I’m absolutely no enemy of Tesla, nor Elon Musk, nor the technological advances. I am very curious about the world dominated by electric cars and self-driving cars. And I’m even more curious about the things we could find in outer space. (Because the truth is out there, I’m sure.)

Good, but expensive

I admire Musk to some extent, but I think that Tesla, although revolutionary, will not necessarily be a very good business. Simply because there is too much competition, there are huge, powerful car factories with enormous investable capital reserves, which will also ask for a piece of this cake on the market. Working very hard on reducing the technological backlog behind Tesla. Even if Tesla can solve it’s financing and logistical problems, it can only expect a more modest profit in the future than the one is built into the stock price. Tesla is good, but shares are too expensive – in short.

Chart courtesy of Stockcharts.com

Problems? What problems? One of the numerous Tesla-bears, The Wolf Street wrote:

Americans have taken note: Tesla’s reputation has plunged from a glorious 3rd place last year among the most visible US companies to a middling 42nd place, according to the Axios Harris Poll 100 that ranks the reputations of the most visible companies in the United States.

Chart courtesy of Stockcharts.com

Tesla’s advantage

I think this loss of “visibility” also reflects or it will reflect in the demand of Tesla cars. The Tesla shares plunged 5 percent on Friday, to 235 USD (and touched 231 USD), not seen since more than two years (January 2017).

There are tons of opinions and analysis of Tesla, positives and negatives. Difficult to choose the best ones. Of course there are big believers, fans of Tesla, still hoping the technological advantage of Tesla will be conclusive, like this analysis here on SeekingAlpha:

Neural networks work better with more data. (…) Tesla is in a unique position for collecting this data primarily because of its large fleet that's continuously collecting data about driving conditions and situations. In other words, each car represents a data center, and Tesla has hundreds of thousands distributed data centers scouring the streets (…) If these statistics are correct, then Tesla is many years ahead of any competitor on this front.

Tesla short, VIX short

In fact, I’m very happy now with my “Tesla short – VIX short” combination of trades I told you about it on October the 3rd, 2018. The idea was that Tesla can underperform the markets, and VIX short can provide a very positive, continuous yield if stock market stays in positive mood. Like at the moment, when the contango of VIX (between May and June, 15.67/14.48) is 8 percent – monthly!

Graph: Vixcentral.com

Also see about VIX and contango: Contango As A Gold Mine And Why Should Bitcoinists Care

My temptation

Who could resist the temptation of 8 percent a month? Me, not. But I need some more security, because VIX spikes can ruin the trade. Shorting Tesla seemed to be a good idea, even by 308 USD. (I Know it was much better by 360-380.) The stock market indexes near all time high in US, if the situation persists, can provide a good contango income. See Bloomberg.com:

Hedge funds are betting the calm will last, shorting the Cboe Volatility Index, or VIX, at rates not seen in at least 15 years.

Although, the high level of VIX shorts, can be an alarming signal. If all this shorts will be closed, the VIX futures can skyrocket and my positions can be worthless. Maybe I should close both positions and wait for better times?

Every short position shall be liquidated some day – and, I think, this day can be near. I have to decide at which point Tesla short should be closed, and maybe search for other shorting ideas to complete the VIX trade. Do you have any?

The dream of many people is a Tesla, rather than gasoline-devouring older car types. I could make only this conclusion of a poll I made on dPoll last week. About the price of Tesla shares most people have no idea.

(Cover photo: Pixabay.com)