In my opinion, the ride down will be worth the pain and blood-loss of sticking with a short bet…

From PM Fund Manager Dave Kranzler:

In my opinion, the ride down will be worth the pain and blood-loss of sticking with a short bet on TSLA, which is why I continue to buy small quantities of put options that have been expiring worthless. I know at some point I’m going to catch a $100+ reversal in TSLA stock which will more than make-up for the small losses I’m enduring in the puts while I wait for that occurrence.

Using puts protects me from the unknown magnitude of upside risk from shorting the stock. Plus, I don’t have make a “stop-loss” decision because I don’t have the theoretic “infinite upside” loss potential that I would face shorting the stock. With my loss capped, I can hang on to the puts through expiration. With a stock like TSLA, often a stop-loss exit is followed up by reversal to the downside, leaving the short-seller without a short position.

As we saw on Friday, TSLA stock can reverse to the downside quite abruptly and sharply. I can guarantee that some number of shorts covered as TSLA was soaring over $370, leaving them with no position when the stock reversed, closing at $357. I don’t want to recommend specific puts to use but I can recommend giving yourself at least four weeks of time. If I were putting on a new put position today, I would probably buy a very small quantity of the July 7th $340-strikes. If TSLA sells back to the $310 area before expiry, which could easily happen as $310 is where the last 2-week push up in price began, the puts would have an intrinsic value of $30. The current cost is about $10.

TSLA reminds me of Commerce One (CMRC), a B2B internet company that went from $10 to $600 in a very short period of time in late 1999 – 2000. It eventually went to $0. I shorted and covered small quantities of stock starting around $450. I was fortunate to have been short from the high $500’s when it finally topped out a $600. The volatility of this stock was extraordinary but persistence and “thick skin” paid off.

The above commentary is from the Short Seller’s Journal. Subscribers who liked the idea have been short TSLA June June 12th, when the stock opened at $359. You can’t time the top or bottom with a stock like TSLA, but you can make a lot of money if you get 2/3’s of the ride down. You can learn more about the Short Seller’s Journal here:  LINK

Silver Charts

  1. The Federal government is quickly moving away from tax credits for E Cars like Tesla.  This $100,000 car is still not worth the credits given even if you’re in the  50% tax bracket

    One of the propeller heads in the California state legislature proposed a bill that offers billions in CA gas tax credits that can be used to massively subsidize the cost of new E Cars.  It amounts to a subsidy that easily comes to $30-40,000, just the right amount of cash to balance a $100,000 unicorn fart powered rich bitch car to something more along the lines of what we lumpen proletariat might buy.

    But it gets worse.

    This tax credit is paid for; yes you guessed right, it’s paid for by highway taxes.

    Joe Lumpen buys a gas powered car.  He gets hit with another 30 cents of gas taxes when he can ill afford to fill the tank while some rich effing douchenozzle is subsidized by poor people.

    Ain’t life sweet when you can drive a $100,000 Tesla and run it on roads paved with the lifeless bodies homeless, poor, low income and otherwise taxed to death Average Joes of the Late Great State of Kleptifornia?

    Maybe we should all get Teslas for free.

    Problem with that is the care and feeding of the Unicorn charging stations.

    I betcha it’ll be something to watch when an owner tries to charge his Tesla by shoving the connector up a unicorn’s ass.  That horn will come in mighty handy  🙂

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