A ‘Time Arbitrage’ Options Play on Tesla Stock

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Tesla cars at a Chicago dealership.

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It will soon be truth or consequences time on Wall Street.

Many of the world’s most important companies are about to start reporting quarterly earnings, providing investors with an opportunity to compare their estimates of reality with data and commentary from sophisticated corporate practitioners.

Whatever can be said about what happens next in the financial markets, one thing is clear: Many investors remain confused. The Federal Reserve and other central banks have begun to raise interest rates, bringing about the end of two decades of easy-money policies that supported stocks and the economy. Earnings reports should give investors insight into what comes next.

The trend, in short, may no longer be your friend, and in such times, it is helpful to have an investing framework. JPMorgan Chase CEO Jamie Dimon recently provided one in his annual letter to shareholders.

Dimon warned of the unprecedented risks facing the U.S. economy, ranging from Russia’s invasion of Ukraine, persistent inflation, rising rates, the Covid-19 pandemic, and even the potential reordering of the world order. But he also offered some insight into the basic principles and strategies that he used to build his bank.

“We strive to build enduring businesses, and we are not a conglomerate—all our businesses rely on and benefit from each other. Both of these factors help generate our superior returns,” Dimon wrote, offering investors a useful way to evaluate companies that are well run—and potentially worthy of long-term investments.

Investors who are intrigued by this can take advantage of a strategy that we have long called…


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