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Why actively trade against a moonshot -- Would you have done the same against NASA for the moon landings...? My understanding is that short positions are not m

by beambot 10y ago

Why actively trade against a moonshot -- Would you have done the same against NASA for the moon landings...? My understanding is that short positions are not merely passive; they can have a detrimental effect (in aggregate) on a company's likelihood of success. Are you really interested in harming the company (even if fairly negligibly for you as an individual) in exchange for some modicum of personal financial gain? Sorry, I just don't get it. Assuming NASA's $18.4B budget is split evenly among 300M Americans... I'm paying ~$60/yr for NASA. I would gladly pay that to TSLA even if it didn't have "good business prospects" as a way to push forward humanity -- that it continues to have financial upside is just a bonus. In this world, we so rarely get a chance to "vote with our dollars" in a meaningful way. The fact that some people have grandeur plans and work tirelessly to progress humanity is amazing; that others just want to naysay and profit off their crashes & burns... it boggles my mind.

ihodes 10y ago
Buying shares of TSLA doesn't put money in TSLA's pocket anymore than buying a PUT on TSLA takes money from their pocket.
- mingmecca 10y ago
  Not directly, but in acquisitions the price of the stock does help in all stock/part stock deals.
cheriot 10y ago
In moderation, short positions help markets function better by discouraging speculative bubbles. How those affects combine for TSLA I won't claim to know. But the popular notion that short positions are inherently harmful is incorrect.
gdudeman 10y ago
Short positions are part of an efficient allocation of capital and efficient pricing. They also effectively bring down the price of this company - so you can buy more if you think it should be higher. Some people think Tesla is a mess. Short sellers help keep bubblicious prices down and, if those people succeed, they'll invest in companies that have a better shot of actually succeeding. Shorting is part of the spectrum: it goes from all of your money in a single stock to none to negative. I think one could argue that by not buying more Tesla stock, you are also not merely passive. You also have a detrimental effect. ;) Sources: http://www.economist.com/blogs/freeexchange/2010/12/financial_markets http://www.economist.com/blogs/freeexchange/2010/12/financia... http://marginalrevolution.com/marginalrevolution/2008/07/in-defense-of-s.html http://marginalrevolution.com/marginalrevolution/2008/07/in-... http://www.npr.org/sections/money/2008/09/in_defense_of_short_selling.html http://www.npr.org/sections/money/2008/09/in_defense_of_shor...
3pt14159 10y ago
Selling short can be harmful for a company, since brokers are allowed to lend up to 100% of a company's shares, effectively doubling available supply which can put downward pressure on cash raises through further raises through the creation of additional stock, but buying put options is just an advanced form of side bets which has almost no negative consequences to the company in question.
- JumpCrisscross 10y ago
  > buying put options is just an advanced form of side bets Option dealers dynamically hedge. For each put sold they (a) buy a call and short the stock, (b) buy a put or (c) sell some fraction of the stock.
  - 3pt14159 10y ago
    I'm aware, it's why I followed it up with: > has almost no negative consequences to the company in question. The reality is, of course, not so simple, but the general idea is manifested differently on the strike price of course and I didn't want to get buried in detail. The fact remains that even if the stock was 100% short sold, buying additional puts can still tank the stock due to market dynamics, but it isn't wrong to say that buying puts has less impact than selling short.
tedunangst 10y ago
People buying TSLA aren't required to take an ideological purity test, either. You can bet that some of them are in it for the money, too. Your comment is kinda like "you can vote, but only if I approve of it" which isn't really voting.

by beambot 10y ago

ihodes 10y ago

Buying shares of TSLA doesn't put money in TSLA's pocket anymore than buying a PUT on TSLA takes money from their pocket.

mingmecca 10y ago
Not directly, but in acquisitions the price of the stock does help in all stock/part stock deals.

cheriot 10y ago

In moderation, short positions help markets function better by discouraging speculative bubbles. How those affects combine for TSLA I won't claim to know. But the popular notion that short positions are inherently harmful is incorrect.

gdudeman 10y ago

Short positions are part of an efficient allocation of capital and efficient pricing. They also effectively bring down the price of this company - so you can buy more if you think it should be higher. Some people think Tesla is a mess. Short sellers help keep bubblicious prices down and, if those people succeed, they'll invest in companies that have a better shot of actually succeeding. Shorting is part of the spectrum: it goes from all of your money in a single stock to none to negative. I think one could argue that by not buying more Tesla stock, you are also not merely passive. You also have a detrimental effect. ;) Sources: http://www.economist.com/blogs/freeexchange/2010/12/financial_markets http://www.economist.com/blogs/freeexchange/2010/12/financia... http://marginalrevolution.com/marginalrevolution/2008/07/in-defense-of-s.html http://marginalrevolution.com/marginalrevolution/2008/07/in-... http://www.npr.org/sections/money/2008/09/in_defense_of_short_selling.html http://www.npr.org/sections/money/2008/09/in_defense_of_shor...

3pt14159 10y ago

Selling short can be harmful for a company, since brokers are allowed to lend up to 100% of a company's shares, effectively doubling available supply which can put downward pressure on cash raises through further raises through the creation of additional stock, but buying put options is just an advanced form of side bets which has almost no negative consequences to the company in question.

JumpCrisscross 10y ago
> buying put options is just an advanced form of side bets Option dealers dynamically hedge. For each put sold they (a) buy a call and short the stock, (b) buy a put or (c) sell some fraction of the stock.
- 3pt14159 10y ago
  I'm aware, it's why I followed it up with: > has almost no negative consequences to the company in question. The reality is, of course, not so simple, but the general idea is manifested differently on the strike price of course and I didn't want to get buried in detail. The fact remains that even if the stock was 100% short sold, buying additional puts can still tank the stock due to market dynamics, but it isn't wrong to say that buying puts has less impact than selling short.

tedunangst 10y ago

People buying TSLA aren't required to take an ideological purity test, either. You can bet that some of them are in it for the money, too. Your comment is kinda like "you can vote, but only if I approve of it" which isn't really voting.