Apparently there are convertible bonds out there for the 360 price. Here is how it effects the price:
"I suspect a great deal of the bond arbitrage that is going on, will continue to bump up short levels, as it is essentially free money. It's a lot like repeatedly selling covered calls, without the equity risk, since the equity only comes into play if your position is a big winner."
"Dans, brilliant. . .that makes perfect sense.
This, all by itself, could explain why the stock seems to have trouble holding over $360/share.
Every time it gets above that point, a window opens for convertible bondholders to short shares against their bonds for arbitrage, locking in their bond value ("free CDS") and the difference between the exercise and stock prices. That, in turn would tend to drive the stock price back down, and it could happen repeatedly until every convertible bond is covered.
How many of these convertible bonds are there?
On the flip side, if the bonds are converted, even assuming all the bondholders just used the new shares to liquidate their short positions, there would still be associated dilution. Don't see how the stock could rise even with their short covering. .
If the bonds are not converted, then either they're paid in full at maturity, or they're not.
If they're not paid in full, TSLA is in bankruptcy court and then the bondholders will cover their shorts.
If they are paid in full, by definition, the bondholders are ahead on their short positions (otherwise they'd have been converted) and THEN the bondholders cover.
Now we get massive short coverage but without dilution. Wouldn't that drive up the stock price?"
https://seekingalpha.com/article/4182582-tesla-playing-blame-game