Senator's Bearish Tesla Bet Under Scrutiny As He Buys Put Options Ahead Of Elon Musk-Led Company's Q3 Results That Set Stock Slide In Motion

Tesla, Inc. TSLA shares have been going through a lean phase and the modest recovery seen has been in fits-and-starts. Against this backdrop, a Congressman has disclosed on Thursday bearish bets on the electric vehicle giant.

What Happened: Sen. Tommy Tuberville (R-Ala.), who has been in the news due to his blockade of military promotions, on Thursday disclosed a series of stock transactions made through the month of October, data provided by Quiver Quantitative, an analytics firm that tracks stock trading by Congressmen showed. The firm noted that the senator made almost $3 million worth of new stock and options trades.

The “Stock Trading on Congressional Knowledge Act” requires U.S. Senators to publicly file and disclose any financial transaction within 45 days of its occurrence.

Betting Against Tesla: Tuberville bought three lots of Tesla put options and sold all of the Tesla shares he held. All the transactions were made on October 17. The Tesla stock have been on a downtrend since the company reported its third-quarter results on October 18. From $254.85 at which the stock closed on October 17, it fell to a low of $194.07 on October 31 before staging a modest recovery.

The value of the sales transaction has been recorded as $1,001-$15,000.

The senator bought three tranches of put options, each amounting to $1,001-$15,000, and having a strike price of $190 and an expiration date of Dec. 15, 2023.

A put option gives a holder the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time frame. It 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.

Tesla shares closed Thursday’s session down 3.81% at $233.59, according to Benzinga Pro data.

Conflict Of Interest? Tuberville bought call option to buy U.S. Steel Corp. X shares, valued at $1,001 to $15,000, which has a strike price of $25 and is set to expire by June 21, 2024. He also effected a partial sale of the stock in two tranches, one value at $1,001-$15,000 and another at $15,001 to $50,000.

Quiver Quantitative pointed out that the senator is a member of the Senate Subcommittee on Commodities on account of which has privy to inside information on the steel market. U.S. Steel said in August it is evaluating strategic alternatives and offering an update in late October in its earnings release the company said it is “fully engaged in and is progressing a robust and competitive strategic alternatives review process to maximize stockholder value.

Other Major Transactions: Among the stocks the senator bought were Meta Platforms, Inc. META The Western Union Company WU, Advanced Drainage Systems, Inc. WMS, Rockwell Automation, Inc. ROK, ResMed Inc. RMD, PulteGroup, Inc. PHM and NXP Semiconductors N.V. NXPI.

Tuberville made a series of bearish bets on Texas Instruments, Inc. TXN through the purchase of put options and also outrightly selling shares.

The senator also sold shares in railroad operators CSX Corp. CSX, Norfolk Southern Corporation NSC and Old Dominion Freight Line, Inc. ODFL. Among biopharma, he bought shares of AbbVie, Inc. ABBV and GlaxoSmithKline plc GSK but sold Merck & Co., Inc. MRK and Johnson & Johnson JNJ.