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I believe that at 45B$ Tesla is massively overpriced. The thing is that I don't know how long it will take it to trade on fundamentals, maybe a couple of years after launching model 3.

So I want to short it, but not to suffer from the excessive cost of holding a short position for many years.

What do you suggest is a good way to implement such a short?

Thank you

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    $\begingroup$ The repo cost are (should be) priced into all derivatives as well. I.e. in the presence of high borrowing cost, the forward is ceteris paribus lower, put options more expensive, ... $\endgroup$
    – LocalVolatility
    Commented Feb 15, 2017 at 16:00

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As LocalVolatility pointed out, the cost should be priced into the derivatives as well so you cannot do better than that unless you have an execution alpha, provided you want the exposure of a naked short.

You can offset some of the cost of your short position with option premium, e.g. a vertical spread where you buy 1 or more puts at higher strike price(s) and offset their costs by selling put(s) at lower strike price(s).

However, if you just want to take a short position but don't necessarily want the complete upside of a naked short, you can construct a position that gives up something of equivalent value, e.g. capping your upside in exchange for lower cost.

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  • $\begingroup$ Thanks @elleciel, I now sell not-in-the-money calls and cover with higher ones, this way I gain from a prolonged move but the upside is low and capped $\endgroup$
    – kambi
    Commented Feb 15, 2017 at 16:20

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