Senator Tommy Tuberville (R-AL) — the college football coach turned lawmaker and anti-woke crusader — has reportedly bought put options, betting against the stock price of Tesla, the electric vehicle manufacturer run by billionaire Elon Musk. Tuberville is an active investor, as revealed in trades listed by quiverquant, which tracks Congress members’ trades.
As investment site Benzinga explains: a put option “becomes a profitable bet when the value of the underlying security declines. It is often used as an investment insurance or hedge to ensure that losses in the underlying asset do not exceed a certain amount.”
BREAKING: Senator Tommy Tuberville just bought puts against Elon Musk's Tesla.
— unusual_whales (@unusual_whales) November 16, 2023
He bought $50k in $TSLA $190 puts expiring 12/15/2023
He also got options in $TXN, $KO, $X, $LPX & $AMAT.
Yes you read that right. A US Senator has leveraged positions over companies they legislate pic.twitter.com/htiNVXaaCe
The strike price on Tuberville’s Tesla put options is $190, which would require the price to sink precipitously from its current level, which is more than $235. The expiration date is December 15.
The Motley Fool uses Netflix to explain how a put option works:
“Imagine Netflix trades at $500 per share. You think it’s overvalued, so you buy a put option with a strike price of $450 and an expiration date three months away. The premium costs $10 per share, which is a total price of $1,000 for the contract.
The breakeven point would be $440, the difference between the $450 strike price and the $10 premium. If Netflix plummets to $400, then you’re up $40 per share ($4,000 total) on your put option. If it doesn’t drop below $450 at all, then you’d only be able to let the option expire and eat the cost of the premium.”
Members of Congress have been criticized in recent years for trading in the equities of companies they are simultaneously charged with regulating. Legislation in Congress can deeply affect business operations — even the viability — of major companies.
Consider a Senator who invests in Exxon-Mobil before that company is granted, through legislation, increased drilling rights or some other favorable treatment. Or a Congressman who knows a U.S. sanction against Chinese technology is coming and buys put options on a computer business that relies on Chinese microchips. It’s not clear that Tuberville is acting on information like this, only that he is acting.
Tuberville has been in the news lately for his intransigence, holding up multiple military promotions and the filling of critical positions in a one-man protest against abortion policies at the Pentagon. Tuberville believes the U.S. military has gone woke, and he wants especially to stop the armed services from reimbursing travel expenses to service members who travel for an abortion.
