Investing General Discussion

Big Phoenix said:

Would be interesting to see how much real money you could extract from his position. From a quick search guy owns 227 million shares of Tesla and the average volume is only 20 million shares/day.

Click to expand...

Why sell when you can simply borrow billions against your position and have no income!

Big Phoenix said:

Pour one out for the Z boys;

View attachment 380306

Click to expand...

I'm going to have to make a decision on this one:
1. Take loss on the puts
Choice to take loss because you don't believe it will further improve between now and expiration and do not believe there is an upside in the future to hold the shares.
2. Cover the puts and enter the equity.
This is the position to take if you are bullish that there is further upside above the strike, turning it into a profitable trade.
3. Hold the puts till expiration and decide then.
In this situation they are trading at a very high delta so I'm not paying much premium to close them now pretty much just the intrinsic value. Waiting is the choice if you potentially don't want the shares, looking for it to bounce some and exit the position at a more favorable level or they expire worthless.

I really try to avoid exiting a position on a day like today and the week the stock has had. I'm very happy they are leaving the idiotic home buying business but I would also be unsatisfied if they just sit back on the original strategy which to me is way too small of a limiting business. Obviously I should have closed the puts when they were trading for pennies and the money was made. They are in a tough position because realtors are their source of income and it's realtors who they need to be displacing. Fortunately it's a small position, but like to make sure I always post every loss or potential loss.

If Zillow just goes back to old boring model it's probably not worth more than $40/share, if they can stream line home buying and extract some of the billions in transaction costs it could be worth considerably more (>$150/share) so that is the gamble. Management misstep doesn't give investors confidence, but they also wouldn't be the first company to have a misstep and then find their groove again. I tilt towards the bullish because we are not in a show me market, they don't need to succeed for the market to reward them they only need to be willing to try. For the next 1-3 quarters they are going to flounder with out direction if the CEO doesn't come up with a clear and concise plan for the future.