Recently, Market Rebellion identified a series of large bearish bets made against EV darling, Tesla. It started just two weeks ago, on September 29. Market Rebellion identified 4,171 put spread spreads bought in the $260-$240 range at $5.98 per spread.
Source: Market Rise Unusual Options Activity
Total commercial price: $2.5 million dollars.
At that point, with Tesla trading at $275.56, the stock would have to drop about 13% in just one month for the spread to reach full profitability (which would lift the value of the bet). bet this $2.49 million to over $8.3 million).
Spoiler alert: It took a week, not a month, for Tesla to drop below $240.
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Why?
Source: Evening Standard
Though those spreads have more than tripled in value since the initial purchase, the bears are not over with Tesla stock. On October 3, Market Rebellion identified another big bearish bet against the EV giant.
Undeniably, this bet is even bolder. This trader chose 18,000 long set options with an average contract price of $8.28.
Source: Market Rise Unusual Options Activity
Total commercial price: $15 million dollars.
For these put options to break even, Tesla stock would have to fall add 2.46%. Further Advanced: These sell options have been set to expire in just five days.
Then, just a day later, the news broke:
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Source: Variety
Within minutes of the news breaking, the Tesla bears were back again with two more bizarre bets on Tesla.
With Tesla trading at $247.89, Market Rebellion has identified a buyer of $5,000 $210 strike calls that will expire 10 days from the initial trade – and 10,000 won $120 The strike put the option to expire in January.
Source: Market Rise Unusual Options Activity
Total commercial price: $2.96 million dollars.
While the deal isn’t as large as the $15 million off sale it took the day before, it stuck for another reason: It’s calling for Tesla to drop again 16% next weekend and more 50% in January. This, with the stock falling more than 10% that week.
In response, one twitter user said:
Source: Twitter
What happened next?
Source: CNBC
Source: TradingView
Tesla fell again. Through October 12th, those $210 options will expire on October 14th (you may remember it as “totally ironic bet“Trading as high as $5.55 – a 288% price increase from the original trading price. And the $120 strike in January puts options? Tesla didn’t need to drop 50% for those to make a profit – just 8 days after the purchase, that $120 strike brought the options traded up to $3.80 – a gain price 69.6%.
Key point
If someone is willing to bet more money on Ariana Grande’s money to buy a mansion, it’s probably worth noting. You can have yours idea about what is and isn’t “an ironic bet,” but at the end of the day, most people who have amassed a multi-million dollar fortune in the market don’t want to throw it away. Chances are, there’s a good reason they bet that.
