December 31st, 2020 by Daryl Elliott
First, what is FAANG?
Let’s start by explaining the FAANG list of stocks. These are all household name tech stocks:
- Facebook (FB)
- Apple (AAPL)
- Amazon (AMZN)
- Netflix (NFLX)
- Alphabet (formerly Google): GOOG (Class C) and GOOGL (Class A). More on this “alphabet soup” on bottom of article*.
These stocks are massive stocks that are traded heavily by investors and traders alike. Investors trade longer term and traders trade short term (and in some cases are day traders who may get into and out of a stock multiple times in a day).
Please see the Risk Disclosure at the bottom of the article.
Why did the FAANG stocks become a group and become popular?
This is a group of stocks that are good trading stocks that have great liquidity, good price movement — which increases volatility, which increases option premium values. This combination of factors attract traders to trade them. Their stock trading volume is very high, which keeps their bid/ask spreads tight, which makes them easy to trade when opening and closing trades, which is especially important in options. This group of stocks is colossal in the options trading world.
FAANG stocks — high volumes mean a lot of money gets moved, a lot of money can be made (or lost).
There are very many options traders who make a living trading either mostly or only this list of stocks. The opportunity trading these stocks is unlimited. A trader can scale up volume considerably with these stocks, unlike a lot of other stocks, because of their high volumes.
What is FATANG?
FATANG is being proposed in this article as a modification to FAANG. It adds Tesla (TSLA) to the FAANG list.
Tesla is the largest stock ever added to the Standard & Poor’s 500 Index (S&P 500).
Rob Maurer of the Tesla Daily YouTube channel stated last month that Tesla would be the most valuable (highest market capitalization) stock that has ever been introduced to the S&P 500 list. For a full list of stock YouTubers, please see this article on green stocks, or go to www.BuyGreenStock.com.
Have hedge funds taken sizable TSLA positions?
Yes. Especially now, since TSLA is now a part of the S&P 500. This will strengthen the broad base of support for Tesla, and should make the stock steadier. In short, with the advent of the recent introduction of TSLA to the S&P 500 Index, Tesla has arrived.
Let’s explore various metrics in the FAANG list of stocks and compare to Tesla to see if Tesla is as substantial as the current FAANG list members.
Stock Price
| Stock | Price |
| Facebook (FB) | $276.78 |
| Apple (AAPL) | $134.87 |
| Tesla (TSLA) | $665.99 |
| Amazon (AMZN) | $3,322.00 |
| Netflix (NFLX) | $530.87 |
| Alphabet (formerly Google) (GOOG) | $1,758.72 |
Tesla ranks #3 in stock price behind Amazon and Google. Stock price is important in the options world, as the higher the price of the stock, the higher the concomitant premium. Based on the stock price metric, should TSLA be included in the FAANG list? Yes.
Source: Google Finance 12-30-2020
Options Volume
Options volume is the amount of options traded in the last day.
| Stock | Options Volume |
| Facebook (FB) | 318,998 |
| Apple (AAPL) | 1,992,559 |
| Tesla (TSLA) | 647,604 |
| Amazon (AMZN) | 575,446 |
| Netflix (NFLX) | 146,396 |
| Alphabet (GOOGL — Class A) | 28,327 |
Tesla ranks # 2 in daily options volume behind only Apple. Based on the options volume metric, should TSLA be included in the FAANG list? Yes.
Source: MarketChameleon.com 12-30-2020
Market Capitalization
The calculation to determine a stock’s market capitalization is easy. Multiply the number of outstanding shares of stock against the price of the stock. In the trading world, market capitalization is commonly referred to as the “market cap.” You can also quickly find it looking at Google Finance or other investment sites.
| Stock | Market Cap |
| Facebook (FB) | $789.1 Billion |
| Apple (AAPL) | $2.3 Trillion |
| Tesla (TSLA) | $629.1 Billion |
| Amazon (AMZN) | $1.6 Trillion |
| Netflix (NFLX) | $229.3 Billion |
| Alphabet (GOOGL) | $1.2 Trillion |
Tesla ranks # 5 in market cap behind Apple, Amazon, Google, and Facebook. Based on the stock volume metric, should TSLA be included in the FAANG list? Well, it is in the rarified air of these strata of stocks, and it’s ahead of one of the stocks on the list, Netflix, so in my opinion, yes. It is at least in the same league as these other top stocks.
Source: MarketChameleon.com 12-30-2020
Daily Stock Volume
The daily stock volume figure represents the number of shares traded in the last day. Sometimes this figure is represented as “volume average,” which is the average volume of the last some number of days.
| Stock | Daily Volume |
| Facebook (FB) | 16,400,000 |
| Apple (AAPL) | 121,000,000 |
| Tesla (TSLA) | 22,900,000 |
| Amazon (AMZN) | 4,900,000 |
| Netflix (NFLX) | 4,000,000 |
| Alphabet (GOOGL) | 986,000 |
Tesla ranks #2 in daily stock volume behind only Apple. Based on the stock volume metric, should TSLA be included in the FAANG list? Yes.
Source: MarketChameleon.com 12-30-2020
Open Interest
Open interest is the total number of options contracts that are currently in trades. Open interest shows Tesla is dominant over all FAANG stocks except Apple.
| Stock | Open Interest |
| Facebook (FB) | 2,262,429 |
| Apple (AAPL) | 11,341,625 |
| Tesla (TSLA) | 7,237,986 |
| Amazon (AMZN) | 1,030,058 |
| Netflix (NFLX) | 680,336 |
| Alphabet (GOOGL — Class A) | 256,175 |
Note: GOOG (Class C) has less open interest, so GOOGL was used in this instance.
Tesla ranks #2 in option open interest behind only Apple. Based on the option open interest metric, should TSLA be included in the FAANG list? Yes.
Source: MarketChameleon.com 12-30-2020
NASDAQ 100
What about the NASDAQ 100 Index? Is Tesla a member on this prestigious list?
Tesla is ranked #4 in the NASDAQ 100 list behind Apple, Microsoft, and Amazon. Tesla ranks ahead of Facebook, Google/Alphabet, and Netflix in the NASDAQ 100 list. Based on the NASDAQ 100 Index metric, should TSLA be included in the FAANG list? Yes.
Source: Slickcharts.com 12-30-2020
Do any trading companies already treat Tesla as though it is in this top tier of stocks? Yes.
Below is a screenshot from a video presented by one of the oldest and most reputable options signal services. (A signal service is a company that sells its trades, that subscribers can take if they like the trade or not take if they don’t like the trade in their own accounts.) This large signal service company doesn’t even trade all of the FAANG stocks, but it does trade Tesla.
A good related piece is this Teslarati article on changing demographics: Tesla Is Now the Millennials’ Go-To Stock Instead of Apple. From the article:
“‘It is incredible that since the beginning of the year, in the face of persistent pandemic-related volatility, the number of millennial investor accounts across our client platforms has doubled,’ Capuzzi said. ‘They’re definitely bullish in the face of uncertainty.’
“Tesla, without a doubt, is the most popular. After surveying over 1.5 million U.S.-based trading accounts for its ‘Millennial 100’ report, it was evident the Silicon Valley-based car company was the new leader.
“Apex released the report for Q3 earlier this month, and Tesla managed to overtake Apple as the most sought-after stock for young investors….”
In a related manner, MicroSectors FANG+ Index 3X Leveraged exchange-traded note (ETN) and some other ETNs and ETFs already include FAANG stocks and TSLA. The MicroSectors FANG+ includes 10 stocks: FB, AAPL, AMZN, NFLX, GOOG, Alibaba (BABA), Baidu (BIDU), NVIDIA (NVDA), Tesla (TSLA), and Twitter (TWTR). And guess what? Tesla is the #1 holding in that ETN, with a 12% share.
See more on ETFs here: 18 Cleantech ETFs — And What Are Exchange Traded Funds (ETFs)?
Does the Tesla inclusion in the S&P 500 matter?
Yes. This is a truly significant milestone for any company. It is also significant because it means that some hedge funds are obligated to add positions in TSLA, which accounts for significant amounts of stock. This may well have been a contributing cause of the stock price rise in the 4th quarter, if not earlier.
NASDAQ was a fully electronically traded market from the beginning. It introduced stock ticker symbols with four characters in its stock call symbols. Prior to that development, the New York Stock Exchange (NYSE) used only one, two, or three characters for stock symbols. All of the FATANG stocks are traded on the NASDAQ exchange. It is generally a technology company exchange, but it is not strictly so.
It’s time to elevate Tesla to FATANG.
Tesla meets all of the significant criteria of the other FAANG stocks. It’s a tech stock traded on the NASDAQ exchange with huge option volume, high stock volume, a high market cap, and a decently high stock price. The high options volume proves that traders have already accepted it as a viable options stock to be traded with spread and other options trades.
Especially since Tesla is now a part of the S&P 500, and NASDAQ 100, it deserves to be included in the exclusive FAANG trading group to make the new group of FATANG.
*Side note on Alphabet being split into two stocks.
Alphabet, formerly Google, is split into two stocks, GOOG (Class C) and GOOGL (Class A). Google founders Sergey Brin and Larry Page own Class B shares, which have 10 votes per share. Class A has one shareholder vote per share and Class C stock has no votes per share. Class C shares were created in 2015 to keep the voting power with the founders.
The fact that there are two publicly traded stocks, GOOG and GOOGL, dilutes the stock and reduces both stock and options daily volumes and options open interest. This makes the stock less desirable to trade compared to one combined stock. Volume is important to keep the bid/ask spreads tight, so it is easier, faster, and less costly to get into and out of market positions.
Source: TheStreet.com 12-30-2020
Risk Disclosure: CleanTechnica is a cleantech publishing firm. We are not investment advisors. Information in this article is for educational and informational purposes only. This is not investment advice. Any action you take on any of this information is at your own discretion. All trading and investing is risky and there is a risk of loss. Please consult with a licensed investment professional before investing your capital.
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About the Author
Daryl Elliott Proponent of solar, wind, EVs, veganism, democracy, and all things environmental and progressive. Writer. Editor. Active options, futures & stock trader. Go green.