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Tesla shorts take an estimated $2 bil of losses in Elon Musk’s ‘next level burn’

15 points by john58 8y ago

olliej 8y ago
Yeah I don’t understand people who short - the downside is functionally unbound. Maybe it’s “investors” and “managers” using other people’s money? I’m sure my risk/reward bias would be skewed if the downside was “less commission income” rather than “well there goes my retirement”
- phrixus 8y ago
  If the only concern is about unbound potential losses, You can cap your risk by buying far out of the money calls
- Someone 8y ago
  In general, the higher the variance in outcomes, the higher the expected payout of an investment. Also, if you have more money you can decrease the variance in your payout by making multiple uncorrelated (1) investments. That can make investments that are insane for the average citizen look as huge opportunities for the very rich. For example, consider a game using a fair coin “put in $100k, heads you lose everything, tails we pay out $201k”. If you have 100k in savings for retirement, you probably wouldn’t want to play that game. People who have $100M, on the other hand, might line up to play it a thousand times, as that game, on average, pays out 0.5% per game played. I would hope manny of those shorting Tesla must have thought this “game” is similar: high risk, but an expected payout that is better than that of less risky investments. (1) there’s a risk there, as totally uncorrelated investments do not exist anymore in a global economy.
- compcoffee 8y ago
  >Yeah I don’t understand people who short You know who the biggest short sellers are of Tesla? People hedging their long bets. That said, the stock is still down ~20% from highs, so I don't understand the hubris of rooting against daily price changes.
marketgod 8y ago
Shorts help us find companies like Enron.
nscalf 8y ago
It really seems like traditional investing has yet to fully understand how to assess the value of Tesla. A lot of the value seems to be wrapped in from people's hopes/expectations of the future of energy/vehicles. Tesla is more than a car/battery producer, it seems to also be a figurehead for clean energy to a large extent.

15 points by john58 8y ago

Yeah I don’t understand people who short - the downside is functionally unbound. Maybe it’s “investors” and “managers” using other people’s money? I’m sure my risk/reward bias would be skewed if the downside was “less commission income” rather than “well there goes my retirement”

phrixus 8y ago
If the only concern is about unbound potential losses, You can cap your risk by buying far out of the money calls
Someone 8y ago
In general, the higher the variance in outcomes, the higher the expected payout of an investment. Also, if you have more money you can decrease the variance in your payout by making multiple uncorrelated (1) investments. That can make investments that are insane for the average citizen look as huge opportunities for the very rich. For example, consider a game using a fair coin “put in $100k, heads you lose everything, tails we pay out $201k”. If you have 100k in savings for retirement, you probably wouldn’t want to play that game. People who have $100M, on the other hand, might line up to play it a thousand times, as that game, on average, pays out 0.5% per game played. I would hope manny of those shorting Tesla must have thought this “game” is similar: high risk, but an expected payout that is better than that of less risky investments. (1) there’s a risk there, as totally uncorrelated investments do not exist anymore in a global economy.
compcoffee 8y ago
>Yeah I don’t understand people who short You know who the biggest short sellers are of Tesla? People hedging their long bets. That said, the stock is still down ~20% from highs, so I don't understand the hubris of rooting against daily price changes.

marketgod 8y ago

Shorts help us find companies like Enron.

nscalf 8y ago

It really seems like traditional investing has yet to fully understand how to assess the value of Tesla. A lot of the value seems to be wrapped in from people's hopes/expectations of the future of energy/vehicles. Tesla is more than a car/battery producer, it seems to also be a figurehead for clean energy to a large extent.