[mynameishere]

If you sell puts against a short position from May 8 to May 17 (strike: 55.00, price: ~3.40), you can make >5 percent in 9 days. I'm guessing that most of the people borrowing shares at that rate are selling straddles to retail that make the overall position look less crazy.

http://finance.yahoo.com/q/op?s=TSLA+Options

...the implication is that unhedged longs are carrying the real risk.

[pyoung]

So you are saying that a lot of the short interest is coming from people hedging their long bets?

I can somewhat relate to why one would take this strategy, as Tesla is getting a lot of hype, implying that the stock might break out (or already did, currently at $71), but they are also in a fairly precarious financial situation, with a ton of debt. Elon himself warned that if the company didn't get to positive cash flow it was likely they would go under. Still it seems like a high price to pay for a hedge, wouldn't it be simpler (and possibly cheaper) just to reduce your long position?

[JPKab]

Do you have a recommendation for a good reference to learn all this lingo? I understand what a short is, but WTF is a 'put'? 'Straddles'??? 'Unhedged longs'?

[paddy_m]

A put is an option that gives you the right to sell a stock to someone by a specified date at a specified price. If you buy a put, you are betting the stock price will go down.

A straddle involves buying both a call and a put. If a stock is trading at 10, and you buy a PUT at 8 and a call at 12, you make money if the stock goes above 12 or below 8, between that, you eat the option price. Basically a straddle is betting on volatility.

You can also sell a straddle, sell a put and sell a call, and bet that stock will remain at the same price.

[mynewwork]

http://www.investopedia.com/ is a decent resource for the beginner to understand terminology.