Do we reach the top of Tesla stock? What will happen after SP500 inclusion?

Finally it is over. Tesla will be included in SP500 stock index after December 21st and last Friday, it was huge.

What is huge? The volume. Last Friday Tesla equity trading volume reached nearly 150 billion dollar which is a new record for US stock markets. We have seen 130billion dollars in SPY ETF in last crisis in March 2020. If we check the stocks there is roughly 40 billion volume in APPLE, which is very low comparing TESLA latest volume.

Before the inclusion passive funds bought required amount of stocks. With the record price. Yes. It was not cheap for them. Then should we expect a fall in Tesla stock?

Before jumping in this answer with yes, we should remember hedge funds lost nearly 40 billion dollars shorting Tesla. Their loss in very bad. The stock increased nearly 700% comparing SPX 14% at same period.

I suppose shorting the stock directly is not a good idea. But buying some put spreads for 30-60 day expiration will be wise decision to bet for some fall in stock price.

We will see how the stock will act after SP500 inclusion soon.

Good luck.

Categorized as General

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