Suspiciously Large Tesla Short Position Makes 1400% Profit In A Day Following Elon Musk Allegations

Yesterday, Bussiness Insider came out with an article accusing Tesla CEO Elon Musk of sexual misconduct. The article details a 2016 incident that took place aboard SpaceX’s corporate jet and a $250,000 hash money paid by SpaceX to keep the woman silent.

You can read the details of that story in the Business Insider article linked above. A Point to note here is Elon Musk has denied all allegations calling them “wildly untrue” and saying that “the attacks against [him] should be viewed through a political lens – this is their standard (despicable) playbook – but nothing will deter me from fighting for a good future and your right to free speech.”

However, another story I covered yesterday was about a suspiciously large Tesla short position that was opened several hours before the Elon Musk story broke. The way the short position was structured, it will only make money if by today Tesla’s stock price was to fall below $650.

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By the time the short position was opened, Tesla stock was trading around $730 a share, meaning even before the Elon Musk story broke, someone was betting large sums of money predicting Tesla’s stock price will fall by 11% today.

A website called Unusual Whales first discovered the suspicious Tesla short-seller activity and reported on it prior to the Elon Musk story. Unusual Whales offers a service that “uncovers unusual options, stocks, and crypto purchases, to equalize information for the retail investor.”

At the time, Unusual Whales’ Twitter page wrote “what's interesting is the large bearish flow on $TSLA today, especially at close. The UW unusual alert algo noted one large put position expiring tomorrow, similar to when Business Insider reported on Dave Portnoy's alleged sexual misconduct. Unusual!”

What's interesting is the large bearish flow on $TSLA today, especially at close.The UW unusual alert algo noted one large put position expiring tomorrow, similar to when Business Insider reported on Dave Portnoy's alleged sexual misconduct.Unusual!https://t.co/rh03t5z9R4— unusual_whales (@unusual_whales) May 20, 2022

If you are unfamiliar with “option contracts”. It is a financial contract that allows you to buy or sell a company’s stock at a predetermined price. This means rather than buying or selling a company’s stock directly, you purchase a contract that says you have the right to buy or sell a stock at a predetermined price, no matter what the stock is trading at that day.

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For example, let’s say you have purchased “put options” of Company X. And tomorrow Company X’s stock price falls from $100 to $80. At this point, you can exercise the options contract and force the contract writer to buy Company X’s shares from you for $100 even though it’s trading at $80. This allows you to make the $20 difference as a profit.

This is a very high-level explanation of options contracts however, in reality, it takes several books to even scratch the complexity of options trading.

However, when we bring it back to today. Unusual Whales followed up on the suspicious short-seller position and reported that “these $TSLA unusual puts attached below just reached nearly a 1000% return in one day after the $TSLA breakdown and Business insider report.” then added “Someone always knows” without naming any particular person or entity.

These $TSLA unusual puts attached below just reached nearly a 1000% return in one day after the $TSLA breakdown and Business insider report.Someone always knows.(And I provided them for free, as well! Congrats to those in!) https://t.co/ustBpttq3x— unusual_whales (@unusual_whales) May 20, 2022

Soon after, Unusual Whales followed up on their tweet raising the gains from the suspicious Tesla short position to an incredible 1400% in a single day.

These have now returned 1400% in less than 24 hours.More intrinsic value coming as they are now deeply ITM as $TSLA falls past $650, trading at $636 now.Link: https://t.co/IuSK5MH4vb pic.twitter.com/cxLcFcRtZX— unusual_whales (@unusual_whales) May 20, 2022

As of writing Tesla stock is trading at around $630 per share down more than 10% for the day.

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After the Elon Musk story came out yesterday Unusual Whales said “Business Insider has just published an alleged sexual misconduct story on Elon Musk. Interestingly, they have done similarly with Dave Portnoy, before $PENN [ Penn National Gaming which owns 36% of Portnoy’s Barstool sports] earnings. Additionally BI's CEO, Henry Blodget, was accused of securities fraud and banned from the securities industry.” You can refer to my previous article for more details about Dave Portnoy, $PENN, and Henry Blodget.

Business Insider has just published an alleged sexual misconduct story on Elon Musk.Interestingly, they have done similarly with Dave Portnoy, before $PENN earnings.Additionally BI's CEO, Henry Blodget, was accused of securities fraud and banned from the securities industry.— unusual_whales (@unusual_whales) May 19, 2022

As of now, it’s impossible to say with any certainty who made the Tesla short position and how they are connected to allegations against Elon Musk, However, it’s nonetheless fascinating to see the financial world's dirty underworkings unfold right before our eyes.

We will be sure to keep you posted if we learn more about the story. Until then, make sure to visit our site torquenews.com/Tesla regularly for the latest updates.

So what do you think? Do you think the short sellers behind the suspiciously large Tesla short position knew beforehand about the allegations against Elon Musk? Let me know your thoughts in the comments below.

Image: Courtesy of Tesla

For more information check out: Tesla Brings Back The Cyberwhistle But It Can Only Be Purchased Using Doge Coin

Tinsae Aregay has been following Tesla and The evolution of the EV space on a daily basis for several years. He covers everything about Tesla from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.