Pair trade: Long $TSLA, short $NIO

$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.

Bình luận:

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

Bình luận:

$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...

Bình luận:

Trade still valid.

Bình luận:

This was spot on.