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Comment by Powdering7082 | Hacker News Reader

I've been buying Tesla puts at a small scale for the past 6 months, usually puts about a month out.

It's been a great way to lose money so far.

Regardless of what happens theta and IV crush will probably wipe you out. I don't like Tesla's stock but I don't touch it just because both the stock and options tend to be way overpriced.

It really is wild that investments are driven by the marginal investor, not the median investor. 99% of us can think that Tesla is trash, but 1% of world investors is an absolute ton of capital.

The last price in any market (whether it's stock shares or housing) is driven by the market liquidity which is extremely inelastic. It mostly just does whatever it feels like short term and the time it takes for elasticity and fundamentals to overwhelm it can be so agonizingly long.

You're more complaining that investors who don't own a stock have no influence on its price. Which is true, but I don't see a workable way to change that.

The median investor in Tesla, on the other hand, seems to be happy with the situation since they're not selling.

I'm not complaining really, just think it's a explanation that describes the downward sticky nature of companies that can't seem to justify their valuations.

I agree that the median investor feels that way, I just think that the median Tesla investor (apart from passive broad based funds) is a tiny, tiny, tiny part of the market.

Actually, the reason is the opposite. Tesla is reportedly over 40% owned by retail investors compared with under 20% for most big tech stocks. It's a meme stock.

If you invest in an index fund, 1.9% of your money goes into Tesla.

Investing in a proportional index fund moves the market as a whole, but does not move the individual stocks in relative rank. Aside from short term frictional liquidity issues, it just makes the stocks' relative movements exaggerated.

The valuation of Tesla is still decided by the marginal investor.

One could even be excused for the paranoid thought that there's a conspiracy of capital backing techno authoritarians. Of course, some of that is a money maker, like surveillance tech. But these are the same people backing dodgy brain implants, and third rate LLMs at fabulous valuations. And who are OK with merging a dying social media site with that third rate LLM start up.

Yeah it's been a good learning lesson. I only put in what I was comfortable losing (and fast!). The way the stock moved after the absolutely abysmal earnings will certainly stick with me lol

My new strategy has been wait for a large swing (when IV is high) then sell puts at ~ .1 delta. Ask me at the end of the month if it works out.

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