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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
What strikes and expiration are you thinking for the aggressive CC's? I need to do same with some puts that I got assigned recently.
With both approaches, you're selling stock to raise cash to close the BPS. In the 1st case, you stop at that.
In the 2nd case, you're adding another step (open a BPS for 2025 and collecting a premium), hoping that TSLA can beat that number.
This is a sunk cost fallacy, because there's nothing special about the new BPS other than a specific number you're trying to recoup. Nothing wrong with that, if you would have done that anyway, without the original BPS history. But if you're doing it only because you're chasing after some past loss (which is now history and irrelevant), is it really best move if you never had that BPS in the first place?
Rebalancing is taking place over the course of this entire week, plus quadruple witching.
Same strike / expiration that I used a week ago. I'm down $8 since I made the conversion - hoping to find more cash / shares, and do some more conversions. I consider $200+ in >2 years to be an awfully good risk/reward. In practice I also plan to be closing a lot of these in 6-18 months, with none of them held to expiration (unless share price is up a LOT and time value has gone to ~0).
Since I got assigned, first time, when shares were $170, that's probably the strike I'd start with on aggressive cc's. More assignment last night with shares around 160 -- I don't see going quite that low, but if we get a nice up day tomorrow (3-5%?), that sounds like a good reason to sell some 170s.
I would in effect be looking to sell back the new shares at a particularly agreeable price. And confirming a large loss, on the order of $100/share ($10k/contract) while freeing up the cash to start earning back that loss. I've got the loss either way.
Switch from put spreads to call spreads, not the same risk of assignment. In hindsight I should have just started with call spreads, I didn't realize this assignment stress would come into play.
Ha! Oct 2021 wants a word with you about "call spreads"!
Edit: Spreads are leverage. Be wary of them in either direction!
Yes I was assuming his current positions were already spreads, put spreads.
Since those spreads are so far ITM, you could consider rolling them *down* a lot to improve the chances of near term recovery and reduce the likelihood of assignment. Either pay the premium difference or widen a bit, like 200-236 looks to be equal premium to 300-330. Of course those wider spreads have higher max loss. Depends on your risk tolerance and outlook for next year, but it wasn’t long ago that we were at those levels.
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What are your general thoughts about pros and cons of rolling Jan24 LEAPs $333-$467 (massively underwater, converted from shares at ~ATH!) to Jan 25 $160 or $200 (would require reducing #contracts about 80% to do it at approx. zero cost). I’m thinking total value would recover faster for the latter than the former, and I was always in it for capital gains rather than exercising (in Roth IRA). At this point, I would love to recover the lost value by 2025.
Because the BPSs are at full loss, I either sell shares and close the BPS, which means money/shares are gone forever, or I pay $2 to roll them another year and hope to get $28 back in 2025. You are correct that I would never open those spreads now, but the SP was 400 when I started (They were originally +270/-370, but I tried to lower the short leg and increased the number back when the SP was around 315 a few months ago and we were looking to go higher). Never, in a MILLION YEARS, did I think we would end the year around 150....
The difference should be how much you received for selling the puts.
This was my thought as well, but damn if I remember making that much off of them. thanks.
Were they rolled? If so, that often ends up increasing the amount.
Holy S#$#! I was looking at having to go to 2025. I can't believe staying with 2024 works. You're right. It's basically free other than widening and adding a little margin. I will definitely do that for my 310/280s tomorrow. I already rolled the rest to 2025 (and I don't know how safe those are from early assignment)....
THANK YOU!!!!
Yes, they were rolled for sure. Thanks, I will have to have a closer look at this to make sure if I sell them at 205 or higher, I am not short $
The money/shares *are* gone forever. You'll always be down by that $28 whether you make $1 or $100 in the future. Trying to "recoup" the loss by spending $2 to return an arbitrary $28 probably means losing $2 on top of everything else. If the $2 is meaningless, that's fine. But if $2 is material and you'd never invest without the prior loss, I don't understand why you'd make the trade now.
The job now is to make the best investment decision today, irrespective of what happened in the past.
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