I had a very successful trade last month after Tesla Inc. (TSLA:US) crashed from the $170 to
$140 taking the TSLA May $150 puts from $4.50 to my close-out price of $16.00 literally within a week. Last night, those headlines forces the “short Tesla” trade back onto my radar screen because what this resembles is the falling from Grace of the genius wonderchild, Elon Musk, because as the boss and mouthpiece for the company that boasted of a “driver-less steering capability”, after hundreds if not thousands of accidents (including fatalities) the fault of Tesla
vehicle design, the Feds have decided that the once-richest man in the world is no longer “off limits”. If they go after Tesla for the knowingly marketing a product with design flaws, they will go after its Founder as well.
In any case, Tesla is going to resume its downtrend today with a pre-opening down approximately $6.00 from $177.81 to $171.54. In the GGMA Trading Account:
- Buy 10 contracts TSLA June $160 puts @ $5.00 (now at $4.75) This will be a starter position and will be added to later in the week.
I wrote back in April, after they announced the layoff 10% of their work force, that Tesla was “headed to $100” and I now believe that the U.S. DoJ has Musk in its crosshairs and that means systematic leaks of improper conduct leading to securities fraud and that kind of perpetual news rot will not end. It will be as if it is the stock market equivalent of “Watergate” which prompted the bulk of the decline in the 1973-1974 bear market. To coin a phrase, Tesla is
“toast”…
