Offtopic: Short on Tesla

Please note! Without several years experience on the stock market do not touch leveraged Options / Futures.

I have not written about my stock market activities yet and options trading is probably not a good starter. But to the Tesla -20% loss on 08.09.2020 and with my sceptics on the tesla market valuation I wanted to write some thoughts. Especially as Tesla is on a frenzy rise again ;-).

I´ve always been a tesla sceptic. I´ve driven the Model S and the Model 3, great gadgets no doubt, but the valuation and the leadership on CEO level are just ridiculous. However shorting on stocks is difficult, your conclusions can be 100% right, if the timing is wrong you will lose money. Just take Wirecard as an example, the Financial Times first started reporting accounting violations in January 2019. Below is the Wirecard chart from 12.2018 till 05.2020 Even as Insider knowing the system is a 100% fraud it would have been impossible to time the short right.

My Experience

I like to invest in companies where I posses hands on experience. Either by using their products or insights through work / projects. Beside that for me there is nothing better than owning a stake of your employer. I am a long investor in stocks, so I never analysis stocks with the intention to open short position. However sometimes I look at companies where things just don´t add up and I wonder how to take benefit of it. I will not go on details when it comes to Tesla valuation, and I don´t won´t to start a discussion with Tesla believers but to me it´s a car company valued at the price of a technology startup. Let´s just assume the Stock is overpriced, how can the take profit ? Put Options, Knockouts, Certificates, leveraged or not.

I´ve shorted Tesla twice via Put Options, once in 2019 which was a complete disaster, the other time in March 2020 which went well but does not really count because of the corona crisis. Both times it was only gamble money, no big loss in case but it hurt as I had to work a few days for the money.

And how was the outcome ?

All in all it was + – zero after fees. Yet the fees and spreads are horrendous, you have to make at least + 5 – 8% to cover it. The biggest problem is the timing and volatility just like the Wirecard chart the price is a roller coaster. Especially with the CEO Musk and his “might take Tesla private 420$. Funding secured” Tweet.

Have you ever thought about going short on stocks ? How did it work out and which strategy/instruments did you use ?

Learn from my mistakes do not touch shorts. This is an investment advice 😉

Regards Matt