Reddit User Loses $260,000+ From Tesla Options

Bryant Le

Many individual investors — many of them, followers of a popular, juvenile, foul-mouthed Reddit page called Wall Street Bets have gambled their savings for the chance of massively beating the stock market. One reddit user, u/glideoutside gambled $260,000 into Tesla call options expiring on December 10th. (Source found here.)
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Tesla has been a strong performer for the past few months, and has definitely shown strong upward swings in the past month from prices of $800 to $1250 per share. This is a 50%+ move in only one month from October to November. Tesla did well on its previous earnings (10/20) by surpassing earnings expectations by 15%.

In contrast to buying shares of Tesla, buying call options means that the user has bet that Tesla prices will massively move and would definitely be higher than a certain out-of-the-money price by a given expiration date. (This is a lot of conditions to check off.) You can learn more about options on Investopedia.

The benefit is that the potential gains are unlimited; however, the downside is that the entire investment can potentially be lost if the conditions are not met by the expiration date. This Reddit user bought $420,000 Tesla options, betting that Tesla would be higher than: $1150, $1250, $1400, and $1515.

Unfortunately, Tesla ended the day on December 10th at $1017, and this Reddit user lost 63%+ of their investment or $260,000 within a single day as Tesla did not break out.

Just as a reminder, invest with what you can lose. And none of what I provide is financial advice.

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