(01-11-2020, 11:04 PM)NilesMike Wrote: I wasn't knocking the trade, I just wanted to see the reasons behind the option selection and provoke some thoughts.I knew that Mike. You give me some friction on some of my trades and I thank you for that. I suspect it has something to do with insane TSLA option premiums? It's not a trade I would ever make, but Otter can take it.
Here are the biggest reasons I would not short TSLA right now.
-It's a cult stock with huge momentum so fundamentals do not matter like they do to us. Do they matter some day? Of course, but what year? I learned some shorting lessons shorting AOL. I was right in the end, they were replaced. TSLA was in deep financial trouble in 2019. How long did it stay down before the next launch? Half the small investors don't know what a balance sheet is, and the other half don't seem to care about fundamentals as long as units and sales grow.
-First mover in a growing industry. First by a mile, and EVs aren't going away.
-The China wildcard. China has incentive to reward a US company as others are leaving. They can subsidize if they wish to make sure TSLA does well enough in China. They may or may not do that.
-Did I mention it's a cult stock?
