Baby Momma Drama, 100 Missed Calls...
Elon's beefing with his family. Will it matter for the stock?
I’ve been busy and haven’t had any good stock ideas in this market (hence my silence), but tonight I have some hairbrained speculation that’s quick and easy to share, and might be newsworthy for those of you who have managed to fully detach from or were never on the worst site on the internet, so welcome back to me.
I shamefully missed the move in Tesla from $400 to $100 (and without a doubt, the easiest money has already been made), but my FOMO has had me keeping my eyes out for a reentry point, and now there’s an (admittedly stupid) catalyst that has pulled me back in to the Tesla puts casino:
On Monday (January 9), Elon unfollowed his brother and fellow Tesla board member Kimbal.
On Tuesday (January 10), Elon unfollowed the mother of two of his children, Grimes.
On Wednesday (January 11), Kimbal unfollowed Elon.
So what’s this about? Let’s speculate, just for fun.
Could be the woke mind virus.
From time to time, Grimes has tried to keep Elon in line when he gets a little too boomer-fox news-traditional values-conservative (and I very much respect her for doing so). In 2020, Elon went on a rant about “pronouns” (Jesus never used them, after all) and Grimes publicly tried to settle him down. (It was later revealed that one of Elon’s children is trans, potentially the cause of his commentary and Grimes trying to make him be a less cruel person, and his daughter has since severed ties with Elon). So perhaps Elon’s continued and deepening association with the reactionary right was pushed back on by Grimes, and when sounding-board Kimbal took her side, Elon decided he didn’t need those woke libs in his life anymore.
Could be something more personal. After all, Elon’s father has two children with his own stepdaughter. I imagine Page Six is working to find out whether there’s anything going on between Grimes and Kimbal - this author is not going to offer any speculation in that regard.
But lastly and most importantly, there’s some chance it’s related to Tesla.
Kimbal’s been in Elon’s inner circle since the beginning and continues to sit on the Tesla board. There is an (ongoing?) SEC probe into whether Elon tipped off Kimbal when Elon sold his first large chunk of Tesla stock - perhaps that probe is nearing fruition and Mr. Cowboy Hat has turned State’s Witness. Grimes, likewise, has been close to Elon since they started creating Our Future World Leaders, and while she’s not as formally intertwined with Tesla as Kimbal, she was in deep in Elon’s fake $420 takeover, and is/was perhaps privy to plenty more, and may be able to corroborate any inappropriate communications between Elon and others regarding stock sale(s) (the February sale being probed marked the top, but Elon continued to liquidate throughout the year), general company performance, or any of the infinite sketchy things (some real, some totally fictional) that TSLAQ has spent the better part of a decade trying to elevate into awareness. The Saudi’s aren’t willing to testify in Elon’s defense, so maybe Kimbal and Grimes aren’t playing ball anymore either.
So, not sure if this is actionable, but it is certainly out of the ordinary.
As for how to trade it - the answer is probably, of course, not directly at all - but I’ve just started easing into some put spreads meant to capture any downward move related to Q4 earnings (to be released in January), a disappointing 2023 forecast, which will be communicated at the same time (the business is weakening globally), general market weakness after this recent relief bounce, and any X-factors, such as this.
I’ve been playing it relatively conservatively (for me) and buying some February 17th put spreads. Depending on how low you can think things go, some example math:
110-100 (retests recent lows): ~$2.60 cost, up to ~4:1 payoff
100-90: $1.60 cost, ~6:1 payoff
90-80: $.90 cost, 11:1 payoff
80-70: $.45 cost, 22:1 payoff (but probably just better off buying the $80s naked)
Regarding technicals, Tesla’s bounced nicely in the past week as have a lot of other garbage stocks. It looks to me like if things reverse lower, there’s recent support at $100, some historical support in the $90s, and then not much until ~$65. One lesson I learned from the Boeing trade in 2020 is that all gaps really do (sometimes) get filled - and Tesla has some gaps around $75, so that might be a not-totally-unrealistic medium-term target.
Of course, that move may not happen by February if it happens at all, and Tesla could certainly retrace higher first going into earnings if the market remains strong, so I’m easing in as we approach earnings (and potentially can buy puts with higher strikes) and will give it a few weeks of time on the contracts thereafter to let any move shake out.
So in conclusion - does Elon being petty with his family on Twitter mean that the end is near? Almost certainly not. But in the past he has not so subtly telegraphed big developments with public announcements (Tesla stock sale, Twitter purchase) - so this is probably as good of a time as any to pick up a few shitputs.
Yours,
Elmer
Elmer come back, we can’t read your Twitter anymore