[abvdasker]

I think what the parent is saying that the original post definitely misses is that the trading volume in short expiry options on Tesla is so high that it would be impossible to detect one trade in a sea of hundreds of thousands.

[gruturo]

Why short at all? That is asking for trouble. Buy some stock, then make some incredibly positive claims on Elon’s Twitter (l4 self driving perfected, coming next week to all customers after a lengthy secret testing. New battery chemistry wildly better than anticipated, twice the power density and a life of 25000 charge cycles - and it even costs less to make, without needing any cobalt or rare earths).

Watch stock go up, sell before the whole thing is clarified.

[abvdasker]

Trading the stock directly would probably not maximize gains. I'm saying you could buy short expiry call options and make far more money (or puts if you're trying to move the price the other way). Part of the reason people trade options is because you can make (and lose) far more money with less capital than you can by just trading the underlying security. In many cases it's higher risk, higher reward.

Here's a scenario demonstrating the idea:

Let's say I spend $92,300 to buy 61 shares of TSLA at its current price of $1,512.18. Then I post my Tweet causing TSLA to jump to $1600.00 on the same day and sell my 61 for $97,600. My total profit is only $5,300.

But what if instead I buy $92,300 of 7/17 TSLA call options at $1600? They cost only $9.23 per contract for 10,000 contracts. Now the same price movement to $1,600.00 today causes the value of my options to increase to $39.16 per contact. I can sell them for $391,600 netting me a total of $299,300 for the same starting capital. If you have access to margin then you're talking millions in profit with even a small price movement (though at that point you probably have to start worrying about the SEC).

[spelunker]

As Matt Levine (who's twitter account is referenced in the article) says though, short-dated out-of-the-money call options are a good way to get the attention of the SEC.

In general though I agree with you - I think a person absolutely could make more than $100k on the market with not a lot of capital and get away with it.

Of course, "not a lot of capital" is still more than no capital.

[Sebb767]

The stock is highly volatile. This could easily end up with investors thinking that Elon has gone fully mad and the stock tanking.