Two months back, I clearly made my case for why Tesla (TSLA – USA) will eventually implode. Of course, the timing of that implosion is difficult to guess at—hence my use of a bear put spread. Now, thanks to OCC, I can go out much further in time. While, I suspect that TSLA’s share price is much lower by January 2019, by January 2020, it will have blown through over $10 billion in additional operating losses, working capital needs and worthless cap-ex, and the shares are almost CERTAINLY much lower, though the migration from TSLA to TSLAQ probably takes another year or three.
In any case, I’ve been adding to my position using the Jan 2020 200/100 bear put spread and this has now become a pretty large position for me (as far as options positions go). At a ~15 debit, I can’t help it. Every time I come back from grabbing a coffee or a sandwich, I add a few more. Nothing on my screen at today’s prices seems as attractive. Even if I’m wrong, at a 15 debit, I can re-load again in 2 years and play it out again while still making huge % returns on the spread--even at my increased overall cost. I simply don’t see how a cash incinerating vanity project can sport the current market cap at a time when newer and better products are coming to the market from well-funded competitors—while TSLA will be forced to constantly issue equity to buy itself time. At some point, the market will eventually choke on all of this new equity. On a side note, I find Elon Musk’s twitter feed to be increasingly rambling and delirious. It would seem that he even sees the end being near, now that his truck is stillborn and he can no longer distract people with dreams of colonizing Mars and tunneling under Los Angeles.
In any case, the TSLA implosion is my top pick for 2018 (...and 2019) and it sure is cheap to play it through 2020 option spreads.
2017 has been quite rewarding for myself and readers. These are the positions I have written about.
Manas Airport Company currently up 50% (all right, fess up, which of you guys opened a brokerage account in Kyrgyzstan and front ran me??)
JYNT from 3.75 and currently up 35%
SNAP puts up a few hundred % (depending on strike) as the stock dropped 30% in a month into unlock
DRYS short up 90% in 7 weeks
NZM AU up 29% including dividends in 6 months
Mexican REITs up 10% in 3 months
SBLK up 90% in 3 months
For 2018, I intend to let my AIM CN and JYNT play out. I also have a few other positions I'm following closely that I intend to write about. However, at today's prices, nothing quite attracts me like those 2020 puts.
Happy Holidays and Happy New Years everyone.
Let's hope 2018 is as successful as 2017 was,
Disclosure: Long JYNT, AIM CN, TSLA various put spreads