Perhaps you are giving the MM options writers too much credit. Their purpose is to provide liquidity with enough vig that they can hedge out or otherwise, and they don't have to necessarily be super autistic about all of the happenings of the underlying. They're similar to Vegas hanging out sports betting lines, although somewhat more sophisticated.

You are also ignoring the counterparties who think TSLA is going to the moon and taking the other side either by writing puts or buying long term high strike calls that force the MM option writers to take the opposite side too.

Also consider that Jan 2020 50s only return 10 to 1, and people playing for BK have much better spots out there to try. Sep 50s have 7B outstanding in total payout if TSLA 0s by then.

Personally I think they just plumb run out of money and die without being able to capital raise, and I don't think they can do a cap raise for the reasons already outlined in this thread (no updated shelf registration, SEC would probably yank any new shelf registration, etc.)

Are they really going to 0??

Exactly!

+1 to TS content, also Mor****a.

The issue I see with Tesla is a very simple one:

They owe lots of money, and need to continually borrow more. Eventually they are going to **** up their finances and then its gg.

Hardware is hard. Building Teslas is very hard. It is also incredibly cash intensive.

They can't simply run a skeleton crew and keep the servers on. Once the cash runs out, it seems like it is completely over, very very quickly. Everyone knows this.

So if that is potentially the end, then you can ask yourself. What might the beginning of the end look like?

- Execs leaving en masse (especially from finance related teams)
- Musk using outlandish bluffs:
*We'll make a 35k car
*We'll be profitable soon, no more raising money
*I'm willing to sell to the Saudis
- Convertible note due for 900M currently underwater
- Imminently needing to raise money even tho he's been bluffing he doesn't
- The most shorted stock in history
- Problems with cars
- Strange dealership events, lots of cars with dusk in lots, waning demand
- Former engineers/employees speaking out about bad practices
- Competition heating up
- Musk being weird

There are just a lot of things happening right now that in 2 years if we were talking about Tesla going bankrupt, we would laugh about how obvious it was at the time.

Tesla over-extended itself by going all in for a consumer car, when it should have stayed a niche luxury company and then got into freight. Then, when they have a polished system, go for the economy car, and do it right. You can't move fast and break things when you are selling cars.

Even if they get another 5-10B lended to them in the next year, they still don't have a clear path to profitability beyond that. There is only so much money.

Hold my beer, Spurious, I got this.

*ahem*

That's all irrelevant. #StockPriceBro

Bought 400 shares of NIO out of pure tesla hate and zero research @8.9


jin yiang at it again

Post apocalypse there will be cockroaches and tsla trading above $250.... I don’t understand the market

Gonna pull an ASAP here


Someone bought $100k worth of oct puts w 50 strike price today


35 days


That person is awesome

I thought those were Oct 2019 puts?

https://twitter.com/pierpont_morgan/...560768512?s=19

Nope

Ahh, I just saw Oct 19 and assumed it was next year. Definitely balla.

Buying lotto tickets 80%+ OTM is so awesome/baller, definitely a high probability trade one wants to be doing!

BTW, not that it matters to your perspective but with 26k contracts already at OI really have to wait to Monday to see even if these were BTO, $100k is honestly nothing in the grand scheme of things.

jokerlightingmoneyonfire.jpeg

That's the kind of emotional idiocy i mentioned.

Seems like cold hard rationality to me. Tesla October 19 50s are 12c. If bankruptcy takes the shares to worthless 50% of the time (it's about 80% of the time), you need a 1 in 250 of bankruptcy before the 19th of October to be +EV.

You're the emotional idiot if you think risk of bankruptcy isn't 1 in 250. Multiple objective quantitative indicators put it way higher - Quick Ratio, net working capital, debt vs assets, upcoming payments vs liquid assets available, debt ratings. Multiple qualitative items put it higher - mass exodus of executives (including turning over their ENTIRE accounting team in 18 months and the new CAO leaving after a month), the CEO committing serious stock fraud and generally acting like a weirdo under intense pressure, not paying suppliers for months, a dozen liens suddenly filed in CA for prolonged non-payment of contractors, pushing customers refunds out to 45 business days (63 actual days), etc.

He's making a +EV trade. Not one I would make, but something like the $200 October 19s for $2.30 are fantastic value and very +EV. You just lose most of the time, but non emotional idiots play for EV, not locks.

Would love for you to explain the math behind why it's a +ev trade... The hilarious thing is it's very likely this isn't even a long premium move, just a hedge to an existing position or someone closing out short puts but whatever you say lol.

You limit your risk to your outlay but acting like buying lottos is a solid risk/reward, LMAO... check the OI on all the monthly September lottos that will expire Friday. Way more than $100k has been purchased over the past few months throughout all this drama and what a shocker but the sellers of those are going to clean up...

Isn't the math explained in his post?

Maybe you can explain it to me then? Better than a 250 to 1 chance TSLA goes bankrupt/down 80%+ in 25 trading days?

If that's your thinking (and again be careful to take advice from those who call something a good idea but have zero skin in the idea themselves), then I disagree and say there a lot of better ways to benefit from a huge move without having such a polarized scenario of all or nothing.

I mean, I agree it definitely is probably paired with something, I think one factor that needs to be considered is that tesla doesn’t totally tank in BK, but I don’t know the rules for institutions holding during BK

This is a bull market, look at how the heavily shorted names have performed lately. It's a credit to bears that they've even been able to keep a name like this underperforming recently given the intense interest from both sides. You really need the market to tank to have a scenario where this truly dumps and even that doesn't seem certain to me with how dedicated the long side is. Ross Gerber is a clown but his firm was buying the debt all week, he's not alone in the amount of "dumb" money that is out there. I forget what article it was in but there maybe $1 trillion in private equity cash just sitting out there, good luck trying to prove they can't raise from somewhere. The Saudis may not have bought out the firm but they did still take a pretty nice sized stake.

I'm no bull but this thread has become a weird echo chamber repeating news the market already knows as if suddenly that's going to cause massive liquidation among the long side. The longs dgaf, this idea that people will be running for exits like Enron/Valeant isnt going to happen. If it does go down this will drag on for YEARS.

I was thinking about two companies that have been locked to go BK for a while being Moviepass & Sears, even they are still up and running despite the inevitable demise everyone knows is coming. People still love Tesla and want to own the cars despite the issues we all know, that has to count for something.

That's actually very easy. There's extensive diverse literature building on the Altman Z-score and a diverse range of financial ratios in estimating bankruptcy odds. They have a prediction success of >70% of one year bankruptcy. Taking the most conservative estimates, Tesla is > 1%/month chance of going bankrupt purely on these formulas. You're getting paid 4001:1 on these puts. Game over on the trade being +EV.

That that isn't immediately obvious to you makes you pretty ignorant of basic EV and trading.
Are you such a raging dickhead that you can't understand risk versus reward? Are you so completely and irredeemably stupid that you're using a single example of a 500-1 payoff failing as evidence that a 500-1 payoff bet is a bad idea?

Clearly you are. It's in black and white in your post.

I personally don't like the $50s for various reasons and have argued against getting them, but they're +EV by a long way.

Lol alright have a good one man, maybe someday we can have a discussion that doesn't end in your name calling.