Wiki Selling TSLA Options - Be the House

[mongo]

That last paragraph doesnt mean those shares are unissued. It means those shares were issued only for the purposes of the plan. In other words: they had to issue brand new shares for the plan, as opposed to, says leftover shares from a secondary offering.

The fully diluted share count includes all shares that could be held by people if all the vested compensation plans were exercised (worst case $/share). The float is only shares that currently exist. The fully diluted number needs to be less than the authorized (max) share count which was recently increased to adjust for the planned 3 for 1 split.

The plan required sufficient unallocated/ unissued shares to be available (reserved). As they vest they are added to fully diluted. As they are exercised they are issued and added to the basic count.

Invalidating the 2018 reduces the fully diluted number and increases the number of non-allocated/ not issued shares.

 

[DaBooster]

Dare we play with fire?
Yesterday I sold a bunch of 6-14 185 cc's for $3.50
buy 'em back on a MMD or let'er ride ?

 

[tivoboy]

Thats the thing. She said his vested options are already included in the float, but what is the law saying he and Tesla should do with those if ultimately the previous plan has to be undone? Is he just going to leave them expired and Tesla can take ownership, which will lead to the recognition of extraordinary gain that can offset most of the cost of issuing new options? Something doesnt add up here. Shes saying its going to cost $25b but what is going to happen to that 10% of float? If Elon is giving it up, someone has to benefit from it.
@The Accountant can you lend us your wisdom?

This was a bit nebulous as much as she was ready to discuss it… but my take away was that if DID cost something in the past, maybe it was the 2.6B, and if passed it WILL cost something more in the future - but not now, and not at option transfer.. I think when the options convert to stock then there IS some additional component of exercise or employe based compensation that is going to have a COST to Tesla.

 

[tivoboy]

Very helpful, thanks!

Worth a read...

Note sure about this though "Over $730 billion of value creation"

I think the interview was cut short before she could say “oh, well of course before the 600B of value destruction”

 

[Jim Holder]

The fully diluted share count includes all shares that could be held by people if all the vested compensation plans were exercised (worst case $/share). The float is only shares that currently exist. The fully diluted number needs to be less than the authorized (max) share count which was recently increased to adjust for the planned 3 for 1 split.

The plan required sufficient unallocated/ unissued shares to be available (reserved). As they vest they are added to fully diluted. As they are exercised they are issued and added to the basic count.

Invalidating the 2018 reduces the fully diluted number and increases the number of non-allocated/ not issued shares.

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I've read somewhere that a cornerstone of the court's position is that cancelling the comp plan is beneficial to TSLA shareholders. If this is correct, it contradicts what the Tesla BOD is saying that a new comp pkg would cost 10x more. Can you help make sense of it?

 

[Jim Holder]

TSLA diamond bottom reversal pattern detected. Looks like will make a drop to $157/160 then bounce back up and keep moving. This should be the reversal that officially puts TESLA back into an uptrend on the daily.

(Credit: Rip)

 

[MP3Mike]

I've read somewhere that a cornerstone of the court's position is that cancelling the comp plan is beneficial to TSLA shareholders. If this is correct, it contradicts what the Tesla BOD is saying that a new comp pkg would cost 10x more. Can you help make sense of it?

Because the court doesn't know if there would be a replacement plan, and if there is, what that plan would be and what it would cost.

 

[Jim Holder]

Because the court doesn't know if there would be a replacement plan, and if there is, what that plan would be and what it would cost.

If true that's quite risky and sloppy of the Court if they're really out to "protect" us shareholders (basis of the whole case).

 

[Patrick66]

If true that's quite risky and sloppy of the Court if they're really out to "protect" us shareholders (basis of the whole case).

Their rationale is that there is no way that more than $6B is justifiable. (Picking a random ceiling.) Looking at 2018-today and projecting to 2028 that seems rational; compensation would not be extreme for pumping bubble.

Both sides of the argument are only partly correct. I only hope that details of a compensation plan limit shareholder harm this time around.

 

[EnzoXYZ]

My 2021 $136k Model S Plaid is worth $56k as trade-in according to Tesla with 17k miles. I got Musked.

2020 we bought a $1500 playset for the kids and now I have to pay $300 to get rid of it. You seem to have the better deal.

 

[BornToFly]

I'm REALLY tempted to sell 207.5CC for next week for 0.3
With the Shareholder meeting on a Thursday, we only have to worry about one day of price action....

 

[BornToFly]

I'm REALLY tempted to sell 207.5CC for next week for 0.3
With the Shareholder meeting on a Thursday, we only have to worry about one day of price action....

I put the order in. So far missed it by 0.01

 

[TexasGator]

BTF - you can always close them on thursday before the meeting. that is my current plan for my -C185s (that i sold way too early at $2)

 

[jeewee3000]

I'm REALLY tempted to sell 207.5CC for next week for 0.3
With the Shareholder meeting on a Thursday, we only have to worry about one day of price action....

Good luck (should the order hit).

I'm not comfortable copying this trade TBH. 16% rise from here seems very possible if a) the vote goes through and b) we get some other good news on the shareholder meeting. (unlikely, but not unheard of)

 

[Jim Holder]

 

[BornToFly]

BTF - you can always close them on thursday before the meeting. that is my current plan for my -C185s (that i sold way too early at $2)

Except that with the extra intrinsic from the meeting, it may not be possible to close for a profit before. We will see....

 

[Jim Holder]

I'm REALLY tempted to sell 207.5CC for next week for 0.3
With the Shareholder meeting on a Thursday, we only have to worry about one day of price action....

Why not wait for higher IV/better premium early next week?

 

[BornToFly]

Good luck (should the order hit).

I'm not comfortable copying this trade TBH. 16% rise from here seems very possible if a) the vote goes through and b) we get some other good news on the shareholder meeting. (unlikely, but not unheard of)

Yeah, I've thought about that. To go ITM it would have to be the highest close since Jan 24th.

 

[mongo]

This was a bit nebulous as much as she was ready to discuss it… but my take away was that if DID cost something in the past, maybe it was the 2.6B, and if passed it WILL cost something more in the future - but not now, and not at option transfer.. I think when the options convert to stock then there IS some additional component of exercise or employe based compensation that is going to have a COST to Tesla.

The additional direct cost to Tesla is payroll taxes on the gross payout (value - basis).
Indirect/ GAAP costs/ dilution are dependent on size of package needed to result in the new payout amount.

I've read somewhere that a cornerstone of the court's position is that cancelling the comp plan is beneficial to TSLA shareholders. If this is correct, it contradicts what the Tesla BOD is saying that a new comp pkg would cost 10x more. Can you help make sense of it?

The issue is a moon shot based compensation plan (12x market cap on ten years) has a lower probability (Black-Scholes) than a plan based on performance that has already occurred (100% occurrence). So the original 2018 plan had a payout of 304 million shares (split adjusted), but only a fraction of that hit the books as a GAAP expense.
Imagine buying 2028 Call options in 2018 when TSLA was ~$12 versus buying them in 2024 when TSLA is at $180. Same sort of thing. Even if payout is less, cost to Tesla/ shareholders may be more.

 

[DaBooster]

Dare we play with fire?
Yesterday I sold a bunch of 6-14 185 cc's for $3.50
buy 'em back on a MMD or let'er ride ?

Bought back for $2.35