnormal rises of Tesla and Nvidia. Tesla, which rose by 43.65%, can be said to have contributed the most. According to the data provided by the agency, “only 9% of the funds outperformed the market in October”. The main reason was that the fund began to reduce Tesla’s holdings in September. This shows that Tesla’s influence on the entire market Influence.
Now that Musk sells stocks on a large scale, it must be worthy of our attention. Why does Musk sell? This is mainly because the United States plans to tax the super-rich. Democrats in the United States Senate have proposed a tax on the unrealized asset gains of billionaires and proposed an additional 3% additional tax on the wealthy with incomes of more than $10 million.
Most of Musk’s asset appreciation comes from stock gains. In the past, as long as you don’t sell stocks, the government could not tax you. Now the US government is short of money and is ready to attack the super-rich and have to deal with unrealized assets. Income taxation, Musk is naturally under considerable pressure, after all, who makes you the richest man in the universe, so selling the stock is within expectation.
If this is the reason, the long-term impact may not be too small. Because the executives of the super-tech giants have increased their wealth crazily in the past year, and there are many people who have doubled their wealth. Once they really start to tax unrealized asset gains, they will probably be the same as Musk. Selling some stocks may not be good news for U.S. stocks whose valuations are already quite expensive.
Tesla's current daily turnover fluctuates in the range of 30-50 billion US dollars, but most of them are intraday high-frequency trading of machine algorithms. In fact, there may not be so many net buying orders. This US$23 billion sell-off is a big impact on Tesla. The stock price is bound to cause a lot of pressure. After all, with a market value of US$1.2 trillion, how many institutions are willing to take over at this price is a very big uncertainty factor.
Of course, these are not the most scary. We know that Tesla's recent rise is not due to the improvement of fundamentals, nor is it the short position liquidation, but more from the gamma squeeze. Institutions buy a large number of call options, and option market makers must buy the corresponding underlying stocks. This will push the stock price up. As the stock price rises, retail investors will chase the rise, and then more people will buy call options. Finally, the option market makers are forced to buy more underlying stocks, which in turn pushes the stock price to continue to skyrocket. This is the so-called gamma squeeze.
Gamma squeeze to a certain stage, the option market maker will continue to increase the implied volatility of options, making option trading unprofitable. In the end, institutions no longer buy call options. I believe everyone has discovered something recently. Tesla's call options are getting less and less profitable. In the past, the underlying stocks rose by 3 points and easily doubled several times. Now that the underlying stocks have risen by 5 points, Tesla's call options may not necessarily double.
The effect of force is mutual. Gamma squeeze is always two-way. When the positive gamma squeeze fails, the reverse gamma squeeze will appear. The fall in stock prices triggers institutions to buy put options to hedge. Option market makers need to sell stocks to hedge, which further triggers stocks to fall. Then retail investors also sell like crazy, which further triggers institutions to buy put options to hedge. In the end, everyone becomes a net seller of the stock, and the stock price will trigger a huge sell-off in a very short period of time (usually more than 20%).
How much Tesla will fall next week, how much impact it will have on the market, and how Tesla's stock price will fluctuate after the gamma squeeze fails are all unknowns, so it has become the biggest black swan in the coming week. Tesla is the leader of all high-beta stocks. Once the leader does plummet, it is not a good thing for the sentiment of the entire market.
