Tesla on the brink?

by JDH on March 2, 2019

For those of us who held Tesla puts, Friday was a good day.

After hitting $321 at the beginning of February, it touched $288 on February 26, bounced back to $320 on February 28, and then closed back in on $292 on March 1.


Fraud Boy Elon said that they would start selling a $35,000 car, which he’s been promising forever.  You would think that would have made the stock go way up, but it didn’t, because no-one believes him anymore.  With the expiration of some government incentives, and the realization that the cars have numerous mechanical problems, demand has collapsed.  Selling a crappy car with a small battery is no longer the sexy proposition it once was.

The game is up.

I sold my March puts, and bought some April puts, about $30 out of the money.  My strategy is simple.

I start by buying 25% of my full allocation.  So if I want to gamble $10,000, I buy $2,500 worth of puts.  If they immediately go up, I sell them, pocket the profit, and take $2,500 and by more (with a different strike price, obviously).

If they move against me, I average down and put another 25% of the dollars on it.  And so on.

With the volatility in the stock, it bounces around, so it’s not that difficult to scoop a profit, and then roll it forward.

I want to continue holding puts, so that when the inevitable bankruptcy happens, I make a dollar.  (It’s possible that a buyout will happen without a bankruptcy, but whoever buys it will pay cents on the dollar, so it should still be a profitable trade).


Gold is moving slightly lower, but I’m not trading it.  I’ll continue to hold through this consolidation, and presumably by the end of the month it will resume its ascent.

I hope.

That’s the plan; let’s see what happens.