Tesla Bulls Pile Onto $960 Call Options Ahead of Musk's $1 Trillion Pay Plan Vote: Options Chatter
$Tesla (TSLA.US)$ shareholders' vote on CEO Elon Musk's $1 trillion pay package will test the conviction of bulls who piled onto call options that could pay off should the stock price more than double by early 2027.
Call options that give their holder the right to buy Tesla shares at $960 a share by Jan. 15, 2027 continued to hold the biggest open interest, or the tally of outstanding contracts. Open interest rose for an eighth straight session to 122,774 contracts, even as the stock rally faltered as more investors announce their decision to vote against Musk's pay package.
Musk's pay package would be triggered should Tesla's market capital climb almost six-fold to $8.5 trillion. The 12-tranche proposal set milestones that need to be met including 10 million active subscriptions for full self-driving and 1 million robotaxis delivered. Online voting ends tomorrow while some shareholders may be allowed to vote in person during the annual shareholder meeting on Nov. 6.
Maryland State Retirement and Pension System said Tuesday it's voting against Musk's pay package, adding its voice to a growing chorus of investors opposed to the $1 trillion proposal. Norges Bank Investment Management, the world's largest sovereign wealth fund, also said it's voting no. Last month, proxy advisers Institutional Shareholder Services and Glass Lewis urged shareholders to vote against the compensation plan.
Musk rallied support for his pay package during the company's earnings call in late October.
"I just like the new increased voting control to give a strong influence, but not so much that I can't be fired if I go insane," Musk said. "I just don't feel comfortable building a robot army here and not -- and then being ousted because of some Aslan recommendations from ISS and Glass Lewis who have no freakin clue."
With less than two days left before the voting ends, institutional investors and large speculators are pouring millions of dollars into Tesla options.
At 10:28:51 a.m. Tuesday, an active buyer paid a $62.53 million premium for call options that give their holder the right to buy 1.185 million Tesla shares at $450 in 73 days. That was the largest block trade tied to Tesla posted so far Tuesday.
That multi-leg transaction was posted at the exact time when an active seller sold $56.1 million worth of call options that give its holder the right to buy the same amount of shares for $420 in 17 days. That could signal that the holder of the $420 call option may be rolling out his or her position to a later expiration date at a higher strike price.
"While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk- consistent with our views on executive compensation," Norges Bank said on its website. "We will continue to seek constructive dialogue with Tesla on this and other topics."
Maryland Treasurer Dereck Davis described the compensation plan as "excessive, irresponsible and undermines the principles of sound corporate governance."
Share your thoughts on Tesla in the comments section. Do you think Elon Musk deserves that $1 trillion pay package? Let your voice be heard by voting below. And if you want to read more options columns like this one on Cipher Mining, or this like this one on Amazon, Apple and Alphabet, follow me here, where you can also find my earnings stories on some of the biggest stocks.
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Luzi Ann Santos
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Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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Don’t be soft : without him tesla is nothing
mommymoney : i could say so much, but if a person w/o his money & potential money did 1 of the many things he has within the last year, this wouldnt be a question. investing is a firm of value also…. or it could be.
Jamesjinlin : In essence, the outcome remains the same. People merely focus on the one trillion figure, but this is a phased process. The final portion constitutes only a small fraction, while the earlier phases are relatively easy to achieve. It is difficult for Musk to obtain the full one trillion, but securing the initial half trillion is much easier. Hence, this is fundamentally a numbers game. We should oppose it unless no compensation is taken prior to reaching an $8.5 trillion market capitalization.
Chak : really $960 by jan
ztock_boy : Elon walks away from work for a year, then returns holding his hands out for more money?
Jason Pico : Without Musk buying $1 billion, where is TSLA's stock price now?
75655239 : i work at tesla.. it wouldnt be possible without elon. we lose elon.. i expct tesla to shit the bed.
75428532 Don’t be soft : Yes.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
75949597 : Elun musk being the biggest entrepreneur, always making headlines... if you know how hard that guy works and how hard he built his company's, you wood need to agree that he deserves the 1 trillion pay plan. for those of you who disagree, are the ones who never ran a business in your life!
and its face the fact, if not for musk, there wouldn't be a company called tesla!
75532795 Jamesjinlin : These words ring true: the market value in each period doesn’t appear out of thin air. Especially when bearing the risk of a bear market following the bursting of a bubble, it’s anything but easy. If it were simple, others would have already taken over.
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