S&P spike - when to sell and when to re-buy?

[adiggs]

After Monday trading (~+$30 on the share price), I haven't seen anything to change my larger plan for the week. The short version being - see what happens on Wednesday and decide from there (hold through tomorrow pretty much regardless of what happens).

More detailed.
- the Jan '21 contracts are just holding, with the current intention of closing them the first week in January. For me, this is driven by these contracts being in a taxable account, and I'd like that tax event to be next year. They are also performing particularly well, leading to my prior observation that the next time (assuming there is one), I'll go for the month after instead of the week after.

What I'm monitoring with these is a big enough spike this week or next, that the post inclusion drop will be big and fast enough, to make paying the taxes and closing this year a better idea.


- the 12/18's - are all near ITM or ITM. My plan of the moment is to see what happens on Wednesday. I'm looking for evidence of the start of significant buying (and I'd really like to see that tomorrow as well, though I don't really expect to). If I don't see the buying pressure on Wednesday, then I expect I'll close up shop on these. I won't like it, but they still have a lot of time value despite being near ITM, so take the win.


- The 12/24s are the 700 and 900 strikes. I don't know what I would see tomorrow that would stop me holding through most of the day Wednesday. I'll have a faster trigger on the 900s - they need to get a move on soon, or I'll let 'em go. I won't like it though! The 700s are likely to be the position (along with the Jan '21s) that I carry through 12/18 and into the week after. I also want to see what next week trading looks like, with a reasonably good chance at a continuing swell. I do expect the 700s will be ITM by then, making it easier to see what the front half of next week brings.


NOT investment advice, and worse - I am historically bad at option purchases. This time around, the calls look like they'll be a net money maker, and pretty good at that. That is unusual for me.

 

[ammulder]

the Jan '21 contracts are just holding, with the current intention of closing them the first week in January. For me, this is driven by these contracts being in a taxable account, and I'd like that tax event to be next year. They are also performing particularly well, leading to my prior observation that the next time (assuming there is one), I'll go for the month after instead of the week after.

What I'm monitoring with these is a big enough spike this week or next, that the post inclusion drop will be big and fast enough, to make paying the taxes and closing this year a better idea.

I have only January 15 2021 $800 calls, so this is what I'm grappling with. My sense is that the price is unlikely to rise between Dec 22 and Jan 1, so quite possibly TSLA price will be down somewhat, IV will be down somewhat, and time value will be decaying -- all three downward pressures on the call prices. Therefore I think I want to sell on 12/18 or 12/21 or very shortly thereafter. I just can't decide what the week of 12/21 will look like.

I do have prices I will sell those calls at no matter what -- at a certain point I will have accomplished my most optimistic goals and will take the profits and run no matter how much higher it "might" go. The problem is those prices aren't really fixed until I see the price action this week. I have limit sell orders in for all of them, but I may be tweaking those right up through Friday close.

 

[pjferr]

Hmmm, not a bad idea. I like the tiered sales. Here are my thoughts:
TSLA S&P SP Prediction - Conducted Dec-12th weekend
If you are long term holders, then why sell at all? I understand the idea of cashing some out, especially if you need the money, but those numbers seem a bit low, especially if you understand that Tesla is growing at nearly 50% yoy. At that rate, we might easily see $900-1000 in 2021, $1200-1400 in 2022, $1600-1800 in 2023, $2000-2500 in 2024. So, what company is a better investment? Please let me know because I would like to investigate it (as long as it’s in greentech).

The only reason for selling would be to in an attempt to accumulate more shares on the anticipated dip after inclusion, taking advantage of the fact that my Wife & I are are holding in tax sheltered account. Other than that I have no desire to sell and agree with you the share price will likely go much higher from here in the next year or two. The price has already run up around 50% since the inclusion announcement and presumably will run up a bit a fair bit more by the end of this Week with the forced buying that will occur. Even though a dip should happen, the fact that those shares are being removed from the float is causing me stress that there is a chance that prices could just slowly and steadily continue to rise for Weeks or Months as Active Funds buy in. I'm thinking at the very least I will take a small percentage off the table on Friday and perhaps set some limit sell orders for chunks in the $800's and $900's for some but not all of the shares.

 

[Prunesquallor]

The only reason for selling would be to in an attempt to accumulate more shares on the anticipated dip after inclusion, taking advantage of the fact that my Wife & I are are holding in tax sheltered account. Other than that I have no desire to sell and agree with you the share price will likely go much higher from here in the next year or two. The price has already run up around 50% since the inclusion announcement and presumably will run up a bit a fair bit more by the end of this Week with the forced buying that will occur. Even though a dip should happen, the fact that those shares are being removed from the float is causing me stress that there is a chance that prices could just slowly and steadily continue to rise for Weeks or Months as Active Funds buy in. I'm thinking at the very least I will take a small percentage off the table on Friday and perhaps set some limit sell orders for chunks in the $800's and $900's for some but not all of the shares.

There ARE other reasons to sell. I’m looking to retire margin so I can set up a line-of-credit account (for potential income starting next year). I’ve got a sell limit ladder set up from $695 to $795 for 15% of my TSLA.

 

[TheTalkingMule]

Thanks for the candid plan for call selling, i have little experience with near term calls so it's a huge help.

My plan for 12/24 700's is roughly the same as above.......wait until Monday and see what happens. I think I asked this before, but will ask again. You can't trade options after-hours, right? That's my only concerns is if there's a mega-spike AH Friday I would miss out on selling my calls at peak.

Have some now deep ITM Jan15s that I'll just sit on til a clear peak the week of the 21st. Need to sell them this calendar year for cash, so latest I can hold them is til the following week. Should be long enough to see the near term peak.

Still planning to sell covered calls for 2022/2023 on most of my shares if there's a considerable spike. I need to take in some premium and force myself to stop watching this stock every day, so this plan fits! Looking at least $200 over SP at peak probably $200/$300/$400 over and spread between 2022 and 2023 so I'm unlikely to loose all my shares. I think we're nearing a macro bubble pop, so not worried to much about losing them all.

Edit to add: My goal is to maximize CC premiums while losing maybe 100-300 shares that I will then buy back(plus some) down the line when money isn't free anymore and valuations pull back.

 

[saniflash]

You can't trade options after-hours, right?

No you can't. I'm considering selling my calls and rolling the money into common stock so I can sell it during the Closing Cross on Fri.

 

[Thebeezer]

It's seem to me that a lot of people with dec 24th call plans to wait until 21st or 22th to see what will happen.

If everybody sells their calls option about the same time, is there a chance that this cause the value of the options to decrease? Any idea?

 

[Featsbeyond50]

I think the day to sell will be Friday. Probably late in the day because the typical daily TSLA pattern seems to be UP early in the day, drift down, then finish strong. Also, a lot of you guys, who are way more in-the-know than I am are talking about a special situation at the end of the day Friday.

I also think we will have the post inclusion price drop and I think that will commence by the end of next week. If we don't have a substantial runup from the current level (stays under 700) I think the share price will settle between 500 and 550.

These are just my predictions, not advice. I am planning to act on these predictions though because i need SOME diversification. Six months ago I had a pretty diverse portfolio, now I find myself over 90%in TSLA. 100% in the kids Edu funds and two Roth accounts.

 

[BabyBull]

Now that the 1218 and 1224 calls in the gutter, those of you who have 0115 700/800/900 calls, what is your plan of action?
Are you going to sell some before friday end, monday/tuesday or wait next week, etc?

I bought them pretty high and those are 25% down for me. It is tempting to just dump them before they drop more value.

Asking for a friend, again.

 

[Nurkbonis]

I have some 12/24 580s and 590s that I bought at market open the morning after the announcement. They are up quite a bit. Still think I will hold into next week and just hope the SP doesn't drop more. I have a few other "yolo" calls that I bought just in case there's a huge spike.

I also have a few 1/15/21 700s that I am iffy about. Not sure what to do with those. Will have to see what happens the next few trading days.

 

[ammulder]

Now that the 1218 and 1224 calls in the gutter, those of you who have 0115 700/800/900 calls, what is your plan of action?
Are you going to sell some before friday end, monday/tuesday or wait next week, etc?

I bought them pretty high and those are 25% down for me. It is tempting to just dump them before they drop more value.

Asking for a friend, again.

Depends on when the effin' buying starts!

I'm planning to sell my January $800s on Friday afternoon if it looks great, and wait and see how things look Monday if Friday before close is uninspiring.

I still can't see a way for the share price to NOT go up, but what do I know?

I have limit sell orders in place in case things move too quickly for me to follow, but they're high. If there's only a moderate bump, it's on me to decide. Sigh.

 

[adiggs]

Now that the 1218 and 1224 calls in the gutter, those of you who have 0115 700/800/900 calls, what is your plan of action?
Are you going to sell some before friday end, monday/tuesday or wait next week, etc?

I bought them pretty high and those are 25% down for me. It is tempting to just dump them before they drop more value.

Asking for a friend, again.

My Jan calls are 500/700/800. My original plan was hoping they would gain and retain their value into the first week of January, and close then. That's still my operating plan.

The only addition is that if there is a big enough spike Friday / Monday, then I am more inclined today to close them this year and pay the taxes this year. I don't have a different approach for the 3 different strikes.


Like @ammulder I keep expecting the buying to start in a big and noticeable way. At the very least, they are far enough out in time that time decay won't yet be a big deal when the new year arrives.

 

[Buckminster]

The inclusion spike is still occurring!

I had assumed a few months ago that benchmark funds would buy before or within a few days of S&P 500 inclusion, in which case the share price would spike over 700 and probably over 800.

It turned out that benchmark funds mostly decided to wait, now they are being forced to buy with FOMO. So the inclusion spike is still going on. I would not be surprised if TSLA peaks at over 1000. I think that the share price will drop from its peak, probably sometime around Q4 earnings, back to between 600 and 700.

I'm normally pretty bad at short term predictions, so the above is probably completely wrong.

Makes sense that we continue the melt up ahead of earnings. A good number of benchmark funds will not want to wait in case Tesla plays their deferred revenue card etc.