Rolled up my 710/640 to 770/700, both for this Friday for a ~$1.2 credit. Not sure the credit was worth it, but the plan is to close half the exposure pre-earnings.
So thinking of Elon's sales to fund his taxes, I see there are 3 different options for him:
1. Sell all that's needed to fund his taxes.
2. Borrow all that is needed
3. A mix of 1 & 2 above
Of course Elons motivation would be to maximize his ownership stake in Tesla, while not getting overly leveraged. The precedent has been for him to take the #1 path, but at those points Tesla was a much riskier security. Also, #1 would mean a sale of ~12 million + shares, more than any offering Tesla has ever done, at least in $ terms.
I think #2 is very unlikely, purely from a leverage perspective. I see <10% chance of this happening.
I think #3 is the most likely approach, with him borrowing may be half and kicking the margin loan can down the road to next year, where he can pay it back with hopefully appreciated shares.
I think the most interesting part of all of this is a reflexive phenomenon, to borrow from Soros. If Elon sells only half of whats needed, that is a very clear message that he thinks there is further upside and it would perhaps let him sell the rest at higher prices next year. If I was gaming / brainstorming this with Elon, this would be my advice. Of course Teslarati made a valid point that there are too many irons in the fire for him and Elon needs no added stress from leverage, but keep in mind that Tesla's leverage has gone down substantially with the cash handily exceeding liabilities. Some of this can easily transform into a bit of leverage on Elon's personal balance sheet, without much of an issue.
Obviously this has implications for the post earnings trading, the reaction to news, and the best approach for options positioning.
So thinking of Elon's sales to fund his taxes, I see there are 3 different options for him:
1. Sell all that's needed to fund his taxes.
2. Borrow all that is needed
3. A mix of 1 & 2 above
Of course Elons motivation would be to maximize his ownership stake in Tesla, while not getting overly leveraged. The precedent has been for him to take the #1 path, but at those points Tesla was a much riskier security. Also, #1 would mean a sale of ~12 million + shares, more than any offering Tesla has ever done, at least in $ terms.
I think #2 is very unlikely, purely from a leverage perspective. I see <10% chance of this happening.
I think #3 is the most likely approach, with him borrowing may be half and kicking the margin loan can down the road to next year, where he can pay it back with hopefully appreciated shares.
I think the most interesting part of all of this is a reflexive phenomenon, to borrow from Soros. If Elon sells only half of whats needed, that is a very clear message that he thinks there is further upside and it would perhaps let him sell the rest at higher prices next year. If I was gaming / brainstorming this with Elon, this would be my advice. Of course Teslarati made a valid point that there are too many irons in the fire for him and Elon needs no added stress from leverage, but keep in mind that Tesla's leverage has gone down substantially with the cash handily exceeding liabilities. Some of this can easily transform into a bit of leverage on Elon's personal balance sheet, without much of an issue.
Obviously this has implications for the post earnings trading, the reaction to news, and the best approach for options positioning.