Devoted Whole Mars readers may remember our story from just last week revealing that noted Tesla short-seller Mark Spiegel had covered half of his Tesla short position. After devastating losses in December, Mark reduced his Tesla short from 20% to 10% of his portfolio.
We received many comments from readers who were scratching their heads after reading the story. “After blowing 11% of his clients’ money in December, who in their right mind would still put 10% of their fund into another Tesla short bet?”. Well, Mark BS would.
As Tesla shares reached stratospheric new heights this week, kissing the $500 mark, Mark was forced to cover half his Tesla short position once again. According to a tweet posted earlier, his Tesla short position now stands at just 5% of the portfolio. I’m sure this time things will work out fantastically for him!
Just what kind of bet did Spiegel make? As Mark revealed earlier, his firm Staph Infection Capital had bought a “very large” amount of January 2020 $200 puts. Essentially, he spent 20% of his fund on contracts that would allow him to sell Tesla shares for $200 each in January 2020 (which is now).
If Tesla shares were at $100 or even $150 as Mark was expecting, he would have been able to make a killing buying Tesla shares for $100 each and selling them via the put option contract for $200. However, Tesla shares aren’t worth $100 –– they’re worth $500. That means that the “very large” number of put options Spiegel purchased are “out of the money”, “underwater” or “a zero”. Because you can sell Tesla shares on the open market for nearly $500, an option to sell them for $200 is completely worthless.
Mark Spiegel is famous for shorting fast-growing companies. He has been shorting Tesla for at least half a decade and isn’t tired of losing money yet. He also shorted Amazon stock when it was $100. Other than that, Spiegel is well known for trading stocks from his toilet in Manhattan.
Spiegel now admits that there is no way he will ever make back the money he lost shorting Tesla and net a profit. We wish Mark the best of luck on his future endeavors and are praying for his $TSLAQ bagholder friends and victims.
Mark Spiegel just had to cover half his short position AGAINTweet