TSLA Market Action: 2018 Investor Roundtable

[sundaymorning]

He has said at least once in the past he doesn't care about traders. Musk never says anything he doesn't really mean even if it is a joke.

Some traders actually convert the options into shares. I would hope that he considers it. So I have a question for you since this is the first time I’ve been through something like this. I have $250 strike, do you know what will happen to them if the stock is approved for $420? Can anyone help me answer this?

 

[ggr]

This isn't right. You guys are probably screwed if you have options with strike prices over 420. They'll keep some value in case they need to pay more than 420 but you'll lose almost all your money. You're probably not going to have a chance to sell unfortunately.

We were talking about Deep-in-the-Money options. I agree about far out options. I have some of them too. Fortunately I'm pretty conservative, so what I'll lose on them I'll more than make up on the others.

 

[traxila]

I am concerned with the possibility that Musk might face some liability wrt. securities law. Can anyone shed any light on this?

I was thinking the same. I do know that twitter is accepted as a press release nowadays, BUT usually stocks are halted before press releases like that. We will have to see... I hope there are no issues there. Really hope Elon checked this stuff out before posting that.

 

[neroden]

But why...who initiated the halt? SEC..Tesla...who?

Typically it's done by the exchange (NASDAQ)

 

[Mario Kadastik]

For those asking about options. Options are a contract that gives you the right/requirement to buy/sell stock at a certain price. The US options also allow early exercise. This means that options that are with a strike price below 420 can at any time exercise them and get shares assigned that will then be sold when the company goes private. This is by default done by brokers on the day the company is delisted. If you strike price was >420 and the deal goes through, then you were just gambling and your options are worthless.

Basically option price is made up of two parts: in the money real value (i.e. stock at 350 option at 300 strike has 50 of real value) and time value (which is based on volatility and expectation of movement). The latter component is unknown and is the part that moves the most and decays over time. Now if certain price becomes 100% certain the stock jumps there and as there is no uncertainty left the volatile time component becomes 0.

 

[Toolsmack]

What happens to all that money short with this offer? Do they have to buy shares to close positions prior to the conversion to private. If yes I see a squeeze coming

 

[Reality]

To clarify things for people, the stock WILL start trading again, and will trade in the period leading up to the vote. That's how it works. They only halt trading until the company makes its formal announcement about the go-private offer.

There are other reasons stocks are halted....

 

[TradingInvest]

To those saying "I hope this kills the shorts!"

It won't... There will be a lot of people willing to sell us a share at $425.

Elon just capped short losses.

You still don't get it. Big trouble coming to shorts.

 

[KarenRei]

What happens to all that money short with this offer? Do they have to buy shares to close positions prior to the conversion to private. If yes I see a squeeze coming

Autosqueeze

 

[Fact Checking]

I agree it was odd. Don't have any explanation other than "that's weird", though.

Yesterday's price action is obvious in hindsight: probably big player converting shares into leveraged-long short term options.

The drop at the end of the day: knowing what's coming today they probably bought the OTM options at that point as price spiked down.

If true then my post got pretty close I think, I hope you found it useful and maybe it sped up your trading decision today by a few seconds! ;-)

 

[Unpilot]

So I wonder when trading will resume?

 

[Remus]

To those saying "I hope this kills the shorts!"

It won't... There will be a lot of people willing to sell us a share at $425.

Elon just capped short losses.

you are delusional.
brace for impact.

 

[The Blue Owl]

So I wonder when trading will resume?

Once Elon finishes putting the deal together. He's still on the phone!

 

[MXWing]

What about option holders Elon?

We are f*cked. For those above 420 strikes.

We call this a black swan event.

 

[Runarbt]

What happens to all that money short with this offer? Do they have to buy shares to close positions prior to the conversion to private. If yes I see a squeeze coming

I do hope they have to buy back shares on the open market, before tesla goes private?
They wont get them handed to them at $420, and get an easy exit??

If so - even call holders OTM might be able to get their money back.

 

[traxila]

SEC.gov | SEC Says Social Media OK for Company Announcements if Investors Are Alerted

This says twitter OK by the SEC. Who am I to argue?

 

[Causalien]

D

Some traders actually convert the options into shares. I would hope that he considers it. So I have a question for you since this is the first time I’ve been through something like this. I have $250 strike, do you know what will happen to them if the stock is approved for $420? Can anyone help me answer this?

Depends on if your brokerage have auto exercise.

Your ditm call will lose all volatility premium and will have some time premium until the buyout date. It loses all time premium past the buyout date.

So eventually, your ditm option becomes just like shares and it won't matter when you exercise until the buyout date. I'd just wait till buyout and exercise. Or if the short squeeze happens, use that period to sell.

 

[oneday]

To clarify things for people, the stock WILL start trading again, and will trade in the period leading up to the vote. That's how it works. They only halt trading until the company makes its formal announcement about the go-private offer.

Yes and anyone with options WILL be able to exercise.

 

[omarsultan]

Seems like a good sign for Tesla--that Elon feels the company will throw off enough cash to fund future endeavors and not being public would certainly remove a large volume of BS from his life. The special purpose fund give me hope that we can continue to be part of the story.

 

[GBleck]

Anyone know if Charlse Schwab will hold private stock as part of a roth or will I have to roll this to another custodian?