On Friday, July 10, Benzinga's founder and CEO Jason Raznick analyzed on Benzinga's PreMarket Prep trading show potential buying opportunities in Tesla Inc TSLA, given the recent run-up and existing market dynamics.
Raznick told listeners he received a message from E*Trade Financial Corp ETFC notifying him margin requirements for Tesla shares have risen from 55% to 70%. He observed a drop in Tesla’s share price within minutes.
“A lot of people that got this message had to sell shares,” Raznick said on the show. “Multiple people I talked to overnight were forced to liquidate Tesla shares. Multiple people. And these are people who were positive, up on Tesla, and they had to sell by the close yesterday.”
Watch to the full PreMarket Prep discussion in the clip below:
The margin requirement is the percentage of stock a trader must own in cash, rather than credit.
“This is happening because large institutions are buying shares of Tesla, and brokerage firms want to free up shares to sell to these institutions,” Raznick said. “We are forced to sell stock because of the margin we have on it, and I do believe that represents a potential long-term trading opportunity.”
Raznick said he bought October $1,500 Tesla call options two weeks ago and is looking to buy more Tesla call options.
Tesla's stock traded around $1,757 per share at time of publication. The stock was trading under $1,500 at the time of Raznick's interview on July 10.
PreMarket Prep is a daily trading show hosted by prop trader Dennis Dick and former floor trader Joel Elconin. You can watch PreMarket Prep live every day from 8-9 a.m. ET here. The replay can be found on Benzinga's YouTube channel, and the podcast is on iTunes, Google Play, Soundcloud, Stitcher and Tunein.
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