Market Makers Likely to Pin Tesla's Price to Profit from Both Calls and Puts

TLDR: Tesla has a high probability of trading around $190 this week. If there is a significant deviation on Thursday or Friday, it may be worth considering buying options to speculate on a potential squeeze.

$Tesla Motors(TSLA)$ surged 15% on Monday, which should theoretically indicate bullish market sentiment. However, after battling market makers for so long, the first thing I checked was the open interest data for put options. As expected, the open interest for puts with strike prices between $195 and $185 saw a substantial increase.

On the call side, the strikes with the largest increase in open interest were mainly above $200. But the $190 to $200 strike range already had significant open interest. Therefore, this week's Tesla price action is essentially a battle between giants: the most likely scenario is market makers pinning the stock firmly around $190 to cash in on both calls and puts. Alternatively, the price could break out in one direction, triggering a squeeze.

When I say break out in one direction, I mean it could go either way bullish or bearish - it sounds meaningless said like that. But this week I'm leaning towards a bearish broader market, so the answer is likely $190 consolidation.

Why would a bearish market lead to $190 consolidation? In a market downturn, Tesla plays a defensive role, with funds potentially fleeing other declining stocks and flowing into Tesla. However, due to the bearish sentiment, Tesla's price is unlikely to rally excessively, thus settling around $190.

$NVIDIA Corp(NVDA)$ : Unless there is an extreme move up or down that presents bargain opportunities, Nvidia is unlikely to break through $900 this week ($NVDA 20240503 900.0 CALL$ ).

$Advanced Micro Devices(AMD)$ : Assuming Nvidia cannot breach $900, what does that imply for AMD's earnings? An inability to break $900 means Nvidia's weekly gain would be capped at 2.2%. But as is well known, whenever AMD rallies sharply, Nvidia's pre-market move is definitely more than 2.2%.

However, I don't think AMD's earnings will disappoint either. Call options reflect very bullish market sentiment, with strikes as high as $180 being bought. But AMD's stock often gaps up and sells off after earnings, so selling puts may be more profitable ($AMD 20240517 150.0 PUT$ )... or maybe not?

To be honest, I feel this week could be a bit abnormal. Perhaps it's better to play it safer in May and reassess trading plans after earnings.

$Amazon.com(AMZN)$ is the stock most likely to see extreme moves up or down this week. Overall option sentiment is bullish, with high open interest concentrated in calls above $180. But on the other hand, large trades are buying $185 straddles, leaning bearish ($AMZN 20240621 185.0 CALL$  & $AMZN 20240621 185.0 PUT$ ).

Additionally, those with large positions in the $160 calls ($AMZN 20240621 160.0 CALL$ ) seem to be quietly closing them out, which doesn't look like a good sign.

$Apple(AAPL)$ : The stock price is already near the bottom, and earnings may lack positive surprises. Despite higher call open interest, it may still fail to break above $180.