Reddit User Down $200,000+ From Tesla Options

Bryant Le

Many individual investors — many of them, followers of a popular Reddit page called Wall Street Bets — have gambled their savings for the chance of massively beating the stock market. One reddit user, u/oqidjxj gambled $280,000 into Tesla call options expiring on December 17th. (Post by the user can be found here. I am simply writing an article on an event that happened on Reddit.)

This is not the first story where a user gambles their life savings on Tesla...

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 $280,000 of Tesla options, betting that Tesla would be massively higher than $1000.

Unfortunately for user oqidjxj , Tesla has not exploded as it did a few weeks ago. With hundreds of thousands in call options at strike price $1000 and $990, oqidjxj only has 3 days before their call options expire worthless and lose the entirety of their $280,000 investment as shown in the screenshot of their positions below...

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

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