Part 3/9:
- Aggressive Bullish Investors (Over 100%) via Leverage: Traders like the author, who are more than fully invested through margin, call options, and LEAPS (Long-Term Equity Anticipation Securities). Their approach is based on the conviction that Tesla is significantly undervalued and that doubling down could lead to substantial gains.
Leverage, Margin, and Why Leaps Are Safer
A critical point emphasized is the distinction between using margin and LEAPS:
- Margin: Borrowed funds, which can lead to margin calls if Tesla's stock drops sharply. A 20-40% decline could force forced liquidation, risking substantial losses and loss of participation in future upside.