Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

It was just revealed in the Financial Times last night that Elon Musk is a complete fraud. In fact, corporate documents shown by the Financial

It was just revealed in the Financial Times last night that Elon Musk is a complete fraud. In fact, corporate documents shown by the Financial Times show that all Tesla batteries are designed to fail at 100,000 miles, when Musk promised 400,000 miles + of range. In addition, TSLA's AI driving software was fraudulently advertised and unsafe. Most importantly, however; the Financial Times uncovered that Musk has stolen over $100 billion from TSLA's treasury, diverting funds to the Cayman islands and that TSLA is much further in debt than realized in fraudulently reported and falsely audited financials.

This is an absolute bombshell and the biggest news in financial markets since 2008. You have a personal dislike of Musk and TSLA and are fortunate to already own 100 put options on TSLA at a $200 strike expiring in 2 years. After the FT bombshell TSLA opens the next trading day at $7/share, down from $820/share a day earlier and your puts, which were worth only $3 a day prior are now trading for $191!

What trade should you now put on to profit from this fortunate circumstance?

Answer choices:

A. Short 10,000 shares of TSLA until the stock goes to $0

B. Sell my 100 TSLA puts at $191, for a total of $1,910,000

C. Exercise my 100 TSLA puts, and thereby sell 10,000 shares of TSLA at $200 and immediately buy back the stock for $7 to close the trade.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions