For anyone who can't be bothered to click on Bulrathi's video, here's a screen cap. Comedy gold.



I can't decide what I like best:

- The "I'm raging mad!" eyes as he defends Elon
- The Blade Runner poster
- The makeshift temporary bookshelf with two different books on it
- The guru hair and tshirt/jacket/Apple watch combo.

Then there's the comedy gold of the actual argument as well, especially where he stumbled over what UAE means or whether they have one trillion or two. Worth watching for two minutes to get inside the head of the millions of raging loons who swallow this up https://youtu.be/6pjOe1P0gKU?t=1202).

maybe the guy should actually read that copy of bad blood.

I look forward to hearing ToothLoser's excuse when he is proven wrong

lol

Guy's been spot on. He has an amazing reputation for accuracy. That item a few months ago about going around begging for money that Spurious ridiculed was obviously true...he's been chasing funding for a bailout of impending bankruptcy. As was the "turned down" obviously. As it didn't eventuate he had to cut capex, kill all his future growth, and because he had no money to build another Model 3 line, he built a 1970s tech hand line in a tent from scrap that was lying around (his words). Meanwhile his coke habit ramped up such that he goes on weekend benders where he calls strangers pedos, and he got a weird girlfriend. This is such classic end stage it's not funny. Lehmann tried a go private right before bankruptcy, as did Sam Antar.

There's something wrong with your brain if you don't see what's going on here.

Been buying Jan 2020 200 puts for a while now. Added on when they fell into the teens. I don't have the clearest vision of the future, and doubt this is close to the highest EV trade, but it feels like the most 'lock' trade.

-Longest time till expiration: Allows me to wait out a wider range of desperation measures

-High strike: Pays off in a range of potential endings that are not bankruptcy, still gets a good score on a bankruptcy

-Tax: Leaps fall into LTCG and reduce tax burden a lot

-Squeeze proof: I can't get squeezed/recalled/cover emotionally on fear

-High return: Still a fairly leveraged play, a strategy match for how high my confidence in the play is


I am new to options trading, if anyone can trash any of these points that would help.

you forgot to mention that one of the books is the Theranos book, the other gigantic fraud scheme. lolllll

Uber being a net negative for the world is one of the worst takes I've ever heard.

I don't know anything about options trading but this all makes sense to me. Curious to hear feedback from others.

Another person new to options that is buying OTM puts in the worst name to do so. Look if BK is your thesis, go nuts but I think you are missing out on free money structuring it different. You should be selling shorter dated puts as a put calender or spreading it out. I can buy a $350/$280 2020 put spread for the same price as your $200 puts and then roll down once they get capped which is a substantially higher % play than what you are doing.

For the millionth time, it's still in this range despite all the noise otherwise. Those of you expecting a Valeant are going to be disappointed, it's the most shorted name in the market now with the most attention. Forgive me if I think it's a silly spot to also be buying LEAPS.

ASAP: A little knowledge is a dangerous thing.

case3: Buying 2020 puts is fine, for all the reasons you listed.

Do you have the same sort of play/care to expand on why you agree rather than just throwaway one liners? Not helpful to the discussion.

So you pay $31 for this play vs $23 for the 2020 puts. Your max payoff is $39 or 1.3x, whereas his max payoff is 8x.

You're a noob with a fetish for "Look ma, I'm not a noob any more!" noob spreads, and it's hilarious. You don't know what the hell you're doing. You actually think spreads are better than straight puts. In >80% of spots, they're not, but your every response to anyone buying puts is "haha you're a noob, spreads bro", like you read some "option trading for total morons" site/book/youtube video where they talk up the "pro" play of spreads and mock the noob play of straight longs, and now all of your advice is "spreads bro, lol only noobs go straight long". It's so dumb. Pointless idiot noise that's
Anyway, to case3:
Yeah this.

case3: Ignore the idiot. 2020 puts are great.

There are about 5 theses here:

1. Musk is close to bankruptcy and unable to raise (else why destroy your capex and growth and go 2.4 billion in negative working capital?) This should play out by January 2019, is obviously <$100 and >4x payoff for those. Jan '19 puts don't offer a much better payoff only double.

2. Musk can't profitably produce a $35K M3 and never will. There is excellent precedent for this - all his prior cars have been priced WAY higher than the price claimed at announcement, and they still lost substantial money even at the far higher price.



Munro says build cost is $36K. German company says build cost is $28K at 10K/week. which they have no capex for and can't reach. Both numbers are big money losers after R&D + SG&A. Given that Musk has no capex for ramping, >$50K car demand dies in the coming months, and they're back to hemorrhaging money. If they can raise, the stock correction from this will play out in 2019 as they need major funds for Model Y and their billions in items becoming due. <$150, 2-4x payoff

3. Litigation is going to destroy them now that they're on the hooks for billions (and counting until a full factual retraction; securities law makes them liable for all losses on both sides until a material misstatement is corrected in full) in lawsuits. This needs longer than Jan 2019.

4. Assuming they can raise and survive and ramp M3 a bit for a small profit, increasing competition in 2019 - lots of new compelling options - will choke off the easy money and they'll be unable to raise the $20 billion+ in fresh money needed to pay off their due debts, pay off their legally binding contractual purchase obligations, PLUS the billions in capex for new lines. This is > 50% imo and pays about 3:1. Needs at least mid year 2019.

5. A major market correction or economic event of some kind happens which deflates the absurd momo names. This will give you a 2:1 payoff or so and is maybe 30%. Needs Jan 2020 to capture the larger probability. 2020 has a better payoff : odds ratio than 4 months time.

The other point is that you need a great payoff for the binary event of Musk full of it vs Musk telling the truth about $420 financing. The 1.4:1 that noob-boy is proposing above is not enough of a cushion for this bet.

So I think you capture the possibilities nicely with your 2020 puts. Jan 2019 doesn't capture enough. It's not like Jan 2019 is even that much better a payoff, only double. I like all your psychological reasoning too. I think this is solid and I hope you get paid.

The only thing I'll add to your analysis is risk management. Plenty of people are going all in against my advice. I'll remind you that there are a number of facts we don't know the answer to and are simply guessing at. There are some low probability possibilities here that mean you get wiped out.

- Musk has financing OR can pull off fraud/rabbit (TeslaCoin, Musk manages to cosy up to or blackmail a large tech or fund CEO). He's a master at one-on-one manipulation of rich people. It's how he got to where he is. I put this conservatively at 20%. Even pure frauds and impending bankruptcies have managed to go private or almost go private. Crazy Eddie managed an actual go private on a fake balance sheet before the SEC caught up with him. Enron had all of Wall Street backing it. Madoff convinced extremely careful billion dollar funds and individuals to put all their money with him ($30 billion worth) despite hug red flags. Lehman Brothers actually found and signed go private backers right before they went bankrupt. So you gotta give this possibility 20%. We're dealing with hackable people here and Musk is a master hacker of people.

- Demand for Model 3 at $58K (the current average sale price for July) turns out to be a lot larger than anyone expected, and their huge quality problems don't turn into something bigger. I would have put this at 20% yesterday but I'd put it at 10% now given the analysis out from a payments processing firm of M3 reservation conversions, which are pretty shocking and show very low demand. Very low time between fresh ordering and delivery also independently confirms this.

I don't think there's anything else to take into account. If neither of those two things happen you get paid.

Ok good luck guys, I honestly don't have a rooting interest in this fight just wanted to discuss strategies. Personally I think BK is an extremely low probability before January 2020, I think you wait to short weakness if it can't hold the lows rather than have what happened this week where it was a great short term trade and still more questions and confusion while the stock holds its post ER gap.

Bankruptcy before 2020 sans a buyout is a function of the probability that they can raise large amounts of capital. Musk shot himself in the foot badly with that Tweet and greatly increased/sped up SEC scrutiny, which will make underwriters even more cautious.

Their quick ratio is 0.31. Working capital is -2.4 billion and climbing. If they can't raise and suppliers start demanding COD - again, Musk shot himself in the foot here drawing unwanted negative press that are now comparing Tesla to Enron - you get a bank run and bankruptcy happens very rapidly, as they have nothing left to mortgage. Through 2018 they mortgaged all their leases, their factory, all of their capital. They own nothing to give to creditors, and some of their debt requires particular balances to not get called - balances that are a billion dollars higher than what they have in the bank right now.

They're really deeply in the **** by any standard acid test you'd do to measure proximity to bankruptcy. Ramping M3 is off the table as they're not building new lines (again, bizarre capex cuts?), only minor improvements are possible in what they have now. If they can't raise, they're bankrupt pretty soon, from early 2019 to as soon as October this year. It all comes down to whether they can raise and whether there is large unexpected demand for a $50K+ Model 3 originally promised as $35K.

The below is really hard to understand if they can raise. You don't let a company get in this state and piss off your suppliers so badly with your stock price at $350 if you can raise. Musk has said many times he wouldn't need to raise again and then gladly did it.

https://twitter.com/TeslaCharts/stat...50075392733184

I know why Elon is so confident. When Tesla is right on the bleeding edge of bankruptcy, Satoshi is gonna move his coins...

I am pretty sceptical on total M3 demand

The market at 40k+ is thin:



Sedans are falling hard to crossovers and I don't see a reversal anytime soon:



The most common current car owned by a Tesla reservation is a Toyota:

https://dailykanban.com/2017/03/mode...ket-challenge/


This agrees with my own anecdotal ideas of who a large part of the Tesla reservation is:

-Someone who drives a Camry (it's not that they won't afford a BMW, they can't afford it)

-The idea of a cool 50k level prestige car for under 30k out the door (35k - incentives) is what pulled in the huge 420k number. This kind of offer is impossible to resist.

-This customer values reliability above all, otherwise they wouldn't be driving the most soul-less car ever made.

-These are the people that created the trend of dumping cars for crossovers. New crossover sales come at the expense of sedans.


Add this all up and the market for small, expensive, hard to service sedans isn't anywhere close to 400k. I am having a hard time coming up with ways demand could surprise to the upside at $50k:

-Unique exclusive features such as self driving

>Tesla is last here and even though customers don't yet realize this, when it comes to spending they will start to look closer.

-Higher cachet

>A model 3 can't eclipse a C or a 3 series. When Tesla was just the S it counted for something against the Germans.

-Tesla loyalty

>Musk losing it is not helping here. This group is vocal, but realistically only a tiny sliver of people who can afford 50k for a car have stuff like this as a life priority.

-Economic boom

>Things are already hotter than anyone expected, the jump to pushing even more people into this price bracket would take a combination of time and circumstance that are unlikely.

-Competitor failure

>These guys are among the most risk averse and accomplished there is. Jaguar might gamble some on an iffy release. MB etc would never take a chance.

Good link on the Toyota owners. Yeah this is an argument I've had with silly people for a while - no, Tesla cannot be an iPhone/Apple because cars don't cost less than one week's salary like iPhones do. They cost a year's salary. Thus most of the market is priced out of premium end by sheer lack of dollars, and the competition for the non-premium side has Tesla crushed for a decade until they get the economy of scale that $150 billion in deployed capital and vast supply chains gets you. Half of the world would own a BMW if they had the money.

Honestly Elon's only out is getting dumb money like the saudis to actually buy this company out at that valuation.. it seems insane for me , but it will burn us shorts and they will be taking a 50 billion dollar writedown eventually

Yeah I think so. The anonymized payments data calculated by that payment processor shows a terrible conversion rate to the high end.

This is typical desperate end stage stuff. Lots of high profile go private attempts just as bankruptcy is looming. It's extremely obvious he didn't have the funding and has committed actionable securities fraud. Whether he can get it is an open question. Going on previous frauds who pulled this stunt near imminent collapse, it seems about 30/70 he can pull it off. But you got to reduce that for the sheer amount of money involved here, and the spanner he threw in the works by the stock fraud he just committed, opening up to liability, and then lying and saying everyone could keep their shares (there's no real way for that to work given securities laws).

So TS I assume you are long puts? I just want to clarify given your almost a thousand posts in here....it's hard to know from moment to moment what your position is. And if you use the excuse that you are just a "short term trader" given everything you posted above it shows a lot about where your conviction is at. If you'd like to make some bets related to bankruptcy I would interested as well. Lmk.

I would take the bankruptcy side of any reasonable bet

What timeframe and odds?

See the part where I said "any reasonable bet"