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Newbie Options Trading
- Thread starter Jonathan Hewitt
- Start date
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- investing options TSLA tsla stock
I fully expected and appreciate the sage and cautionary advice following my investing wish post. The way people are willing to spend time to share their considered thoughts and experiences which keeps me reading these boards but these boards are also the very reason I think the stars will align again over Freemont CA and create another opportunity for serious short term gain. I am interested in the slightly longer term approach with LEAPs but these are not available to me given the restrictions on capital. My intention has been to use a portion, not all, of retirement funds but still make an effective purchase while using available funds to continue to aggressively pay down the mortgage. Since my last post I've mapped out some plausible options, compared it to just buying stock, and considered the taxes. The tax consequence of such an approach make it untenable: increased tax bracket, substantial income tax, unearned income Medicare contribution tax, and early withdrawal tax (temporary but still substantial) make buying stock in a tax deferred account the better option by far. Now I'll hope and wait for the pre-conference call dip and increase my long position. In time it will still pay for the car, only after I have one and not before.
borat99
Member
I think this was posted before: http://www.optionseducation.org/tools/faq/leaps_cycles.html
Link lists info about options cycles. Tesla is Cycle 3
InTheShadows
Active Member
Is it realistic to get a great price on the nov options as soon as the options are available? How does that work? Does someone have to write some calls before I can buy some? Are they usually in high demand, fetching a premium, for earnings plays? I'd like to buy some but am not quite sure how the market values them at the start of their availability. Any answers to any if the questions is much appreciated n
There are market makers who make a market in these options. Since tomorrow will be the first trading day for the Novembers you will probably see a very wide bid/ask spread so you will most likely not get any great deals.
I would wait a few days or weeks until TSLA calms down a little bit before buying. We just had a 12% run up in the stock and the odds are that now is not the best time to buy.
Of course there is a chance that TSLA keeps going up this week, so you never really know when is the best time to buy.
I've started looking at IV by each month (and even by each strike price) and it's really eye opening. For example, IV for Oct is in the low 50's and for Nov it's in the mid 60's or so. Pretty crazy gap but that's obviously b/c of Q3 ER. Anyone else look at IV like this? I think looking at IV on a strike by strike basis might actually affect which strikes I choose to buy in the future.
Which LEAPS did you buy? Depending on what strike you bought it's possible there's been 0 volume over the last couple trading days. That would make the current price the last traded price = your price. If you go to google finance you can view the option chain and see the volume on all the options on a current day basis.
Mario Kadastik
Active Member
For a guideline on the price look at last bid/ask as the bracket usually moves around with the price even if the volume is zero
What's the difference between buying a put and selling a call? They both seem to serve the same purpose, earning cash on a stock decline.
I understand the technical difference between obligation to sell versus the exercise right, but what are the practical reasons why you'd do one over the other?
I understand the technical difference between obligation to sell versus the exercise right, but what are the practical reasons why you'd do one over the other?
InTheShadows
Active Member
When you buy, you are the one in control. When you sell, the other party can exercise at anytime, even if it doesn't make sense.
One reason is that your losses are theoretically unlimited if you sell a call and the stock skyrockets, whereas the maximum you would lose buying a put is your purchase price.
If writing a naked call and then buyer executes, then it'll be theoretically unlimited (you need to buy shares to cover the naked calls sold). But writing a covered call and then the buyer executes, the loss will be limited to the shares called away that you already own. This is my understanding of calls.
marvinat0rz
Member
Does anyone here have a costless collar on their position?
I am considering to do this, since Tesla is now 70% of my net worth and 90% of my stock broker account, but I am still bullish on the company. Is there anything special I should consider in this regard? Is there a detailed guide with the things I need to consider when holding such a position long-term? I'm thinking with regards to how to "reset" it, how much it will cost in commision as a percentage of my total position (think broker fees), the risk of losing out on large gains, etc.
I am considering to do this, since Tesla is now 70% of my net worth and 90% of my stock broker account, but I am still bullish on the company. Is there anything special I should consider in this regard? Is there a detailed guide with the things I need to consider when holding such a position long-term? I'm thinking with regards to how to "reset" it, how much it will cost in commision as a percentage of my total position (think broker fees), the risk of losing out on large gains, etc.
I bought some puts with cash, but since then my account has been margin enabled. I sold the puts and bought slightly more in calls. I have far more than enough in cash to cover the transactions, but TDAmeritrade lists me as having a slight negative margin balance as it seems to have used that rather than my cash to finance the purchase of the calls. It's not a problem I suppose, assuming they're not charging me interest, but I'm curious why it's done that way?
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