re: just bought Tesla stock today at $357

The crazy part is that it's in his IRA. No taxes.

Ron Baron, early and strong investor is currently on CNBC saying no end in sight. He’s been right for years now.

This stock scares me at this point.

I was feeling pretty good about myself in at 420 and out at 650. Now I'm just frightened.


Eta: looks like it got a cut in rating at 8:05. Lasso?

It'll be time to short soon enough.

I will not be one to put my foot on the ledge, though

I wouldn't short shite. Apparently Tesla has convertible note hedges and can basically call them to use to bump up their EPS at certain points.


A discussion on convertible note hedges and its effect on Tsla Q4 earning

quote:

---

Conclusion:

This is really big, huge, meteor, guys. You can check the detailed update below. The conclusion so far is:

1. Tsla is profiting big from the option activity, which can worth upto 0.8B for the 2021 hedge + 1.8B for the 2024 hedge. Currently the total option value should be >1.5B already. The first 0.8B full profit is earned when stock hits 560, and the next 1.8B is fully earned when stock reaches 607.5 (unless they already sold some). We may witness some free cash magic on 1.29 depending on how they account for this, or 2020 Q1 earning. (thanks to /u/aliph
for bringing up the 2021 hedge which I didn't notice before)

2. Whenever Elon feels like to, they can readily sell these options to bag in cash => huge boost to EPS up to 15 dollar per share! So if Elon wants Tsla to be full year profitable and included in SPY now, he can pull it off at end of Q4/now/anytime by selling part or all these options. Totally up to them, but they will definitely sell when stock price hits 560 / 607.5 respectively, at which point the call spread yields maximum profit and no point to keep holding.

3. If Elon wants to, this option profit may be repeatable til the convertible notes matures (see 3rd update). They just need to sell current spread, profit, and buy another spread, which is profitable so long as stock rises fast enough each year.

The implication here is huge: not just profit and SPY inclusion, but potentially almost10B (end of Q3 cash sits at about 6B, + 1.5B operation from Q4/Q1, + 2.6B from options) cash on tsla's hand by end of Q1, assuming stock hits 607.5 and Tsla has no issue in selling these call spreads. Enough to support GF4, Semi, Y, Pickup, roadster at the same time this year, and weather a recession. 1K per share by 2020 Q2 now becomes a real possibility; and 100B stock valuation is going to be cheap. Especially as Elon can screw the shorts anytime he feels like to, it seems really unwise to short the stock at this moment, and the possiblity for capital raise and bankwuptcy is now minimal. If I were retail shorts, I would quit shorting this stock immediately for months til this huge cash inflow settles. Vice versa, it seems premature to sell the stock either until the cash magic is fully priced in.

This probably will mark the most successful option activity in any company history. Solid stuff that CNBC / Reuters / Bloomberg should pick up, but instead we get the unintended accelaration story...Feel free to share this piece as long as you cite properly. However, be cautious with earning play, because things can get priced in very quickly; and there is still some ambiguity about how and how much Tsla may recognize this option profit in Q4 report.

---

This part...

quote:

---

so long as stock rises fast enough each year.

---

...makes me wonder if there isn't some crazy pump going on to convert those options over.

I have a hard time believing those with short positions are unfamiliar with these instruments.

I would have no problem taking profits here if I was in tsla. This is not a place where the stock will trade for very long - good or bad.

It will top Toyota at 200bil mkt cap

All for that 100mil qtr profit

And at like 940 now. I wonder if I should sell at 1k

What in the frick is going on

quote:

---

I have a hard time believing those with short positions are unfamiliar with these instruments.

---

I didn't say they weren't. Just saying I wonder if Tesla is doing some shady pump in order to cash in on theirs.

Sure companies use the same tools but not all companies are valued $100 billion more than their competitors who generate more revenue and profit nor do they grow in value at a rate of 10% per day or 50% for the year.