I disagree, they will be represented in automobile museums as defunct oddities.

Should have waited 3 hours

Hmm, and grad school studies


I stand corrected

the stock doesn't need to go anywhere. i thought the bull case was that they will burn through piles of cash then come out the other side being profitable and ahead of the competition as the market leader for electric cars. as things drag along they are burning through more and more cash while the other automakers are starting to take this sector seriously. it looks like tesla needs to get its act together in a hurry

Tesla getting killed even more after hours on the Moody's double Tesla debt downgrade.

With a downgrade like this, all their assets mortgaged, their future lease revenue now going to others, 2x forward deposits burned already, and money coming due, not to mention $19 billion in legally enforceable contractual obligations they have to pay regardless of production, they're going to have to go to the market to raise capital pretty soon.

on tesla forums, people believe that the car was on autopilot, because the exit ramp was tricky, and the autopilot has difficulty differentiating between stationary objects while moving --> crashed into median.


similar to this incident https://www.wired.com/story/tesla-au...y-crash-radar/

Interesting article. Particularly this:

I thought Volvo was way ahead of Tesla in autonomous driving

I'm not an expert but that seems like it could be an issue.

I think it is time to short with impunity.

I'm hoping it will go back up to 300+ so I can open a new short position.

Curious why you'd sell now... The reason I ask is TSLA options are insanely expensive, the skew is pretty terrible for non spread bets. Going that far out means you spent some serious capital and max gain on January 2019 puts is a double (if you bought near the highs) right now despite the fact we are down $100+ from the ATH. I only want to be playing short term options directionally (which I don't in general want to do on this name) or not at all, usually with a bet like that it means you have some conviction (unless I'm misunderstanding what other options you could have been in) and you are getting the move you want. Don't understand why you'd sell into obvious weakness, your patience paid off and now pull the plug?

I can answer this: Booking a win feels good.

Damn it. I'm fresh out of impunity.

The time to short with impunity was at $380, when I said it was a screaming sell and told people like ChipRick that you should sell it no matter what your thesis was and that anyone holding it up here was a stone cold moron. The stock market is up a lot since then even after the latest run down, and Tesla is down 30%. Oops.

A short at this point is not guaranteed. Apart from Tesla being high beta and the market reversing, if production picks up over the coming month while the market recovers a bit, this is easily back over $320. Also note that there are zero borrows available. That means shorts covering if it reverses.

All of Tesla's short term problems are solved if they start churning out a much higher production rate (3000/week next month). Long term they are still dead of course, this company has no future whatsoever other than bankruptcy as anyone with a functioning brain realizes, but bulls are true believers and will continue to be while there's a glimmer of hope. And the market is still king. I told people at $380 not to the drink the KoolAid because most of the price was a 5x beta in a massive low volatility bull, and not a validation of their thesis. Being moron KoolAid drinkers, they didn't listen. The same is true now to some extent, although some of this fall is production failing so badly. But the majority is still the market, incredibly.

So if you think production is going to continue to disappoint and fail, then by all means short with impunity. If you believe Musk that battery pack production issues are their key bottleneck to get over 3000/week, well, Grohlmann automated production lines for the battery pack should be arriving from Germany about now and being reassembled at the Gigafactory, which means production will ramp in the coming weeks.

Bonds are crashing.

It's (finally) happening?

How long till everyone comes in and says they sold out in the high 300s?

#1 reason is I probably don't know what Im doing

#2 is the stock has been yoyoing between 300 and 380 for months now, so selling at 280-290 didn't seem bad.

Right now, it's at 260, would you sell your puts now? As TS said, it could well go back up to 300+ if Musk comes up with good production numbers.

Usually when you break a long term range as you correctly point out, there is follow through and that was a decisive break on volume. Don't want to be a captain hindsight but my point was you correctly nailed the direction, why not just lower your stop or take a portion off? The point I was making about Tesla puts being pricy is its hard to find a stock where a 25% drop only equates to a double across the board (unless you somehow perfectly timed the puts under $100 and even those are only a 3x... again not sure what your trade was exactly). If you were concerned about bottoming then sell some puts and turn it into a spread, it's one of the best stocks to sell vol (look at how far down all the way to $20! you can take premium in).

Thanks for you insights, I definitely still have a lot to learn.

More good news...

Obviously a horrible deal, and SolarCity's terrible performance and enormous scaling back almost instantly on purchase shows that Musk used Tesla funds to overpay badly and basically save himself and his cousins from the loss and shame of a bankruptcy.

And now that Tesla has dropped to $250, more lawsuits can also be forthcoming about Musk materially misleading investors when he provably knew for a fact that they couldn't make 5000/week by the end of they year due to the battery production problems admitted on the conference call to take 6-9 months, but he doubled down anyway on the prediction and provided no timely update on it becoming impossible.

Stormy weather in Longville.

Why did you buy Jan 2019 puts? And at what strike? That matters.

I don't really care about clucks who believe in technicals and trends, etc, and neither should you. If you followed that bull**** you would have bought Tesla at $380. What I do care about is your thesis. Did you buy the puts for a major reckoning? At what odds? There are two problems, really.

1. If you bet on a major reckoning and always cover at 100%, you lose a fortune if your success rate at picking these spots is high, because this is what the start of a major reckoning looks like. Everything that goes to zero drops a bit like this first. See: Enron, Valeant. If Tesla are going to fail this is always what failure looks like - horribly missed targets, Musk lying his ass off, credit running out, being downgraded, being sued. This whole Model 3 business has taken the path of greatest incompetence.

2. If you bet on a major reckoning and your success rate on picking these spots is low, but your payoff is high (i.e. you're 1 in 5 to get these right and your payoff is 10 to 1 if you do), you guarantee that you're making a losing trade the moment you enter it if you take profit below your required payoff. Everyone should think out their trades such that they're never making guaranteed losing trades. If you're going to make guaranteed losing trades you should instead invite some girls over and set some cash on fire in front of them; the monetary outcome will be the same. There are a surprising number of ways of being a guaranteed losing trader; early profit taking on low probability, high payout if let run spots is one of those ways.

So there's only a narrow window of possibility in which buying the puts and selling them here is a good idea. This assumes they were well out of the money. If they were well in, ignore the above. Anyway, generally you want your bets to be +EV across as wide a range of possibilities as possible, because while it's possible to get the shape of things right, you can suck badly at the details. And being +EV across a broader range means sometimes doing counter intuitive things.

*clucks - yes it's a word - it means "a foolish person"

I am in it for total carnage

They were 320 Jan 2019 puts. Bought them around 360 thinking there was very little upside, and a high prob that we'd get below 300 at some point in the next few months.


This was also a hedge as I am long in other automotive stocks (and other stocks)

I think TSLA is worth less than it is traded at now, and i probably could have timed my exit better, but I'd rather wait for the next rally to get back in.

I did have a smaller position of 200 puts that I sold at the same time at a much lower profit % and I agree that it was a bad trade.

It does.

I pretty much agree with this. Discerning patterns from randomness is what a lot of this is about.

A major reckoning meaning a chapter 11 I guess.

Of course "everything" that ends up having zero value drops a bit at first. It almost seems like you are stating there is a discernible pattern that a trader can recognize and trade accordingly. I have my doubts. You have enumerated the many negative "fundamental" issues with this company that are certainly worth noting. Obviously these negatives form the basis for establishing a potential short position. How an equity value gets to zero in a discernible pattern is what I have doubts about.

Of course but accurately assessing your chances is the key factor.

Of course.


No problem with this.

Adios,
I'm simply saying that if you have long odds puts, then taking the profit based on special pleading on this particular drop ("it's oversold", "it could bounce back") is -EV, since companies that bounce back or are oversold also look exactly like Enron or Valeant did. In other words, if you long term puts on the thesis Tesla is done, selling them at the first major drop is -EV except in a very narrow window where you're actually terrible at picking the result and got lucky. Any other situation it's -EV to take a profit, often guaranteed loss if run 100 time
It was absolutely fine closing $320 puts there.