Initiated a Short Position in Tesla Yesterday: Luck of the Draw Interview Today

I initiated a short position in Tesla yesterday, via PUTs. The NYT stock-sinking interview with Musk today was luck.

CNBC reports Tesla Shares are Getting Slammed after Elon Musk's Off-Kilter Interview with the NYT.

  • Shares dropped more than 8 percent after a New York Times piece outlined serious struggles for CEO Elon Musk.
  • The paper also reported that the board is concerned over Musk’s use of Ambien and recreational drugs, and that Musk and members are set to meet with SEC officials as soon as next week.
  • Musk tweeted last week that he had “funding secured” to take Tesla private at $420 per share, which could be a violation of SEC rules.

New York Times Interview Articles

New York Times Snips

In an hourlong interview with The New York Times, he choked up multiple times, noting that he nearly missed his brother’s wedding this summer and spent his birthday holed up in Tesla’s offices as the company raced to meet elusive production targets on a crucial new model.

Asked if the exhaustion was taking a toll on his physical health, Mr. Musk answered: “It’s not been great, actually. I’ve had friends come by who are really concerned.”

He blamed short-sellers — investors who bet that Tesla’s shares will lose value — for much of his stress. He said he was bracing for “at least a few months of extreme torture from the short-sellers, who are desperately pushing a narrative that will possibly result in Tesla’s destruction.”

Referring to the short-sellers, he added: “They’re not dumb guys, but they’re not supersmart. They’re O.K. They’re smartish.”

To help sleep when he is not working, Mr. Musk said he sometimes takes Ambien. “It is often a choice of no sleep or Ambien,” he said.

But this has worried some board members, who have noted that sometimes the drug does not put Mr. Musk to sleep but instead contributes to late-night Twitter sessions, according to a person familiar with the board’s thinking. Some board members are also aware that Mr. Musk has on occasion used recreational drugs, according to people familiar with the matter.

Mr. Musk said he had no plans to relinquish his dual roles as chairman and chief executive.

But, he added, “if you have anyone who can do a better job, please let me know. They can have the job. Is there someone who can do the job better? They can have the reins right now.”

Tesla PUT Plays

I took a flyer on out of the money Tesla PUTs yesterday. I decided to go pretty far out.

  • September 230s
  • October 230s
  • November 230s
  • December 230s

I put equal monetary weighting on each strike.

I am convinced Musk is guilty of misleading if not fraudulent statements about financing, funding , and takeovers.

Whether or not the SEC reacts to any of that is questionable.

Jim Cramer says 'We'll be on Mars' by the time the SEC penalizes Tesla for Elon Musk Tweet. Cramer may be right, but typically he is a contrarian indicator.

Honey Badger

At the 4:15 mark Cramer says "If you're shorting Tesla, you're shorting the honey badger."

Why Now?

It's possible the SEC does nothing. It's possible Musk gets funding but I doubt it. And in general, it pays to view Cramer as a contrarian indicator.

The bull case rests on believing Musk despite countless serious lies over the years. Why anyone believe him is a mystery.

Two days ago, ZeroHedge posted Tesla Whistleblower Releases VINs Of Model 3s With Punctured Battery Modules.

The whistleblower was Martin Tripp aka @trippedover. His Twitter account is now suspended.

CNBC reports Tesla Whistleblower Tweets Details about Allegedly Fawed Cars, Scrapped Parts

Also consider the Complete Photo Reveal by Tesla Whistleblower Martin Tripp.

Tripp Telling the Truth?

I do not know, but he could be.

Since Tripp posted actual VIN number, he better be telling the truth he is likely in serious legal trouble. But if he is telling the truth, it is Tesla that is in serious trouble.

Regardless, a number of things seem to be coming together so I took a shot. The NYT article today was pure luck.

Timing is exceptionally difficult. But that is always the case with story stocks.

Tesla Weekly Chart

Why Strike 230?

If any of these stories pan out fast enough, Tesla can easily get hammered back to the $180 area in late 2016. But there is technical support at $240 to clear.

It's been a long time since I bought PUTs on anything. I am prepared to lose this entire bet.

Mike "Mish" Shedlock

Comments (13)
No. 1-11
KidHorn
KidHorn

Smart move. Buying way out of the money puts is like buying lottery tickets, but with better odds.

Another thing that could doom Tesla is if quality issues start popping up and the NTSB halts production so it can investigate. It wouldn't be the first time they've done this.

OkieNomics
OkieNomics

Holding a $290 put myself, wondering how long it will be before I'm contacted by a law firm trying to score a class action suit.

aqualech
aqualech

Cramer showing his true colors - a fellow felon stock manipulator.

thimk
thimk

My fidelity IRA won't allow me to trade in options. Maybe blessing in disguise. FDIC insured brokered CD's allowing me to sleep without Ambien. The honey badger has bear like characteristics . It is also characterized as one of the planets fiercest mammals.

Six000mileyear
Six000mileyear

TSLA is this bubble's Enron.