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Paydirt's (TSLA) Option Investing Guide

Discussion in 'TSLA Investor Discussions' started by paydirt76, Jun 15, 2020.

  1. Boomer19

    Boomer19 Active Member

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    thanks

    i sold pretty much all options except jun22 600c i got for 121.00
    have all LTCG shares that am sitting on and prob won’t sell anytime soon

    and a few Aug puts for sh!ts and giggles that i’ll prob take a few k profit on shortly
     
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  2. hershey101

    hershey101 Member

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    When the experts on these forms say sell and go away... I listen..
     
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  3. Boomer19

    Boomer19 Active Member

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    well, i took a lot of risk off compared to what i had. i was heavily concentrated in tsla and still am compared to about 95% of the population. so i did sell, but technically didn’t go away
     
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  4. tander

    tander Active Member

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    Yeah I think like 6mo ago would be 10-20x, but 9mo ago is like 80-90x!
     
  5. juanmedina

    juanmedina Active Member

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    Why did you change your mind? Do you think the inclusion is priced in?

    Other folks like Fact Checking seem to think that we could still have a significant increase in the SP.

    Screenshot_20200718-120805.png

    Can you talk about more about when to sell options? Everyone seems to focus on the buying plan but no one talks about the exit plan. For instance the 1300c Jun 21 that I got I paid $140 for it and now is $540 in my IRA...a tiny gain by TMC standars lol but I am not sure what to do.

    I have to thank you because the few options that I have I got because of you. I was watching the options almost daily from the $700s but I never pulled the trigger because of the "options are too expensive" crowd...which in a way it's true. I was going to get more options in $650s because I had sold some options in that price range and it never happened.

    I got approved on brokerage for a Level 3 account to find out that to trade spreads through Vanguard I have to do it over the phone :confused:.
    So my plan now is to hold the option to the next year and sell the Jun 21 call. Or sell it if we go up crazy high because of the S&P inclusion and just pay the short term gains tax :(.
     
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  6. mongo

    mongo Well-Known Member

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    Interesting, taking a step back, you mentioned shares in a retirement acvoubt, is this a tax deferred or exempt account like an IRA (Roth)? If so, there is no short vs long terms tax difference.
    Or do you have both retirement specific and post tax trading accounts?
     
  7. juanmedina

    juanmedina Active Member

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    Yeah we have both retirement accounts and after tax accounts.
     
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  8. juanmedina

    juanmedina Active Member

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  9. MABMAB

    MABMAB Member

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    Did the OP, who joined here a month ago to talk about options, disappear after selling out, contrary to his original thesis?
     
  10. paydirt76

    paydirt76 Member

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    You never bought :p
     
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  11. MABMAB

    MABMAB Member

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    I never sold what I had.
     
  12. paydirt76

    paydirt76 Member

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    Last I checked, share price is still below where I sold :p One 5% up move is enough to send all you long-timers into a tizzy? Sold the Aug 21 2020 1500C for average price of $360. That will look like a bad sale soon, but that's OK.

    Two reasons, one: goals. My goal is to own 5,000 deltas for the next 5,000 points (already rode 10,000 deltas for 1,100 points). Two: Already made 4.2 million from P&D and then inclusion. My goal in my mind was to 3x my short term play. I 4x'd. We can all get greedy. Of course it is being pointed out that I would hold options until inclusion day. Already admitted to being human in the post where I talk about buying 5,000 shares. Somebody's getting muted.

    Can you talk about more about when to sell options? Everyone seems to focus on the buying plan but no one talks about the exit plan.

    It has to start with goals and risk management. Obviously, I have a hard time sticking to the extra per-trade battle plan. Still have some plans until the options window is about permanently closed. Gonna be harder Upside calls are no longer just the same volatility as ATM, they are now higher volatility. Lotsa demand for upside. They still might be cheap to what happens. We shall see. Still have 1 million earmarked for a play.

    I have to thank you because the few options that I have I got because of you. I was watching the options almost daily from the $700s but I never pulled the trigger because of the "options are too expensive" crowd...

    Best to look at how the stock actually moves instead of just looking at the options market.

    So my plan now is to hold the option to the next year and sell the Jun 21 call. Or sell it if we go up crazy high because of the S&P inclusion and just pay the short term gains tax :(

    No need to hold it to that year, just sell the call right above it to neutralize the risk when you want to effectively sell. Thus you are converting the call to a call spread. You pocket the cash from the call sale and can then change your position to whatever you want.
     
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  13. vikings123

    vikings123 Supporting Member

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    Excellent thread. Can you give an example of how this works? So the covered call is against the lower strike call instead of your core shares is what I'm understanding. Also does this strategy in anyway help offset taxes? I assume not but sometimes it's funny how taxes work. Cheers.
     
  14. paydirt76

    paydirt76 Member

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    Let's say you own 4 June 2021 640C in a taxable account. You want to roll up strikes or get out and not pay taxes. Just sell 4 June 2021 640C against it. You will need the approvals to do so. You pocket the cash from the sale and don't pay tax until expiration. You will have to work with your CPA to figure out the rules on options and taxes. Allegedly if you allow them to go to expiration without exercise then it is a short-term gain.
     
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  15. ggr

    ggr Expert in Dunning-Kruger Effect!

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    I will object to your "allow them to go to expiration". You sold them, you have no control over if/when they get exercised, except to cover them at some point. This deep in the money it's quite possible someone will want to exercise them early to get the low cost basis (I have done so).
     
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  16. hershey101

    hershey101 Member

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    This strategy is also used by many folks to take profits on shares by selling deep ITM calls against their share holdings without hitting short-term capital gains tax. Of course, this only works if you want to sell your shares in 100-share increments. You can also delta-hedge in smaller increments by selecting a strike further away.

    @paydirt76 What is the other play you are eyeing? Are you waiting for the ER to be over, and the IV crush to hit the short/medium term options before executing?

    There was a great post by one of the form members (apologies I don't remember the name) describing the impact of S&P inclusion around the announcement and inclusion date... I think the example that most closely resembles $TSLA is probably $FB in terms of the size of the company, the effective float being bought up etc. We could very well see a 20-30% move around S&P inclusion desipte my objections to the current valuation.

    I made the mistake of not accumulating more shares today morning after eyeing the price for 15 minutes and having my finger on the buy button.... Let's see if I get another chance.

    Honestly, I hope $TSLA shows a $GAAP loss... I think for the bulls, that's the best thing that can happen. The momo traders will quickly dump shares, and bring the price down hard and fast as stop-losses get hit... More bad news will run amuck, and we here on TMC will quitely watch and accumulate more :).... It won't happen, but a man can hope right?
     
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  17. juanmedina

    juanmedina Active Member

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    #197 juanmedina, Jul 20, 2020
    Last edited: Jul 20, 2020
    One more question in my case with Jun 21s 1250-1300 and the January 1500. Is it worth selling before earning because of the IV crush? I am not sure how much the options will drop by because of the drop in IV. Thanks again. If I sale them I will loose 120 points of delta if I replace them with shares and If I sit on the cash I usually loose money lol but maybe this time could be different. At least for my IRA ones.
     
  18. paydirt76

    paydirt76 Member

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    If you can hold on for the ride, I believe the ideal time to sell would be the day before inclusion date. Just a guess. I did not delve into Frank SG's research yet.

    @hershey101 The play I make today or tomorrow will likely be Sept or Oct. Not sure I will have the courage to hold until inclusion day. I tend to chicken out on my battle plan a bit. But super happy I reached my goal as evidenced by the 5,000 shares in my Roth :p
     
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  19. Robertj

    Robertj Supporting Member

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    I hold some Jan 20 1250 calls , cost $60 , now $500
    I do not want to sell , but want to take out some insurance
    What should I buy to , limit my downside , but still have some upside ?
    Any thoughts appreciated
     
  20. saniflash

    saniflash Supporting Member

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    #200 saniflash, Jul 21, 2020
    Last edited: Jul 21, 2020
    sell OTM covered calls against the position?
     

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