March 4, 2021

ONE BUBBLE “BLOWED” (A LITTLE) ... IS THERE ANOTHER BUBBLE?

Bitcoin has lost its charm in recent weeks. 25% below the maximum. Some people need a 33% price increase to break even.We have pointed this out over the past weeks when it comes to iconic assets; people don't understand how to manage profit / loss when volatility is declining.

Another parabolic asset that has become iconic isthis is Tesla. Bitcoin and Tesla have moved in a similar fashion as the group psychology of missing out on growth continues to be a huge force in this market. Tesla's shorts have been painfully carried over (although there has been a slight rise in the shorts lately) and this iconic name has remained, which has surpassed most assets, including Bitcoin. Chart showing Tesla and Bitcoin.
ONE BUBBLE "BLOWED" (A LITTLE) ... IS THERE ANOTHER BUBBLE?
Recently Tesla has been showing desireat least pause. There are many organizations these days that are stuck with Tesla longs whether they like it here or not. One way for these long guys is to look at strategies for selling options. Implied volatility is still trading pretty high against realized volatility as Tesla's realized volatility seems to have evaporated and has moved on to hot things like GM lately.

A note about some growth potential looks likeattractive as Tesla hasn't seen much of a push lately. If you want to be more aggressive, you can use some downgrade protection, although the premiums are very cheap. Why not finance some of the decline by selling high-strike calls to "active managers"?

Chart showing imputed and realized volatility over 3 months.ONE BUBBLE "BLOWED" (A LITTLE) ... IS THERE ANOTHER BUBBLE?
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