This is how Tesla might act during FOMC #tesla

Key Concepts:

• Tesla's stock behavior during FOMC (Federal Open Market Committee) meetings
• Market momentum
• Options pricing and its impact on stock movement
• Stock volatility and price action

Tesla's Performance During FOMC Meetings

The speaker observes that Tesla's stock often exhibits a different behavior compared to many other stocks during FOMC announcements. While many stocks tend to move with significant momentum following these events, Tesla appears to be "a little bit independent of that." The speaker suggests that this independence might be due to the options market.

Impact of Options Pricing

A key point raised is the influence of options pricing on Tesla's stock movement. The speaker posits that options on Tesla become "really pricey" around FOMC events. This high cost of options, coupled with the stock potentially "chops around," leads to a situation where Tesla "tends to not move a whole lot." The speaker admits this is a personal observation based on past experiences, stating, "I could be totally wrong, but I feel like I've lost a lot of money expecting Tesla to move after FOMC, and it winds up not moving."

Market Expectations vs. Reality

The core argument presented is that market expectations for Tesla's volatility around FOMC meetings are often not met. The general expectation might be for a substantial price swing, but the reality, according to the speaker's experience, is a more "subdued" movement. This discrepancy is attributed, at least in part, to the dynamics of the options market.

Conclusion

The main takeaway is that Tesla's stock may not react to FOMC announcements with the same pronounced momentum as other stocks. This observed independence is theorized to be linked to the elevated pricing of Tesla options, which can dampen significant price action, leading to less volatility than anticipated. The speaker acknowledges the subjective nature of this observation, based on personal trading experiences.