How to short TSLA?

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JC565
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How to short TSLA?

Post by JC565 » Wed Feb 07, 2018 8:35 pm

So I know what shorting is.. But Ive never actually done it. How would one go about shorting a stock? Would I need to set up a margin account? Interested in learning hear ao i want to play little money. Nothing major. (Sub 5k) and yes i know id also be liable inthe case of a margin call and need to put stops in place. Again, just never done it.

desafinado
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Re: How to short TSLA?

Post by desafinado » Wed Feb 07, 2018 8:40 pm

Theoretically with shorting your liability can be unlimited (if the stock skyrockets) and your gains are capped at 100% of the value. If you want to express your idea that the stock will go down, one way to do so that is "safer" (in terms of not carrying unlimited tail risk) would be to buy put options.
Last edited by desafinado on Wed Feb 07, 2018 8:55 pm, edited 1 time in total.

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Rainier
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Re: How to short TSLA?

Post by Rainier » Wed Feb 07, 2018 8:41 pm

Safest way is to buy puts.

That gives you the right to sell Tesla at a given price before a given date.

btenny
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Re: How to short TSLA?

Post by btenny » Wed Feb 07, 2018 8:45 pm

See here for Fidelity note on how the process works. Note you have to have a margin account and call your brokerage and find out what interest rate they will charge you to borrow TSLA shares and what percent of the sale price they will hold back.

https://www.fidelity.com/learning-cente ... rt-selling

acanthurus
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Re: How to short TSLA?

Post by acanthurus » Wed Feb 07, 2018 8:51 pm

I'd probably buy deep in the money puts. No margin account required but you will need a lower level options account.

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JC565
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Re: How to short TSLA?

Post by JC565 » Wed Feb 07, 2018 8:52 pm

Thanks for the advice. That was quick. Ive never ventured into options but I'm interested.

MotoTrojan
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Re: How to short TSLA?

Post by MotoTrojan » Wed Feb 07, 2018 9:40 pm

Many of the brokerages offer simulated trading in the actual environment which is a good way to learn. I believe mine was ETrade’s options platform.

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JC565
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Re: How to short TSLA?

Post by JC565 » Wed Feb 07, 2018 9:43 pm

acanthurus wrote:
Wed Feb 07, 2018 8:51 pm
I'd probably buy deep in the money puts. No margin account required but you will need a lower level options account.
Doesnt that assume the stock will increase? The 2 examples i Found online both profited on rising stock.

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Tyler Aspect
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Re: How to short TSLA?

Post by Tyler Aspect » Wed Feb 07, 2018 10:01 pm

JC565 wrote:
Wed Feb 07, 2018 8:35 pm
So I know what shorting is.. But Ive never actually done it. How would one go about shorting a stock? Would I need to set up a margin account? Interested in learning hear ao i want to play little money. Nothing major. (Sub 5k) and yes i know id also be liable in the case of a margin call and need to put stops in place. Again, just never done it.
I would caution against betting against Tesla. Although on the surface it is obvious the business case at Tesla is potentially dubious, the stock is held up by the dreams of a fantastic electronic future. There are still people willing to pump money into Tesla because they can almost feel the dream within reach. You would never know when the dream will pop. Your small bet would be blown as a leaf in hurricane gale force essentially in a random direction.

I would not touch Tesla, either long or short.
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awval999
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Re: How to short TSLA?

Post by awval999 » Wed Feb 07, 2018 10:11 pm

JC565 wrote:
Wed Feb 07, 2018 9:43 pm
acanthurus wrote:
Wed Feb 07, 2018 8:51 pm
I'd probably buy deep in the money puts. No margin account required but you will need a lower level options account.
Doesnt that assume the stock will increase? The 2 examples i Found online both profited on rising stock.
That's a "call" option.

Call option is LONG
Put option is SHORT

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David Jay
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Re: How to short TSLA?

Post by David Jay » Wed Feb 07, 2018 10:23 pm

awval999 wrote:
Wed Feb 07, 2018 10:11 pm
JC565 wrote:
Wed Feb 07, 2018 9:43 pm
acanthurus wrote:
Wed Feb 07, 2018 8:51 pm
I'd probably buy deep in the money puts. No margin account required but you will need a lower level options account.
Doesnt that assume the stock will increase? The 2 examples i Found online both profited on rising stock.
That's a "call" option.

Call option is LONG
Put option is SHORT
On top of that, you can write either a call or put. You can buy either one. 4 ways to transact an option.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

randomguy
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Re: How to short TSLA?

Post by randomguy » Wed Feb 07, 2018 10:30 pm

Tyler Aspect wrote:
Wed Feb 07, 2018 10:01 pm
I would caution against betting against Tesla. Although on the surface it is obvious the business case at Tesla is potentially dubious, the stock is held up by the dreams of a fantastic electronic future. There are still people willing to pump money into Tesla because they can almost feel the dream within reach. You would never know when the dream will pop. Your small bet would be blown as a leaf in hurricane gale force essentially in a random direction.

I would not touch Tesla, either long or short.
Sure but you could also say there are a couple of factors that could pop tsla in the next 6-18 months even if the company is a sucess
A) hostile political climate. Rollback incentives and other credits
B) inability to execute. Those model 3s aren't exactly rolling off the production line
C) real competition. Will people pay for 90skiaa qualitity when you can buy a car from a tradition maker. Obviously this assumes Audi, BMW, jag, mb make their deadlines also

The outcome is definitely out of your control

gsmith
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Re: How to short TSLA?

Post by gsmith » Wed Feb 07, 2018 10:31 pm

Seeing option trading advice on Bogleheads is like watching the leaders of a temperance movement take shots of whiskey.
You want to see if they can hold their liquor and if so straying from "staying the course" more then they'd admit.

Both shorting stocks and options are forms of leverage; the financial equivalent of steroids.
You can make very large profits short term at the expense of the long term.

With shorting stocks, you are borrowing shares and then selling them, essentially owning negative shares.
By buying put options, you are buying an "insurance policy", a security that will expire worthless at the expiration date unless the underlying stock is priced below the strike price of your option. There are complicated instruments with theoretical models written by physicists modeling water.

I would also point out that people who have collectively short TSLA, have lost $1 BILLION in 2018*
To quote Lord Keynes, markets can remain irrational far longer then you can remain solvent.

(Disclaimer: I own some TSLA, but I would be ranting about the risks if you chose any other company)
* https://cleantechnica.com/2018/02/01/te ... lion-2018/

NibbanaBanana
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Re: How to short TSLA?

Post by NibbanaBanana » Wed Feb 07, 2018 10:32 pm

Vanguard has a tutorial on options on their website. Start here. https://investor.vanguard.com/investing ... on-trading

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whodidntante
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Re: How to short TSLA?

Post by whodidntante » Wed Feb 07, 2018 10:37 pm

The exact interface depends on the broker, but most brokers have something to the effect of "sell short" as an action. If you don't see it, it could be because you don't have a margin account. This is what it looks like at Fidelity.

Image

What that would actually do is borrow the shares, and sell them. You have to repay the shares in order to close the short position, regardless of what that might actually cost you. If you lose enough to trigger a margin call, the broker might forcibly close your position.

freebeer
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Re: How to short TSLA?

Post by freebeer » Wed Feb 07, 2018 10:46 pm

Wrong forum

Topic Author
JC565
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Re: How to short TSLA?

Post by JC565 » Wed Feb 07, 2018 10:49 pm

Yes i Do not have a margin account. Just a simple vanguard brokerage. I do have a forex account that gives me access to margin, but for forex only. (Forex is where i got what knowledge i do have of shorting)

Im going to take the next couple of days to study on this. And i appreciate all of your input...


Switching gears here. In regards to tsla.. if anyone cares to discuss the merits of my prospective trade. They Just lost 635 million IN 3 MONTHS and the shares are up 3%. Sorry...But the cows have to come home sometime. I see NO value in tesla. No battery tech, no serious mass production, a hopes and dreams heavy truck prototype, and almost But not quite there autopilot. i truly believe the market wont tolerate musk much longer. If gm or anyone else beats tesla to the punch on level 5 autonomy, its game over. Seeing as how tsla doesnt even seem to care about LIDAR, this is a strong possibility. On top of all that...How Much cash Do they have on hand? Its getting slim.

I do think i need to play the long game here however. I agree with lord keynes 100%. But $ talks and bs walks. Always has always will.

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Re: How to short TSLA?

Post by drk » Wed Feb 07, 2018 10:53 pm

While you could short it or buy puts, I'll propose another way: buy an S&P 500 or value fund. If you expect Tesla to underperform the market, you can safely short it by avoiding it.

For what it's worth, I agree with your take on Tesla. As the old saying goes, though, the market can remain irrational longer than you can remain solvent.

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eye.surgeon
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Re: How to short TSLA?

Post by eye.surgeon » Wed Feb 07, 2018 11:00 pm

More money has been lost shorting Tesla in the last few years than the GDP of several small countries. If you have to ask how to short Tesla, you have no business shorting Tesla.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett

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whodidntante
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Re: How to short TSLA?

Post by whodidntante » Wed Feb 07, 2018 11:22 pm

JC565 wrote:
Wed Feb 07, 2018 10:49 pm
In regards to tsla.. if anyone cares to discuss the merits of my prospective trade.
Well it's the "hot stock." Something could happen to make it fall out of favor, and then the stock comes crashing down to Mars (wakka wakka). But I think the main threat is they just aren't very good at making cars. Tesla is good at marketing, generating hype, and accessing capital markets.

That's fine when there is no real competition, but Daddy GM and Uncle Ford appear to be salivating, and those companies both know how to make cars. How that ends is anyone's guess. It's not a crazy bet that it would end badly for Tesla's stock, but regardless of the outcome, realize it was just a bet. Do not confuse strategy with outcomes, and do not play results.

You probably won't be able to ride TSLA to zero, if that is the result. When everybody catches on that there is blood in the water, short interest shoots up, and the stock becomes "hard to borrow" and shorting costs go up dramatically. Some stocks can't realistically be borrowed, unless you are a hedge fund manager and work out a side arrangement with your golf buddy who runs a fund at Goldman or something. For example, I would short Sears right now if I could borrow the shares inexpensively, but I can't. It turns out a few others have the same idea.

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JC565
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Re: How to short TSLA?

Post by JC565 » Wed Feb 07, 2018 11:37 pm

eye.surgeon wrote:
Wed Feb 07, 2018 11:00 pm
More money has been lost shorting Tesla in the last few years than the GDP of several small countries. If you have to ask how to short Tesla, you have no business shorting Tesla.
I love these types of replies.... reminds me of that line in that movie "wall street wants you to think only they can do what they do" or something like that.

[OT comments removed by admin LadyGeek]

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JC565
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Re: How to short TSLA?

Post by JC565 » Wed Feb 07, 2018 11:42 pm

whodidntante wrote:
Wed Feb 07, 2018 11:22 pm
JC565 wrote:
Wed Feb 07, 2018 10:49 pm
In regards to tsla.. if anyone cares to discuss the merits of my prospective trade.
Well it's the "hot stock." Something could happen to make it fall out of favor, and then the stock comes crashing down to Mars (wakka wakka). But I think the main threat is they just aren't very good at making cars. Tesla is good at marketing, generating hype, and accessing capital markets.

That's fine when there is no real competition, but Daddy GM and Uncle Ford appear to be salivating, and those companies both know how to make cars. How that ends is anyone's guess. It's not a crazy bet that it would end badly for Tesla's stock, but regardless of the outcome, realize it was just a bet. Do not confuse strategy with outcomes, and do not play results.

You probably won't be able to ride TSLA to zero, if that is the result. When everybody catches on that there is blood in the water, short interest shoots up, and the stock becomes "hard to borrow" and shorting costs go up dramatically. Some stocks can't realistically be borrowed, unless you are a hedge fund manager and work out a side arrangement with your golf buddy who runs a fund at Goldman or something. For example, I would short Sears right now if I could borrow the shares inexpensively, but I can't. It turns out a few others have the same idea.
I think tesla is going to end up merging the auto side of the
Business . Battery production and renewables will probably stay around as "tesla" though. I do understand the "hot stock" mentality, but the disparity between reality and the "prop" is getting bigger every day. I honestly wonder how many ira's and 401k's are on autopilot giving support.

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Nate79
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Re: How to short TSLA?

Post by Nate79 » Wed Feb 07, 2018 11:59 pm

JC565 wrote:
Wed Feb 07, 2018 10:49 pm
Yes i Do not have a margin account. Just a simple vanguard brokerage. I do have a forex account that gives me access to margin, but for forex only. (Forex is where i got what knowledge i do have of shorting)

Im going to take the next couple of days to study on this. And i appreciate all of your input...


Switching gears here. In regards to tsla.. if anyone cares to discuss the merits of my prospective trade. They Just lost 635 million IN 3 MONTHS and the shares are up 3%. Sorry...But the cows have to come home sometime. I see NO value in tesla. No battery tech, no serious mass production, a hopes and dreams heavy truck prototype, and almost But not quite there autopilot. i truly believe the market wont tolerate musk much longer. If gm or anyone else beats tesla to the punch on level 5 autonomy, its game over. Seeing as how tsla doesnt even seem to care about LIDAR, this is a strong possibility. On top of all that...How Much cash Do they have on hand? Its getting slim.

I do think i need to play the long game here however. I agree with lord keynes 100%. But $ talks and bs walks. Always has always will.
But they sold 1500 Model 3's! Doesn't that count for something? Clearly they have mastered mass production and next quarter will be ramping like crazy. Or was that next next quarter...... LOL.

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JC565
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Re: How to short TSLA?

Post by JC565 » Thu Feb 08, 2018 12:19 am

I bet 1500 doesn't even pay for tooling.

John Doe 123
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Re: How to short TSLA?

Post by John Doe 123 » Thu Feb 08, 2018 12:28 am

JC565 wrote:
Wed Feb 07, 2018 11:37 pm
eye.surgeon wrote:
Wed Feb 07, 2018 11:00 pm
More money has been lost shorting Tesla in the last few years than the GDP of several small countries. If you have to ask how to short Tesla, you have no business shorting Tesla.
I love these types of replies.... reminds me of that line in that movie "wall street wants you to think only they can do what they do" or something like that.

[OT comments removed by admin LadyGeek]
JC, respectfully, shorting is dangerous stuff. You have unlimited downside exposure with a short position. While this advice could have been presented more courteously, it is relevant. Short selling is a very risky move. Warren Buffett says never invest in something that you don’t understand. That’s good advice.

Best of luck.

gostars
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Re: How to short TSLA?

Post by gostars » Thu Feb 08, 2018 12:52 am

JC565 wrote:
Wed Feb 07, 2018 11:37 pm
eye.surgeon wrote:
Wed Feb 07, 2018 11:00 pm
More money has been lost shorting Tesla in the last few years than the GDP of several small countries. If you have to ask how to short Tesla, you have no business shorting Tesla.
I love these types of replies.... reminds me of that line in that movie "wall street wants you to think only they can do what they do" or something like that.

[OT comments removed by admin LadyGeek]
Did you see the part at the top of the page where it says "Investing Advice Inspired by John Bogle"? You're in a forum full of people whose basic investing tenets include "never bear too much or too little risk" and "never try to time the market" and you're asking how to take infinite risk by predicting that the market will respond in a particular timeframe. Respectfully, consider your audience.

Strummer
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Re: How to short TSLA?

Post by Strummer » Thu Feb 08, 2018 1:14 am

John Doe 123 wrote:
Thu Feb 08, 2018 12:28 am

JC, respectfully, shorting is dangerous stuff. You have unlimited downside exposure with a short position. While this advice could have been presented more courteously, it is relevant. Short selling is a very risky move. Warren Buffett says never invest in something that you don’t understand. That’s good advice.

Best of luck.
To expand the scope of the Buffett quote, I wonder what percent of Tesla shorts have actually ever driven a Tesla. Anyone who hasn't will be unable to evaluate the company's prospects accurately.

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Pajamas
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Re: How to short TSLA?

Post by Pajamas » Thu Feb 08, 2018 1:15 am

If you short Tesla, that ultimately means that you think you are smarter than Elon Musk, the guy who just launched one of his cars in one of his rockets to Mars. Yeah, the rocket missed the target, but still. He just pre-sold $10 million worth of $500 flamethrowers and that makes up for it. Tesla stock has done very well in the past and I don't see anything in the near future to change that.

I would take a long look in the mirror and decide which one of you is smarter and more likely to come out ahead. I know what I would conclude if it were me, but maybe you will come to a different conclusion.

If you do decide to short it, at least have some targets for where you will close your position, on both the upside and downside. If you don't have targets, then you haven't really thought it through.

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JC565
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Re: How to short TSLA?

Post by JC565 » Thu Feb 08, 2018 7:52 am

That's The basic tenant abount musk that drives these share prices. Musk DID NOT put falcon heavy into space. SPACE X Did. Thousands of engineers did. In fact i Dont Think ive ever once heard musk actually give anyone credit for anything. I cant stand the guy. And i have driven a tesla. I owned a model s for about 8 months. The Thing had more squeaks and rattles than my 04 suburban. And even my older bmw. And bmw is known for rattles. As another poster said, They just arent that good at building cars. I didnt like the s very much at all besides the auto steer and adaptive cruise. Btw, sold it to one of these musk culters for a profit. He immediately put a vanity plate on it. :mrgreen:

I get the opinion of the forum not to take excess risk and not to invest in something you dnt understand. But That's kinda The point of this thread.. Risk is relative to your posistion in life. I'm In My early 30s with a comfortable salary, a fair amount invested, and with some play cash On the side. If You Choose to take a vacation and i choose to short tesla, whats the difference. Based On that scenario I'm taking LESS risk than you. You'll blow 5k on your vacation garunteed with nothing but photos and memories to show for it. I might actually make some money. Sure. Might lose some too But Thats what stop losses are for. And the input from the board to limit risk with options is very good advice.

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Pajamas
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Re: How to short TSLA?

Post by Pajamas » Thu Feb 08, 2018 9:12 am

JC565 wrote:
Thu Feb 08, 2018 7:52 am
That's The basic tenant abount musk that drives these share prices. Musk DID NOT put falcon heavy into space. SPACE X Did. Thousands of engineers did. In fact i Dont Think ive ever once heard musk actually give anyone credit for anything. I cant stand the guy. And i have driven a tesla. I owned a model s for about 8 months. The Thing had more squeaks and rattles than my 04 suburban. And even my older bmw. And bmw is known for rattles. As another poster said, They just arent that good at building cars. I didnt like the s very much at all besides the auto steer and adaptive cruise. Btw, sold it to one of these musk culters for a profit. He immediately put a vanity plate on it. :mrgreen:

I get the opinion of the forum not to take excess risk and not to invest in something you dnt understand. But That's kinda The point of this thread.. Risk is relative to your posistion in life. I'm In My early 30s with a comfortable salary, a fair amount invested, and with some play cash On the side. If You Choose to take a vacation and i choose to short tesla, whats the difference. Based On that scenario I'm taking LESS risk than you. You'll blow 5k on your vacation garunteed with nothing but photos and memories to show for it. I might actually make some money. Sure. Might lose some too But Thats what stop losses are for. And the input from the board to limit risk with options is very good advice.
I don't think you have the temperament and knowledge to successfully speculate. Read some books on the psychology involved as well as the mechanics of it. Probably won't make you successful at it but it will at least give you a chance.

John Doe 123
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Re: How to short TSLA?

Post by John Doe 123 » Thu Feb 08, 2018 9:36 am

JC565 wrote:
Thu Feb 08, 2018 7:52 am
That's The basic tenant abount musk that drives these share prices. Musk DID NOT put falcon heavy into space. SPACE X Did. Thousands of engineers did. In fact i Dont Think ive ever once heard musk actually give anyone credit for anything. I cant stand the guy. And i have driven a tesla. I owned a model s for about 8 months. The Thing had more squeaks and rattles than my 04 suburban. And even my older bmw. And bmw is known for rattles. As another poster said, They just arent that good at building cars. I didnt like the s very much at all besides the auto steer and adaptive cruise. Btw, sold it to one of these musk culters for a profit. He immediately put a vanity plate on it. :mrgreen:

[OT comments removed by admin LadyGeek]
“I am young and wealthy. I can afford to burn money.”

If that is the case, then best of luck to you. I suspect that is precisely the outcome you’ll experience.

[Response to OT comments removed by admin LadyGeek]

Your responses clearly indicate a lack of understanding of options and short selling. I humbly suggest that you take the time to fully understand these sophisticated investment vehicles before dabbling around in them. But if you don’t, then perhaps you’ll at least learn some humility. The markets are a good teacher of that.

jdb
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Re: How to short TSLA?

Post by jdb » Thu Feb 08, 2018 9:58 am

Pajamas wrote:
Thu Feb 08, 2018 1:15 am
If you short Tesla, that ultimately means that you think you are smarter than Elon Musk, the guy who just launched one of his cars in one of his rockets to Mars. Yeah, the rocket missed the target, but still. He just pre-sold $10 million worth of $500 flamethrowers and that makes up for it. Tesla stock has done very well in the past and I don't see anything in the near future to change that.

I would take a long look in the mirror and decide which one of you is smarter and more likely to come out ahead. I know what I would conclude if it were me, but maybe you will come to a different conclusion.

If you do decide to short it, at least have some targets for where you will close your position, on both the upside and downside. If you don't have targets, then you haven't really thought it through.
OK, you caught me there. I bet am only person on this site who ordered a flamethrower. Goes with The Boring Company hat which makes my golf buddies laugh. But don’t tell my wife. But has been such a fun ride following Elon past 6 years, enjoy the Model S and Model X both paid for with TSLA gains and enough gains left to more than pay for the two Model 3 will be buying for adult sons plus the pickup truck probably in few years. Waiting for 4 wheel drive versions of Model 3. Just put down $1K deposit with Tesla to be first in my neighborhood with their solar roof. And of course have no idea where stock may end up and since my basis so low not concerned but know for sure a not insignificant portion of gains past 6 years due to short sellers having to face margin calls. Anyway, still trying to figure out what to do with flamethrower when does arrive.

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Pajamas
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Re: How to short TSLA?

Post by Pajamas » Thu Feb 08, 2018 10:01 am

jdb wrote:
Thu Feb 08, 2018 9:58 am

OK, you caught me there. I bet am only person on this site who ordered a flamethrower. Goes with The Boring Company hat which makes my golf buddies laugh. But don’t tell my wife. But has been such a fun ride following Elon past 6 years, enjoy the Model S and Model X both paid for with TSLA gains and enough gains left to more than pay for the two Model 3 will be buying for adult sons plus the pickup truck probably in few years. Waiting for 4 wheel drive versions of Model 3. Just put down $1K deposit with Tesla to be first in my neighborhood with their solar roof. And of course have no idea where stock may end up and since my basis so low not concerned but know for sure a not insignificant portion of gains past 6 years due to short sellers having to face margin calls. Anyway, still trying to figure out what to do with flamethrower when does arrive.
Honestly, I actually considered ordering one myself. :P

jdb
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Re: How to short TSLA?

Post by jdb » Thu Feb 08, 2018 10:10 am

Good to know that I am not the only one on this site with questionable judgment. :happy But do have concerns as to how to introduce the flamethrower to my wife when arrives in a few months. All my friends sworn to secrecy.

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Re: How to short TSLA?

Post by yukonjack » Thu Feb 08, 2018 10:10 am

Reading an original post like this one makes me appreciate Boglehead advice even more and thankful that such schemes aren’t promoted on this website. It doesn’t take much foresight to see this scenario ending badly but of course there is always blind luck that might see this through to a successful ending.

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Re: How to short TSLA?

Post by DanMahowny » Thu Feb 08, 2018 10:19 am

Shorting TSLA is an excellent idea. People will eventually realize that Musk is a snake oil salesman.

The mechanics of shorting a stock are pretty simple. I did it for the first time without any assistance.
Funding secured

jdb
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Re: How to short TSLA?

Post by jdb » Thu Feb 08, 2018 10:56 am

yukonjack wrote:
Thu Feb 08, 2018 10:10 am
Reading an original post like this one makes me appreciate Boglehead advice even more and thankful that such schemes aren’t promoted on this website. It doesn’t take much foresight to see this scenario ending badly but of course there is always blind luck that might see this through to a successful ending.
Not quite blind luck but maybe similar Was in 2012 when we first received the Model S. We were very impressed with vehicle. My wife said that reminded her of when we bought our first Apple computer in late 1980’s. We should have taken equal amount and invested in their stock. I took her advice, stock then less than $60. In ensuing years sold enough to pay for vehicles with after tax gain and bought more on dips, last at $150. Not advising purchase of stock. But think not wise to short the company. And vast majority of my equity investments in Vanguard index funds. But sometimes a blind squirrel does find an acorn.

TIAX
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Re: How to short TSLA?

Post by TIAX » Thu Feb 08, 2018 10:57 am

DanMahowny wrote:
Thu Feb 08, 2018 10:19 am
Shorting TSLA is an excellent idea. People will eventually realize that Musk is a snake oil salesman.

The mechanics of shorting a stock are pretty simple. I did it for the first time without any assistance.
Describe in detail what you shorted, when, how much, and how well you did.

TravelforFun
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Re: How to short TSLA?

Post by TravelforFun » Thu Feb 08, 2018 11:48 am

Why do you think TSLA will go down and when?

TravelforFun

Strummer
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Re: How to short TSLA?

Post by Strummer » Thu Feb 08, 2018 12:21 pm

DanMahowny wrote:
Thu Feb 08, 2018 10:19 am
Shorting TSLA is an excellent idea. People will eventually realize that Musk is a snake oil salesman.

The mechanics of shorting a stock are pretty simple. I did it for the first time without any assistance.
Some of his snake oil is currently en route to an interplanetary orbit encompassing Mars and the Sun, carrying a payload of his other snake oil that goes from zero to 60 in under four seconds when it's on Earth. (That's the original Roadster, by the way — new one does 0-60 in 1.9 seconds.)

Pretty impressive performance for a placebo.

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Re: How to short TSLA?

Post by Da5id » Thu Feb 08, 2018 12:34 pm

Believing Tesla is overhyped/overpriced and due for a fall is quite reasonable. But not, IMHO, something worth investing in by shorting (short is terrible idea for you, with potential for unlimited loss) or buying put options (less bad idea, still bad).

If you are tempted to buy put options, um, you need to get specific. How long until the option expires? What is your strike price? When selecting those, other than a feeling that Tesla is overpriced, how much do you really know with confidence? And are you sure that Tesla's future will not just be slower price growth rather than tanking in a time frame that makes you money? And also note that, unless you are an insider, you probably don't have any unique insights about Tesla and its business prospects...

I get it that doing things like this is exciting. Like playing the lottery and hoping to hit it big. But you are probably in the wrong place to post about it, as most bogleheads endorse a slow and steady approach rather than gambling.

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DanMahowny
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Re: How to short TSLA?

Post by DanMahowny » Thu Feb 08, 2018 12:49 pm

MuskLiesMatter
BalanceSheetsMatter
IncomeStatementsMatter
ValuationsMatter

Short the stock, be patient, you'll be rewarded nicely. Just be prepared for the backlash if you mention it later- some people around here get angry at anyone that's not a full fledged TSLA cheerleader.
Funding secured

Da5id
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Re: How to short TSLA?

Post by Da5id » Thu Feb 08, 2018 12:55 pm

DanMahowny wrote:
Thu Feb 08, 2018 12:49 pm
Short the stock, be patient, you'll be rewarded nicely. Just be prepared for the backlash if you mention it later- some people around here get angry at anyone that's not a full fledged TSLA cheerleader.
Cite me "some" TSLA cheerleaders in Bogleheads? The stock, not the car.

For me, the bigger risk of shorting a stock is succeeding. Because the lesson you learn will be that your hunches are worth investing in, and it make take some time to unlearn that. At least if you are picking stocks to go long on the general trend in stocks over the long haul (upwards) is on your side...

Njm8845
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Re: How to short TSLA?

Post by Njm8845 » Thu Feb 08, 2018 1:21 pm

JC565 wrote:
Thu Feb 08, 2018 7:52 am
That's The basic tenant abount musk that drives these share prices. Musk DID NOT put falcon heavy into space. SPACE X Did. Thousands of engineers did. In fact i Dont Think ive ever once heard musk actually give anyone credit for anything. I cant stand the guy. And i have driven a tesla. I owned a model s for about 8 months. The Thing had more squeaks and rattles than my 04 suburban. And even my older bmw. And bmw is known for rattles. As another poster said, They just arent that good at building cars. I didnt like the s very much at all besides the auto steer and adaptive cruise. Btw, sold it to one of these musk culters for a profit. He immediately put a vanity plate on it. :mrgreen:

I get the opinion of the forum not to take excess risk and not to invest in something you dnt understand. But That's kinda The point of this thread.. Risk is relative to your posistion in life. I'm In My early 30s with a comfortable salary, a fair amount invested, and with some play cash On the side. If You Choose to take a vacation and i choose to short tesla, whats the difference. Based On that scenario I'm taking LESS risk than you. You'll blow 5k on your vacation garunteed with nothing but photos and memories to show for it. I might actually make some money. Sure. Might lose some too But Thats what stop losses are for. And the input from the board to limit risk with options is very good advice.
Someone can blow $5k on a vacation (studies have shown that experiences are one of things that appreciate in value the greatest over time). You may lose a lot more than that with shorting a stock. As others have said, you should buy put options.

I dabbled in options for awhile because I thought it was fun. I made 20%. But I ONLY BOUGHT PUTS and it took a lot of time.

I would very often lose money. And then every once in awhile I'd hit one out of the park.

Options are difficult to consistently make money on, because not only are you guessing the direction of the stock, but you're also guessing the timing of the move. They're expensive.

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HomerJ
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Re: How to short TSLA?

Post by HomerJ » Thu Feb 08, 2018 1:27 pm

JC565 wrote:
Wed Feb 07, 2018 10:49 pm
They Just lost 635 million IN 3 MONTHS and the shares are up 3%.
What other car company has one of their cars IN SPACE!!!

:oops:

I agree Tesla seems to be a poor BUSINESS (at least at this time), but people love it. So I wouldn't bet against people being crazy. Because people are crazy.
Last edited by HomerJ on Thu Feb 08, 2018 1:40 pm, edited 1 time in total.

totesmagotes
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Re: How to short TSLA?

Post by totesmagotes » Thu Feb 08, 2018 1:33 pm

JC565 wrote:
Wed Feb 07, 2018 10:49 pm
Yes i Do not have a margin account. Just a simple vanguard brokerage. I do have a forex account that gives me access to margin, but for forex only. (Forex is where i got what knowledge i do have of shorting)

Im going to take the next couple of days to study on this. And i appreciate all of your input...


Switching gears here. In regards to tsla.. if anyone cares to discuss the merits of my prospective trade. They Just lost 635 million IN 3 MONTHS and the shares are up 3%. Sorry...But the cows have to come home sometime. I see NO value in tesla. No battery tech, no serious mass production, a hopes and dreams heavy truck prototype, and almost But not quite there autopilot. i truly believe the market wont tolerate musk much longer. If gm or anyone else beats tesla to the punch on level 5 autonomy, its game over. Seeing as how tsla doesnt even seem to care about LIDAR, this is a strong possibility. On top of all that...How Much cash Do they have on hand? Its getting slim.

I do think i need to play the long game here however. I agree with lord keynes 100%. But $ talks and bs walks. Always has always will.
From a Bogleheads perspective, I pose these questions:

1. What makes you think you know something that thousands of extremely smart, extremely well paid research staff at extremely well-resourced investment firms (e.g., GS) do not know? Although the market isn't 100% efficient, it is usually pretty good at pricing in all publicly available information.
2. When do you plan to cover your short position? If you jump into a risky trade, you must have a plan for jumping out of it. Market timing is extraordinarily difficult -- if it were easy, then todays prices would already reflect tomorrow's sentiment. To some extent, it does, granted, but picking an individual stock means that you need to anticipate what people will be willing to buy it in the future. Those same people are also doing the math to figure out what others will want to buy it for in the future.

alex_686
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Re: How to short TSLA?

Post by alex_686 » Thu Feb 08, 2018 1:35 pm

JC565 wrote:
Wed Feb 07, 2018 11:37 pm
eye.surgeon wrote:
Wed Feb 07, 2018 11:00 pm
More money has been lost shorting Tesla in the last few years than the GDP of several small countries. If you have to ask how to short Tesla, you have no business shorting Tesla.
I love these types of replies.... reminds me of that line in that movie "wall street wants you to think only they can do what they do" or something like that.

[OT comments removed by admin LadyGeek]
On the other side I used to be on the margin desk of a brokerage firm during the dot.com bubble and crash. I saw people take short positions against bubble dot.com stocks, get crushed, and lose it all. Then the dot.com stocks crashed. The market can remain irrational longer than you can remain liquid.

I am not a fan of shorting except for discipline investors. Figure out what your maximum loss will be and define your exit plan ahead of time. I might also lean towards buying long puts as that is another way to limit your losses.
Last edited by alex_686 on Thu Feb 08, 2018 1:38 pm, edited 1 time in total.

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HomerJ
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Re: How to short TSLA?

Post by HomerJ » Thu Feb 08, 2018 1:36 pm

JC565 wrote:
Wed Feb 07, 2018 11:37 pm
Fyi. My Very First stock was siri @ $0.12. I sold at over $4. I'm Not a genius, certainly not the best trader ever.
You don't think you're a genius, but you do think you're decent at trading because you got lucky your first time.

We're not belittling you. We've all been where you are. After you lose money (hopefully not a lot), you'll finally realize that trading individual stocks is hard.

But I know... you need to burn your hand on the stove before you'll believe us.

Good luck to you.

acanthurus
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Re: How to short TSLA?

Post by acanthurus » Thu Feb 08, 2018 2:03 pm

As others have discussed, selling short outright is quite dangerous. Options are usually the safer bet, but there's a wrinkle with TSLA. It's trading at $327 or so and it's very volatile. This makes a single contract quite a bit of money to play around with - you aren't shorting a share or ten, you dealing with integer multiples of 100 shares for options contracts.

An at the money put contract with a strike of $330 expiring Jan 19 is $53.40 per share. A single contract is 100 shares, so that's $5,340 minimum to short via puts for an at the money contract. You would need the stock to drop below $277 by January of next year to make money.

A safer in the money put contract with a strike of $500 expiring Jan 19 is $181. A single contract is still 100 shares, so you're tying up $18,100 in capital. You would need the stock to drop below $319 in order to make money.

If Tesla goes up in value, the at the money put will be completely worthless by expiration. The in the money put has a good chance of retaining some value (unless Tesla blows past $500 share). So if TSLA goes to $400, the at the money put loses ALL of its value for a -100% return, while the in the money put that you paid $181 for still has $100 of value for a return of -45%. But in dollar terms, that's a $5340 loss vs. an $8100 loss.

On the flip side let's say TSLA goes to $200/share by next January. The $330 put is worth $130, and the $500 put is worth $300. The returns are roughly 130/53.40 = 243% and 300/181 = 165%. The in the money put is inherently less leveraged, so you get a lower return, but has a better chance of not expiring worthless.

Long story short, if you aren't comfortable with burning between $5k and $20K to see if you are correct in the next year, probably don't do this. There are lots of bad companies where you can play around with shorting their stocks via options for MUCH less capital risk. I got most of this out of my system about a year ago, with overnight trades of +60% and -80% happening during earnings seasons on small tech stocks trading around $10/share and never tying up more than $250 per trade. In the end I lost about $100, but it was fun and educational.

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munemaker
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Re: How to short TSLA?

Post by munemaker » Thu Feb 08, 2018 2:04 pm

DanMahowny wrote:
Thu Feb 08, 2018 10:19 am

The mechanics of shorting a stock are pretty simple. I did it for the first time without any assistance.
The mechanics are simple, but make sure you fully understand the risk.

When you own a stock, it can only fall to zero. When you short a stock, there is no upper limit to how high the price can go, and thus what you eventually will need to pay to replace it. Your loss potential is unlimited. This can be dangerous.

Locked