Pair trade: Long $TSLA, short $NIO

2020年11月15日

NIO is extremely over valued here, their competition in China is fierce, and TSLA is leaps and bounds ahead of what they can achieve. Quarterly deliveries were like 1/10 of what TSLA delivered in the last quarter that was announced...Sentiment is extreme and after complacency and euphoria we had a sharp down day at the top. There is a fund shorting it, and Ray Dalio bragging about his position in the stock recently. It's ripe for a short vs TSLA, which is about to rally in the weekly timeframe. Valuation is wild compared to TSLA, and competitive advantage goes to TSLA here, considering all variables and the sales it has in China as well as their pricing for made in China cars.

You should short the same dollar amount of NIO shares as you long TSLA shares to get the pair trade going. I'd aim for a retest of 21.33 in this ratio at least, or could go into new highs as well. A 5-15% position would be fine here. Risk is roughly 3.06 to make 12.16, so a 3.97:1 reward to risk ratio.

Best of luck,

Ivan Labrie.

2020年11月19日

ノート

Higher high so far in the ratio. Looks like the trade will work.

2020年11月24日

ノート

NIO shot up but TSLA action is very good here. I'm close to stopping myself out from the NIO short soon though, might keep going for longer to the point that it's not adding performance to the position. I'll give it one more day here. Holding a big TSLA position from 406 anyways...

2020年11月26日

ノート

Trade still valid.

2021年4月13日

ノート

This was spot on.