Quick Alert: New Puts After TSLA’s Disastrous Merger

Tesla appears hell-bent on merging with money-losing SolarCity. Investors should ignore Elon Musk’s irresponsible and unsupportable PT Barnumesque claims for the combined company, which just mushed together two companies bleeding billions of dollars of cash into a bigger cash bleeder with dubious synergies and more debt.

This is a great opportunity to increase short positions in an unsustainable business model fed by a megalomaniac.

Here are my new profit recommendations…

So far, our TSLA January 2017 $100 puts (TSLA170120P00100000) are up 22% since I recommended them in June. Hang on to those, and add to your position by buying TSLA January 2018 $100 puts (TSLA180119P00100000), currently trading at about $9.60.

This dirty snowball is starting to roll downhill and gather speed. We’ll be ready for it.

Sincerely,

Michael

35 Responses to “Quick Alert: New Puts After TSLA’s Disastrous Merger”

  1. Robert Pacione

    Just a theory. A while back people praised this man as a genius. No matter how it looks. I see it one way. Self sabotage for his own benefit. As so many of you will benefit of his so called disastrous merger or purchase. Has anyone ever thought it’s done on purpose. Has anyone looked into his books and seen if he’s bet against himself or his companies knowing that he cannot fulfill his lithium needs and backed out of his buy backs for his tesla cars after 3 years. Something tells me this man is sinking his own ship under another name knowing it’s going to bring water on board this boat. Business is a dirty plate of spaghetti at best with guys like him. Tangled his own weave and built a back door to cover it up as we can’t see inside until it’s to late. My personal theory!

  2. TSLA180119P00100000

    TSLA = Tesla
    18 = 2018
    01 = January
    19 = 19th of January
    P = Put
    00100000 = $100

    I believe that’s all correct. I’m not sure why the extra zeroes in 00100000, but I think what I’m telling you is essentially correct.

  3. Seems that this grand short idea is based on the premise of current energy storage technology. Be aware that lithium is not the only game in town and is in fact inferior to existing ferrous material technology…,,,by a long, long, long way.

  4. This will be a perfect time for companies wanting to enter the electric car market and take over a company with all the tech and the over pricing of their shares there will be a opportunity to make something in the take over to come if the company end up in financial problems

  5. I agree that Mr. Musk runs a fluff and puff operation, but since he is a consummate insider, I find it hard to imagine the government won’t continue to bail him out, like the failed solar operations of the Obama era. If that turns out to be the case, how is it possible to make a rational investment decision in a poker game with a stacked deck?

  6. Musk is essentially using Tesla shareholder funds to bail himself out of his precarios personal financial stake in SolarCity where his %stake is higher(23%) than at Tesla(21%). A carnival of inequity, and we… will have ringside seats. Peanuts, popcorn, hot dogs! Get ’em while the’re hot. Get ’em while they last!

  7. any puts bought out of the money will pay strike price IF the company files for bankruptcy. So its a gamble, so if you buy the $25 puts and the company files for chapter 11 protection all stock goes worthless but all puts bought will be paid at strike by the COBE. FYI. The question is when, if its bought out the puts will be worthless unless the buyout price is below the put strike price.

  8. Musk is using Tesla shareholder funds to bail his sorry ass out of a precarious financial position in failing SolarCity(where he has a 23% stake). A Carnival of Inequity at which we now have ringside seats. Hot dogs, peanuts, popcorn, get ’em while they’re hot. Get Get ’em while they last!

  9. “I am surprised to see that my TSLA Jan 2017 put option loses value when the stock drops 2-3%.
    Why does it do that?”

    Option prices are also affected by volatility. Volatility (VIX) is a measure or uncertainty or fear in the market. When the VIX is high, option prices rise because most people trade them as hedges against their positions in the underlying stock. Option prices fall with the VIX as well because demand for them is lower when there is less fear. Options also lose value with time decay, but that is not usually very significant until closer to expiration (it’s an exponential curve).

    Check how the VIX was trading when your position was losing value. It was probably falling.

  10. Kevin R. Willis

    You sound like someone who is heavily invested in fossil fuel energy. You also are no mentioning that Solar City has future payment it will receive that seriously exceeds their debit. Anything can look bad from some perspective, what I try to do as an investor is look at all of the facts. Personally I believe the deal will be of great benefit to Tesla as it build it solar farm and it help the nation expand the use of solar energy (but you didn’t mention that either in you biting analysis). Let’s check all of fact.

  11. Dear Michael, l have bought Tesla puts, any suggestions now. The CEO knows the big differences of losses and earnings, that’s why he put up the solar and open partial of gigafactory to sale it to investors and media for distraction not focus on actual earnings. Questions now, what will happen. Thank you.

  12. I recently received a strong recommendation to buy Tesla shares.
    This was a company making the car of the future. They were gearing up and building a massive new plant and the future was assured. How can there be two such diverging thoughts on a company like this. I have not seen the financial fundamentals and have no idea if the US Govt will stand behind them but if the PUT option is correct then the profit could be huge if the company crashes and burns. I am in New Zealand and we have experienced companies being propped up by Govt. because they have been considered too big to be allowed to faIl. Maybe this is the strategy being followed by TESLA?

  13. If Hillary wins, she will continue to subsidize this company. She will win since college students are registering dead people via the internet and then will vote for Hillary through the absentee ballot. Lewitt’s trade logic is sound but she WILL be elected and she will continue to send your money to this swindler. Sad but….the election process is even easier to rig now with on line resources. Liberal judges approved by Republican RINO congress have struck down the requirement of IDs for voters. The end is near and it is now.

  14. I’ve traded Solarcity in the past. Made some nice gains, but down after this years exodus from Nevada due to the metering rate fiasco. I moved to Las Vegas a few months ago and lately I’ve been seeing Solarcity trucks in town. If(and when) Hillary gets elected they will be providing solar energy to military bases(like here in Vegas) public schools, etc. its already happening in other parts of the country(like the Bay Area which is where I’m from). A year ago SCTY was trading around 30 and spiked up to 60 before the Nevada vote. But I know what my eyes saw. They will be huge after the election.

  15. A year ago SCTY was still losing money and trading around $30. The government extended the tax breaks and it spiked to $60. Then Nevada had a metering vote and voted against Solarcity amongst others. The left the state and the stock plunged. I moved to Vegas about 3 months ago and lately I’ve seen Solarcity trucks back in town. They will be providing solar to all military bases(like the one here in Vegas) public schools, etc if/when Hillary gets elected. All the numbers look negative but solar farms are popping up all over. I left the Bay Area and you can’t look at the hills without seeing them on every hillside. After the election THIS WILL BE HUGE!!!

  16. Dear Alvin ChipofftheOldBlock

    Listen you poor man, a stupidly stupendously preposterousonerously giga gigantic bloated per share price has nothing to do with getting propped up against failure. Share price is always allowed failure before favor against business failure. share prices are popularity quotient. cant protect that. the business itself existed to take advantage of massive subsidies. but the STOCKs price per share cannot be protected from the sheer heights all of its passengers chose to hang on for. when they report this week how far behind in deliveries for the year they are…all he can hope for is a Clinton Win to carry him to another wave of subsidies. For the companys solvency its get on the Clinton bus or bust. But the broad market bigger ocean waves will topple the sails of the share price no matter what happens bec rate hikes and wintertime and false credit at all time tap outs and cheapening oil and wars and skys the limit Share PRICES/costs of half uNdelivered halfsolar teslas dont mix

  17. Are you guys kidding yourselves or what. It doesn’t matter if it’s Clinton or the Trumpster and his family they’re going to do what they want when they want, all we have to do is figure out how it will benefit them and once you have that answer you now have a direction. Got to tell you guys I’m from the Bay Area up near the wine country and right now my wife and I are in the Northern end of New York on vacation here in the Catskills and all I have seen are Trump signs everywhere but not one Clinton sign at all. After being in Manhatten for three days and now being up here is like being in a different country, WOW.

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