What's New in Courses (02/16): Elon Musk unloaded $22 billion of Tesla stock

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Musk sold $16 billion in stock last year and donated 5 million shares worth nearly $6 billion to an unknown charity or recipient in November, according to a filing with the US Securities and Exchange Commission.

A combination of tax payments, cash in his pocket, and the donation brings this sales total to approximately $22 billion.

Despite this, Musk ended the year with a greater ownership holding — and more shares —in $Tesla(TSLA.US)$, how did he achieve it?

Firtly, Musk started turning the 22.8 million options into shares, which is how the options exercises work. He could pay $6.24 for each option and acquire a share of Tesla stock.

Because the options are taxed as income, he would sell shares to pay the taxes with each option conversion.

Even as he was dumping billions of dollars in stock to pay taxes, he was collecting even more stock at the low options price, increasing his ownership of the company.

Relevant knowledges:

1. What is an Option?

2. Why do we use options?

3. How to trade options?

4. Four basic options strategies

Options ABC | Courses

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