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If it were that easy, Tesla could do the same. It is not that easy. While you or any other spiv can buy a collar on $10k or even $1m worth of stock for a super
by MagnumOpus 10y ago
If it were that easy, Tesla could do the same. It is not that easy. While you or any other spiv can buy a collar on $10k or even $1m worth of stock for a super short period (1 month, 3 month), it is an entirely different thing to:
- But options for multi-year expiries (because that is how long the disposal will take, after the obligatory lockup)...
- ... in a stock that is 1000x less liquid that your usual AAPL or GOOG...
- ...on a short notice on $325 million worth of stock, i.e. a huge percentage of the free float of the stock, making it impossible to hedge for any bank that offers the collar.
tldr: You are a bit too cocky given your lack of knowledge.
- jonknee 10y agoFWIW, Tesla is a high volume stock and over a billion dollars worth of TSLA shares are traded daily. It's comparably liquid to GOOGL. The full $325m would be about 1.5M shares which would be 15,000 options contracts. Quite a bit, but not too far from the current action in some December strikes (the 50 put has 11,883 open contracts). tl;dr You could quite easily either divest of the stake outright or protect a large portion of it through options.