Something strange is happening with Tesla's stock—and it's got Wall Street whispering.
Gordon Johnson (yes, that Gordon Johnson, Tesla's perennial bear-in-residence) has raised eyebrows with a provocative claim: Tesla's stock price isn't earned through performance but "engineered" through options market manipulation.
I've been watching this dynamic unfold for months now, and let me tell you, it's fascinating stuff. Not because I'm necessarily buying what Johnson's selling—the man has been predicting Tesla's demise longer than some of their cars have been on the road—but because it highlights something fundamental about today's market that doesn't get enough attention.
Here's the situation. Tesla's put-to-call ratio plummeted from 0.85x to 0.67x in just one day. For folks who don't speak options-ese, that means traders suddenly piled into bullish bets rather than bearish ones. The ratio has since dropped even further to 0.61.
So what?
Well, in the market I started covering fifteen years ago, options were just side bets on stock movements. But something's changed. These days, the tail doesn't just wag the dog—sometimes it picks the dog up and carries it around the park.
Let me explain. When someone buys a call option, the market maker selling it typically hedges by purchasing shares. As the stock inches toward the strike price, they buy more shares to stay hedged. This creates a self-reinforcing loop that pushes prices up—what I call the "options leverage loop." It's powerful stuff.
Johnson suggests someone's deliberately exploiting this mechanism. And look, pulling this off wouldn't be cheap. We're talking serious institutional money here, not Reddit traders pooling their allowances.
But why would anyone bother? Several possibilities come to mind.
Maybe a large institutional holder is trying to prevent further price deterioration. Or traders are positioning ahead of anticipated good news. Perhaps it's part of a complex arbitrage strategy. Heck, it could even be market makers themselves unwittingly creating these patterns through routine hedging activities.
I'm generally skeptical of conspiracy theories. Markets are complex beasts, and what looks like manipulation often turns out to be the unexpected consequence of thousands of rational decisions colliding.
That said... Tesla has always operated in a financial twilight zone, hasn't it? With a PE ratio approaching 200 (yes, you read that right—193), conventional valuation metrics went out the window long ago. Tesla bulls see a company revolutionizing multiple industries. Bears see an overvalued car company with a distracted CEO.
What makes Johnson's observation particularly intriguing is the timing. Tesla has faced a barrage of challenging news lately: slowing EV adoption, intensifying competition, Autopilot scrutiny, and perpetually delayed robotaxis. Yet somehow the stock remains stubbornly buoyant, clinging to that trillion-dollar market cap like it's a life raft in choppy waters.
The options market itself seems confused about what happens next. Implied volatility sits at 44.88%, above historical volatility of 40.95%. Translation: options traders are pricing in bigger moves ahead, but they can't agree on direction.
I've covered Tesla since its early days, and one thing has remained constant—this company trades on narrative as much as fundamentals. But even the most compelling story needs some connection to reality, doesn't it? If Johnson is right that options activity is artificially propping up the stock, how long can that continue without actual business improvement?
Markets can certainly maintain irrational positions longer than skeptics can maintain their sanity (or solvency). Just ask the graveyard of Tesla short-sellers who've been buried over the years. But eventually, gravity reasserts itself.
For investors trying to make sense of Tesla's current trajectory, watching the options market might provide valuable clues. If this apparent support suddenly vanishes—well, that's when things could get interesting.
In the meantime, this whole situation reminds us that modern markets aren't the straightforward mechanisms described in finance textbooks. They're more like elaborate stage productions with multiple forces working simultaneously, some visible, some hidden.
And sometimes, it's worth peering behind the curtain to see who's really pulling the strings.
