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Congress trading alert: Senator goes bearish on Tesla stock

Congress trading alert: Senator goes bearish on Tesla stock

On November 7, Finbold shed light on US Senator Tommy Tuberville’s lucrative financial maneuvers, drawing attention to numerous suspicious stock trades. 

Tuberville’s well-timed investments included a substantial commitment to e-commerce firm ChannelAdvisor, valued at approximately $665,000. Within a month, ChannelAdvisor announced its acquisition by CommerceHub, triggering a surge of over 50% in the stock’s value. The Senator reportedly sold the stock the next day.

Most recently, Tuberville, who is also a vocal opponent of banning congressional stock trading, took a bearish position against Tesla (NASDAQ: TSLA).

Tuberville buys TSLA puts

As revealed on November 16, Tuberville purchased put options against Elon Musk’s Tesla.

Notably, the US representative bought $50,000 worth of TSLA puts, unusual_whales said in its X post. 

Tuberville purchases in TSLA puts. Source: unusual_whales X account

Put options are financial tools that grant the holder the right to sell an asset at a predetermined price within a specified timeframe. They are considered bearish as they enable investors to profit from a decline in the asset’s value by selling at a higher predetermined price.

Tesla puts that Tuberville bought are priced at $190, notably lower than the stock’s current price of around $233 per share. 

This means that the Senator is bearish on TSLA, anticipating a decline in its value. If the stock indeed falls below the lower strike price, the put option allows Tuberville to sell the stock at the higher strike price, thereby realizing a profit from the anticipated decline in the stock’s value.

These specific puts are set to expire on December 15, 2023. 

Congressional trading, an increasingly controversial matter

Prior to TSLA, Tuberville accumulated put options tied to several other well-known stock market names, including Texas Instruments (NASDAQ: TXN), Coca-Cola (NYSE: KO), United States Steel Corporation (NYSE: X), and Lousiana-Pacific Corp. (NYSE: LPX), among others. 

The contentious issue of congressional trading is gaining momentum, with members of Congress and Senators, colloquially known as ‘lawmakers,’ frequently gaining privileged access to insider information about certain companies. 

This advantageous position empowers them to execute trades and react to market-influencing details before it is publicly disclosed, giving rise to ethical concerns.

As unusual_whales aptly put it in its tweet, “A US Senator has leveraged positions over companies they legislate,” it said, referring to Tuberville’s bet on TSLA. 

However, these practices may come to an end in the future. Senators Kirsten Gillibrand and Josh Hawley put forward a new law – ‘Ban Stock Trading for Government Officials Act’ – in late July, seeking to prohibit members of Congress and the federal executive branch, including the president, from trading stocks

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