TheChek News Flow

**NOTE: 11/13 3938.JP Reportedly Softbank's Z Holdings is nearing merger deal with Line Corp; Under the terms being discussed Softbank, which controls Yahoo Japan operator Z Holdings, and Naver Corp, which controls Line, would each own 50% of the combined company - Nikkei

TOKYO (Reuters) - U.S. President Donald Trump has asked Japan to quadruple annual payments for U.S. forces stationed there to around $8 billion, Foreign Policy reported, part of Washington’s efforts to press its allies to increase their defense spending.

The current agreement that covers the 54,000 U.S. troops stationed in Japan expires in March 2021.

The demand was made to Japanese officials during a trip to the region in July by John Bolton, at that time Trump’s national security adviser, and Matt Pottinger, who was then the Asia director for the National Security Council, the U.S. global affairs magazine said, citing unidentified former U.S. officials.

A Japanese foreign ministry spokesman said the report was incorrect and no U.S.-Japan negotiations on a new agreement have taken place.

According to Kyodo news agency, Japanese officials told Bolton the increase is “unrealistic”, saying Japan already pays a greater share of stationing costs than other allies.

A U.S. State Department spokesman said in an emailed statement: “The President has made clear that allies and partners should contribute more to their shared defense.”

Negotiations to renew the agreement will start in the first half of next year, the spokesman said, adding that the U.S. commitment to Japan’s defense was “unwavering”.

Japan hosts the U.S. Navy’s Seventh Fleet, including the only permanently forward deployed carrier strike group, as well as the Third Marine Expeditionary Force.

In addition to defending Japan, those units use the archipelago as a base for operations in the wider Asia-Pacific region where U.S. military power acts as a counterbalance to China’s growing influence.

Trump has also insisted Seoul shoulder more of the cost of the U.S. military presence in South Korea, where it serves as deterrence against North Korea, and has floated the idea of pulling U.S. troops from the peninsula.

(Reuters) - An Airbus-backed air racing tournament unveiled an electric-powered sports aircraft on Sunday, billed as the world’s first, as the European planemaker seeks to boost its green aerospace technology.

Several companies, including U.S. ride-hailing company Uber Technologies Inc (UBER.N), are working on electric-powered flying cars, amid increasing concerns about the environmental impact of fossil-fuel intensive air travel.

Last month, Airbus (AIR.PA) rival Boeing announced a partnership with automaker Volkswagen’s (VOWG_p.DE) sports car brand, Porsche, to develop a concept electric flying vehicle capable of transporting people in urban environments.

Air Race E said the aircraft, called White Lightning and unveiled at the Dubai Air Show, will be manufactured by UK-based Condor Aviation.

The aircraft will use an electric motor that will carry it at flight speeds of around 482 kilometers (300 miles) per hour on a tight 5 kilometer (about 3 miles) circuit, just 10 meters above the ground.

“The racing series will provide a test bed for innovation and accelerate the journey towards electric commercial travel,” Air Race E Chief Executive Jeff Walkman said.

Lithium batteries installed under the fuselage of the plane will provide power for five minutes of high intensity racing and around 10 minutes of reserve flying at reduced power, the firm said.

Air Race E is aiming to be the world’s first all-electric airplane competition when it launches its inaugural series of international races in 2020. It expects to this week name eight teams for its first race.

VENICE (Reuters) - Reeling from devastating floods this week, Venice suffered another exceptional high tide on Sunday, with the water peaking at 150 cm (4.9 feet), marking the worst week for the city since official tide statistics were produced in 1872.

The city’s center for tide forecasts had warned the tide could reach 160 cm on Sunday and the high mark hit at 1210 GMT was not far short of that.

Water flooded St. Mark’s Square and hundreds of voluntary workers were helping citizens cope with the emergency.

The city beloved around the world for its canals, historic architecture and art, was hit by a high tide at 187 cm (6.14 feet) on Tuesday. That was just short of the record 194 cm set in 1966 and caused the city’s worst flooding in 50 years.

In normal conditions, tides of 80-90 cm are generally seen as high but manageable.

With four tides above 140 cm since Monday, this is the worst week for high tides in Venice since 1872 when official statistics were first produced.

Mayor Luigi Brugnaro, who has been appointed special commissioner to deal with the emergency, estimated damages from the flooding in the city since Tuesday at around 1 billion euros ($1.10 billion).

Authorities in Florence and Pisa were also closely monitoring the Arno river, whose water levels rose rapidly in the night due to heavy rain.

Italy’s longest river, the Po, which runs across northern Italy passing through Turin, was also being monitored after its level rose by 1.5 meters in the last 24 hours due to heavy rain.

The retail reckoning isn’t just about department stores. MatchesFashion is going through a tumultuous stretch, while Farfetch is trying to get out from under steep losses. What's behind the market shakeout?

LONDON, United Kingdom — The luxury fashion industry’s e-commerce players are struggling to grow profitably.

Earlier this week, MatchesFashion, the UK-based multi-brand online retailer, reported its sales for the year ending in January 31 rose 27 percent, to £372 million. But the pace of growth was slower than the 44 percent recorded in the previous year. And operating profits plunged by 89 percent to £2.4 million, as the company added inventory and invested in a new warehouse to further its overseas expansion. Chief Executive Ulric Jerome abruptly left the company in August.

On Thursday, Farfetch reported that it sold $492 million worth of luxury goods on its marketplace in the third quarter, a 59 percent increase from a year ago. The company also reported an $85.5 million after-tax loss, slightly narrower than in the second quarter, and said it may be in the black by 2021. Investors, who have punished Farfetch in recent months over concerns about widening losses, applauded the results nonetheless, sending shares up 30 percent on Friday to $9.70. (For perspective, the company’s closing price on its first day of trading in September 2018 was $28.45.)

These companies and many others face intense pressure to grow as quickly as possible, either from shareholders in Farfetch’s case, or more often from private-equity backers hoping to use booming revenue to boost the value of their stakes ahead of a sale. Often that growth comes at the expense of profitability, as online brands and retailers invest heavily in marketing and building the infrastructure to quickly ship luxury products to customers around the world. Even Amazon reported a bigger-than-expected increase in fulfillment costs in its most recent quarter.

Competition is also intense; in addition to Farfetch and MatchesFashion, there’s market leader Yoox Net-a-Porter, plus Ssense, Mytheresa and LVMH’s 24S, and many, many other purveyors of luxury products. They must also contend with fast-growing resale sites like Vestiaire Collective and The RealReal, not to mention brands’ own e-commerce operations. On Thursday, Farfetch Chief Executive Jose Neves predicted that brands would pull out of multi-brand retailers online and operate as e-concessions on marketplaces instead, much as they have done in brick-and-mortar department stores.

Many e-commerce players have resorted to flooding Instagram and Google with advertising and offering discounts to hold onto customers. Both strategies are unlikely to succeed in the long run. Customer acquisition costs inevitably rise, and the type of shopper who clicks over to Farfetch from an Instagram ad promising a deal is unlikely to return.

Those tempting sales can also alienate the same luxury brands these online retailers need to survive. Prada and Gucci don’t want to see their products marked down. Rampant discounting at department stores is one reason luxury brands are pouring resources into building out their own store networks; many are now doing the same online.

“Farfetch is no Uber of luxury goods distribution: most of the luxury goods brands worth their salt already have limousines of their own,” Luca Solca, a Bernstein analyst, wrote in a research note on Wednesday.

Farfetch is trying some creative moves, buying sneaker reseller Stadium Goods in December and New Guards Group, the brand distribution and production platform behind Off-White and Heron Preston, in August. The company has struggled to explain how these acquisitions fit into its larger strategy of becoming the Amazon-like “everything store” for the online luxury world. A side business providing white-label e-commerce infrastructure to retailers like Harrods is a more obvious fit. A partnership with Gucci is helping to give Farfetch a clearer identity with consumers.

Matches is also attempting to scale, and running into many of the same problems as Farfetch.

Husband-and-wife founders Tom and Ruth Chapman started with a single boutique in Wimbledon in 1987, but the business expanded rapidly after the pair took their unique merchandising eye online in 2007. They sold a majority stake in September 2017 to private equity firm Apax Partners. The deal reportedly valued the company at £800 million, or about $1 billion.

Rapid expansion followed, including a major push in the US. Matches has also aimed to set itself apart from rivals like Farfetch and Net-a-Porter by offering what it bills as a more-personalised shopping experience. That includes a five-story townhouse in London’s Mayfair neighbourhood, which opened in September 2018. The space hosts events and offers personal shoppers for VIP clients.

Those efforts have paid off, when it comes to recruiting new shoppers and convincing existing customers to spend more. Matches said new customer growth was the main driver behind its growth in revenue in 2018, with the number of active customers rising by 34 percent to 474,000. The top 5 percent of customers were responsible for 40 percent of sales.

However, Matches reported spending £7.8 million on “exceptional items,” including a new distribution centre in North London, a creative and photo studio in East London and the relocation of its Hong Kong office. Earnings before interest, tax, depreciation and amortisation (EBITDA), dropped 43 percent to £14.7 million compared to £26 million for the 2017 financial year.

Luxury retailers are still figuring out their role, both online and off. (It’s no coincidence that high-end US departments stores like Neiman Marcus and Barneys have also struggled in recent years.) Online retailers in a sense created the problem they must now solve; they undercut brick-and-mortar retailers by flooding the market with luxury goods and the promise of free two-day, or even two-hour, delivery.

The question now is whether Matches, Farfetch and their rivals can find a way to grow that doesn’t require additional investment. Scaling is only going to get harder, given the intense competition for online luxury spending. Luxury shoppers also want a personalised experience and a sense the clothes being presented to them were chosen by buyers who share their (no doubt impeccable) taste. If they do get that, they have no obligation to remain loyal to a certain distributor.

Can Farfetch or Matches provide this experience and operate as a global e-commerce giant at the same time? And will the most desirable brands want to come along for the ride? Time will tell.

Apps like Rally and Otis have formed with similar missions of 'democratising' the art world through co-ownership and investment. Offering users the chance to invest in 'cultural artefacts,' however, may be risky.

NEW YORK, United States — Rolex’s “Pepsi Jubilee” watch, a stainless steel piece with red and blue colouring around the face, was purchased for around $17,000 in a lightning-fast sale earlier this month.

Potential customers for high-end watches are typically drawn from a small pool that includes hedge fund managers, professional athletes and private collectors. However, this particular Rolex was sold to 134 people, who paid as little as $8.90 for a share of the watch.

The buyers were members of Rally Rd., one of a growing number of apps and websites that enable anyone to own slivers of rare cars, sneakers, skateboard decks, fine art and other items these services dub “cultural investments.”

Almost all of the sites are targeted towards Millennials and Gen Z, the generations that have been quickest to embrace the concept of co-ownership. In fashion, Rent the Runway leads a pack of brands and start-ups offering clothing rentals, while millions of people buy and sell used clothing on platforms like The RealReal and Depop.

Apps like Rally aren’t exclusively devoted to fashion — the most recent auction there was for a Mickey Mantle baseball card — but rare clothing and accessories are frequently put up for sale. The company’s showroom in Manhattan’s Soho neighbourhood has a Birkin bag and a 1970 Rolex Beta 21 on display, among other items. Otis, a rival investment app, is set to offer shares in a pair of sneakers from “The Ten” — a collaboration between Virgil Abloh and Nike — that was also featured in Sotheby’s sneaker auction (the highest bid on the collection was $22,000).

Returns on these investments are still largely theoretical; Rally was founded just three years ago, and Otis started in 2018. Art valuations are notoriously volatile, to say nothing of a new pair of Off-White sneakers.

“Our job isn’t to be investment analysts,” said Otis Founder and Chief Executive Michael Karnjanaprakorn. “[Users’] primary motivation is owning a piece of culture. They want to support the artists. The financial side is just like an added bonus.”

For most of these sites, users simply download the app and fill in their personal data along with banking information and wait for a “drop” to purchase shares of a product. All apps offer detailed descriptions of the products including the price, number of shares offered, comparable asset value and certificate of authenticity as well as artist bios and a timeline of the product itself.

Rally and Otis rely on the streetwear model of weekly “drops” to build hype for each sale. Rally also sells related merchandise to give customers a sense of ownership; the Lamborghini aficionado who buys a $150 share in a Countach Turbo may never drive “their” car — or even see it in person — but they will have the option to buy a limited-edition T-shirt and a candle that smells like the car’s leather interior.

“Those sold out immediately,” said Rally Co-Founder Rob Petrozzo. “It brings the whole thing to life a little bit more ... it's a display piece you put in your office or in your apartment ... which then becomes a marketing vehicle."

The site has raised approximately $13 million so far, including a $7 million Series A round last year led by Upfront Ventures, who also has invested in sneaker marketplace Goat as well as ThreadUp. Other Rally investors include Anthemis Group, the rapper Nas and Jeffrey Katzenberg's WndrCO.

The UK- based Feral Horses also offers a multi-tiered system in which artists, or the site itself, offer rewards depending on how many shares users buy. For the sale of a Patrick Hughes’ painting, multiple shares of the work can get users a range of “exclusive” items and experiences, including posters, an invitation to a private party with the artist or a studio visit.

Otis has started offering exclusive items designed for the app’s users. For one upcoming drop, the designer Jeff Staple curated a selection of rare Nike SB dunks, which the San Francisco-based artist “Fnnch” painted on canvases. Both the shoes and the paintings will be up for sale.

The market for rare sneakers and streetwear items is thriving online at sites like StockX, Goat and Stadium Goods. Staple’s Nike SB Dunk Low, for instance, helped define modern sneaker culture back in 2005 when huge crowds waited to buy a release of just 150 pairs. They sold for $200, but this summer a recent sale of the shoe went for $13,500 on StockX.

Even classic auction houses like Sotheby’s are expanding to streetwear items in a bid to appeal to younger consumers. The auction house recently participated in a partnership with Stadium Goods for a rare sneaker sale, and auctioned rare Supreme items in May. Though sales of such items are relatively new, many younger bidders have a better idea of how much rare clothes or shoes are worth, thanks to sites like StockX and The RealReal.

“There are very few secrets about comparable pricing on anything that you’re buying,” said Frank Everett, sales director of Sotheby’s luxury division. “[Consumers] come with a lot more information and more confidence about what they’re buying.”

That doesn’t mean the small-time buyers purchasing shares on Rally or Otis are likely to make sizable returns, if any. Art, collectables and other rare items are risky investments to begin with — some handbags and rare watches appreciate in value over time, but the vast majority quickly lose value.

“Since 2017, we’ve seen astronomical rates of growth in [prices],” said Natasha Degen, a professor and chair of art market studies at the Fashion Institute of Technology. “But do we expect to see that over the next five or 10 years? I would say it’s very unlikely.”

While the Sotheby’s auction made headlines after its sneaker sale, 99 out of the 100 shoes were purchased by a single collector, and before the mass buyout, as sites like Vox noted, many of the shoes failed to receive any bids.

So-called fractional investments add an extra layer of danger because it can be difficult for individual shareholders to sell out. Transaction, storage and maintenance costs, along with insurance, can make passion investments like the ones offered on platforms like Rally and Otis even riskier.

“I think it’s very unlikely that this could offer spectacular rates of return,” Degen said.

An item’s value can depend on what it fetched in previous sales and trends in the marketplace, but also its cultural significance.

“If a car is in a Beyonce video, it’s way more important than a car that isn’t,” said Petrozzo.

There’s also the question of provenance. The RealReal recently came under scrutiny for its authentication practises, following reports that counterfeit items had been sold to users. Chief Executive Julie Wainwright responded with an email to customers stating that the second-hand marketplace “strives for perfection, but may not be perfect every single time.”

The site launched an authentication page that shows users profiles of the company’s experts in charge of authenticating items, including their degrees, previous experience and area of specialty.

Rally and Otis said they seek out appraisals by experts in an item’s category and often buy directly from well-known galleries or the artists themselves. For sneakers, Otis said they source from established sellers like Stadium Goods that come with an authentication guarantee. They also rely on a network of authenticators that inspect the shoes in-person.

Many of these sites also have aligned themselves with streetwear products in an attempt to appeal to consumers that are used to buying Supreme skateboard decks they’ll never put wheels on, or hoodies they’ll “flip” for profit.

“The conversation about what we do as a business requires no hand-holding,” said Petrozzo of the site’s primary demographic. “They completely understand what we do.”

The cashmere brand on a mission – Naadam – is taking up tenancy in Hudson Yards with a 750-square-foot store opening Saturday.

The Millennial-favored cashmere brand on a mission — Naadam — is taking up tenancy in Hudson Yards with a 750-square-foot store opening Saturday.

This will be the brand’s third store in New York, following locations on Bleecker Street in West Village and Prince Street in SoHo. This comes after the momentum of Naadam securing $16 million in series A funding last year, which included Torch Capital, among others.

WWD spoke with chief executive officer and cofounder Matt Scanlan in anticipation of the store opening in Hudson Yards, sustainability, as well as overall growth strategy for Naadam.

“We built the brand to speak to this Millennial generation,” said Scanlan, a Millennial himself as well as investor. He feels the appeal of Naadam is truly ageless though. The former Wall Street executive counts an array of sustainable investments under the venture capital firm he cofounded called Magic Hour Ventures.

When speaking about his other friends and investments in the space, Scanlan said, “If you do similar work, you have a lot in common.”

What is sustainability to Naadam? “Sustainability is actually the format to which we achieve those things. We go direct to the source, we can pay more than others, cut costs to the customer,” said Scanlan.

This includes ingraining fair wages and animal welfare at the core. When WWD asked about the company’s manufacturing processes and why they were more sustainable, Scanlan pointed to how the teams are seeing a “renewed effort” across the company, even meeting monthly to ensure greater transparency.

At present, Scanlan said they monitor every one of their facilities, using third-party audits to track energy, water and chemical usage, among other factors.

“The best corporate sustainability processes are the ongoing ones,” said Scanlan.

Naadam is able to make cashmere that prioritizes, as Scanlan says: “quality, sustainability and affordability,” by staying close to the source (herders in Mongolia) of its materials (goats which are ethically combed, instead of sheared, a practice which has been key to the Mongolian culture for thousands of years).

Scanlan doesn’t like to follow the herd in the use of sustainability buzzwords and even questions when companies tout “recycled cashmere” too heavily, although he said the brand is looking into it for the next year.

But their marketing videos do capture a certain energy. “I try to have a sense of humor about it. That’s our brand tone. We do things the right way, but we don’t take ourselves too seriously,” said Scanlan.

When Scanlan spoke to WWD a couple of years ago, wholesale was still very much a performing channel for the 2013-founded brand (not a focus today), but now the majority of the brand’s growth is through its web site, with physical retail being another performing touchpoint.

Which leads back to opening a Naadam location in Hudson Yards.

Is Hudson Yards a mall? Not in so many words, according to Scanlan who said: “When I think of malls I think of something really really different.” He listed off several amenities and factors such as strong foot traffic, right brand alignment and customer demographics, that make the location an ideal fit for Naadam.

“We feel like we can have a lot of stores in New York City,” said Scanlan, adding that “next year will be another big year for retail” with the goal of opening four to five stores next year, without revealing tentative locations.

Although a date has not been set, the company could be eyeing to go public after 2023.

MILAN – A possible public listing of Missoni has been in the cards since the sale last year of a 41.2 percent stake to the Italian FSI fund for 70 million euros. Pinpointing a specific date is premature, however, said vice chairman Michele Norsa, clarifiying with WWD a media report. President and creative director Angela Missoni on Thursday said during a trip to London that she was eyeing 2023 as a possible date for the listing, according to Italian daily Il Sole 24 Ore, although no details were provided about setting an IPO in motion.

In a phone interview from Asia on Saturday, Norsa said that FSI will “evaluate the opportunity of a listing starting from 2023. We are not working on the IPO now, it is a long procedure. Rather, we are building our organization, value and credibility, staying true to a timing we had mapped out to develop the company, which includes several store openings.” In fact, Norsa was busy with the opening of a unit in Singapore, which will be followed by a Missoni boutique in Miami at the Bal Harbour Shops and an M Missoni store at the Aventura Mall. Three stores are in the pipeline and expected to open next year in China.

To be sure, a public listing is a “choice pleasing to the shareholders,” said Norsa, but the executive was cautious about a timing against a scenario and “a world that continues to change.” The company, he said is growing at a double-digit clip.

Market sources say Missoni is working on bringing its longtime Home license in-house, negotiating the acquisition of the T&J Vestor firm, a storied textile company owned and helmed by Rosita Missoni’s brother, Alberto Jelmini. The Home line is historically a top performing division for the brand. In September, Margherita Maccapani Missoni presented in Milan her first collection as creative director of M Missoni, which has also been internalized.

Missoni is also expanding its product offer and is said to be working on inking a watch license by the end of the year. “These are advanced stages of projects that will allow to expand Missoni’s visibility,” said one source.

In an interview with WWD in June, Norsa, who is an industrial partner of FSI, reiterated that the IPO was a possibility for the fund to exit the investment. He also underscored a need to pace the growth of a company that last year reported sales of 150 million euros. “M&As of this kind sometimes create some unnecessary anxiety over promises and plans, while I believe it’s important to frame the point of view of the buyer and its investment. I think there should be strong harmony within the company and in the growth of the brand. There must be a growth of the product, of the structure and of the distribution, measured with one’s own strength. If you have 20 or 30 directly operated stores, you can’t go and open 10 in a year,” he said at the time. A former Valentino and Salvatore Ferragamo chief executive officer, Norsa spearheaded the listings of both companies and was a strong link between the Missonis and FSI, leveraging his track record and long experience working with families.

The Missoni family has a 58.8 percent stake in the company, which was founded in 1953 in Gallarate, Varese, by Rosita Missoni and her late husband Ottavio, known as Tai.

The fund is investing 10 million euros in the areas that Missoni needs to develop: the U.S. and Asia, and the brand’s retail network, which counts more than 70 stores between directly operated and franchised units. A concept flagship was unveiled in New York in September on Madison Avenue between 61st and 62nd Streets, designed by Missoni’s go-to architect, Patricia Urquiola.

Norsa has plans to bulk up the accessories and shoe division with in-house production in 2021. New potential licenses, including the development of perfumes and the gifts category — are also seen as key. Missoni in December inked a renewable five-year licensing agreement with Safilo Group for the production and distribution of prescription eyewear and sunglass collections for Missoni and M Missoni, with the new products available beginning in January 2020. The executive is working on creating a strong structure for the company and last month, as reported, Antonio Moltoni joined the group as chief executive officer of Missoni USA, a new position.

Tesla has become the Donald Trump of the stock market. Investors love or hate the electric-car maker much like the electorate feels sharply divided about the president.

While Trump’s political fate will be decided next year by voters, or earlier by impeachment proceedings, Tesla’s (ticker: TSLA) latest defining moment—yes, this controversial stock has had many such moments—will soon be at hand.

Tesla is about to unveil an electric pickup truck, thus entering an ultracompetitive auto category. The Nov. 21 event—and the subsequent reaction in the stock and options market—will help determine whether the cult of Tesla will relive the bearish volatility that defined the earlier part of the year, or if it will ride the stock’s recent extraordinary strength into 2020.

Since late September, Tesla stock has rallied about 58%, while the S&P 500 index has gained some 7%. So far this year, though, the stock is up an anemic 4%, compared with about 20% for the index.

The lumpiness of Tesla’s stock performance seems to ensure that anyone who trades or follows Tesla must endure the kind of theatrics found in bare-knuckle political campaigns.

During the past 52 weeks, Tesla stock has ranged from $176.99 to $379.49. One analyst just raised Tesla’s target price to $400 from $300. Others have raised concerns that General Motors (GM) and Ford Motor (F) will challenge Tesla by introducing competing electric pickups. The tension is palpable, especially since Tesla just reported surprisingly good earnings, suggesting that the controversial company might finally redeem itself. Or not.

To complicate the story even more, CEO Elon Musk, who uses social media like Trump, recently engaged in another Twitter battle, this time with bearish hedge fund manager David Einhorn.

When all of this Sturm und Drang is added up, Tesla’s options are priced as if fireworks will soon shoot out of the puts and calls. Tesla’s implied volatility is around 42%, or about four times higher than the S&P 500. Tesla’s historic volatility is around 60%. This means the stock is priced in the options market as if shares could move approximately 2.5% to 4% on any given day.

Aggressive investors with an appetite for risk could sell a put and buy a call in anticipation that Tesla shares will make a sharp move in response to the truck unveiling. (Puts increase in value when the underlying security price declines, while calls increase in value when it increases.)

When the stock was around $352, investors could sell the November $347.50 put that expires on Nov. 22 for $5.38 and buy the November $355 call that expires on Nov. 22 for $6.20.

This “risk reversal,” one of our favorite strategies, obligates investors to buy Tesla stock if it is at the put strike price at expiration. Investors also profit from advances above the call strike price. If the stock is at $365 at expiration, the call is worth $15.

The key risk is that the stock falls far below the put strike price, obliging investors to buy the stock at $345 at expiration or to cover the put at a higher price

In practice, this means that investors buy puts to hedge stocks, driving up put premiums, while they underestimate rallies. Plus, many investors increasingly sell calls against their stocks—a strategy known as “overwriting”—and that further suppresses upside volatility and makes calls even cheaper.

These facts are the options market’s equivalent of the old stock-market trope about buying low and selling high, but they are not widely known. To use such a strategy on a controversial stock ahead of a key event isn’t for the faint of heart. But if you relish volatility, Tesla is one of November’s top trading opportunities.