A Tesla Supercharger (Pixabay/Pexels).

Twitter Bid Adds Political Risk To Tesla

In recent posts, we've noted that Twitter's (TWTR) political importance to the current establishment far exceeds its market cap. That explains why Tesla (TSLA) CEO Elon Musk has faced resistance to his takeover bid. 

Now, Bloomberg reports that U.S. regulators are applying more scrutiny to Twitter's Autopilot feature than ever before. 

The Timing Doesn't Seem Coincidental 

The timing of this record scrutiny of Autopilot doesn't seem coincidental. If it had nothing to do with Musk's Twitter bid, why wasn't this level of scrutiny applied after last year's deadly Autopilot wreck? 

Even if the increased regulatory scrutiny in the wake of Musk's Twitter bid is a coincidence, it increases perceptions of regulatory risk for Tesla. 

A Recent Top Name

Tesla has been a recent top name for our system, including in our top ten cohort on March 17th. 

(Click on image to enlarge)

Tesla has been our third best performer so far from that cohort, after Peabody Energy Corporation and ProShares Ultra Bloomberg Crude Oil, but it wasn't in our top ten on Monday. If you're long the stock and looking to add some downside protection here, below is a way you can do so. 

Crash Protection For Tesla

As of Monday's close, this was the optimal collar to protect 100 shares of Tesla against a greater-than-20% drop over the next six months, while not capping your possible upside at less than 24% over the same time period. 

Screen captures via the Portfolio Armor iPhone app. 

The net cost of that collar was negative, meaning you would have collected a net credit of $975 when you opened it. That's assuming you bought the put and sold the call at the worst ends of their respective spreads, so you would have collected more if you placed both trades within the spread.