Wiki Selling TSLA Options - Be the House

[Blitz3RS]

Another newbie question. So I had x20 1/13 120CC and it looks like my luck is finally running out after a year of pretty good trades.

This will be my first time getting assigned. So say I get assigned/shares called away, and now we're at Monday, 16 January.

My cost basis on those shares is right around $50, so it's not a loss selling at 120. Can I use the money gained to re-buy the shares? Do I have to wait X days to re-buy? If so, I will probably put the money in some index ETF, just wanted to confirm what NOT to do because I hear so much about wash sales.

Thanks!

 

[vikings123]

Another newbie question. So I had x20 1/13 120CC and it looks like my luck is finally running out after a year of pretty good trades.

This will be my first time getting assigned. So say I get assigned/shares called away, and now we're at Monday, 16 January.

My cost basis on those shares is right around $50, so it's not a loss selling at 120. Can I use the money gained to re-buy the shares? Do I have to wait X days to re-buy? If so, I will probably put the money in some index ETF, just wanted to confirm what NOT to do because I hear so much about wash sales.

Thanks!

You can always roll your calls to a future date/strike. If you don't do anything and TSLA finishes above 120 tomorrow your shares will get called away. Since you mention cost basis I'm assuming this is a taxable account.

Depending on what type of account(margin vs cash) you might be able to rebuy TSLA or your ETF on the same day or might have to wait 1-2 days to use the cash. But really if you don't want to sell you can always buy back the calls or roll. Think about the tax impacts.

 

[OrthoSurg]

Another newbie question. So I had x20 1/13 120CC and it looks like my luck is finally running out after a year of pretty good trades.

This will be my first time getting assigned. So say I get assigned/shares called away, and now we're at Monday, 16 January.

My cost basis on those shares is right around $50, so it's not a loss selling at 120. Can I use the money gained to re-buy the shares? Do I have to wait X days to re-buy? If so, I will probably put the money in some index ETF, just wanted to confirm what NOT to do because I hear so much about wash sales.

Thanks!

My newbie reasoning about CCs.
I sell close ATM CCs, once my strike price is touched I instantly roll to the next resistance, it might be 2 weeks out, 4 weeks out or 6 weeks out, if touched again I roll further out and wait for a reversal. Once the stock price reverses and there is a down trend I roll back in and to a closer expiry near ATM strike price.

This worked for every bear rally during the 2022 bear market. Might not work if the stock price rockets back up straight to $400 from here but I have learned there are always permabears, short sellers, TSLA FUDsters waiting at each resistance level salivating.

Of course the problem is that you don’t cash in premium on selling CCs for many weeks. However you save yourself a nasty tax bill.

 

[traxila]

@Yoona Can you share how you do a trailing stop on selling your options? I’ve seen you mention that several times as being a saving grace but I don’t see how to to that on my platform (TD Ameritrade app or TOS).

Thanks in advance!

This is the TD think or swim app:

 

[Oil4AsphaultOnly]

Another newbie question. So I had x20 1/13 120CC and it looks like my luck is finally running out after a year of pretty good trades.

This will be my first time getting assigned. So say I get assigned/shares called away, and now we're at Monday, 16 January.

My cost basis on those shares is right around $50, so it's not a loss selling at 120. Can I use the money gained to re-buy the shares? Do I have to wait X days to re-buy? If so, I will probably put the money in some index ETF, just wanted to confirm what NOT to do because I hear so much about wash sales.

Thanks!

In regards to the wash sale. Since your cost basis is so low, then you wouldn't be selling at a loss at this point. HOWEVER, if you turned around and rebought TSLA after the calls are assigned to you, AND THEN sell the newly bought shares at a loss within 30-days, then that would indeed trigger a wash sale.

If you're worried about the call options triggering a wash sale, then you don't have to worry, as long as you didn't buy/sell those specific call options within the 60-day window (30-days before and 30-days after). So closing out the call options at a loss (as part of a roll or just to close them to keep your shares) should be safe from a taxes perspective.

Unless you don't have enough cash to close the ITM call options? If you have enough cash to close just 1 covered-call, then you can just roll them one CC at a time (as long as it's a credit-roll), until all 20 have been rolled.

Anyway, you should consider vikings123's response and consider rolling the call options instead of letting it get assigned.

 

[OrthoSurg]

Promising

“The downtrend is officially over”

 

[EVNow]

TSLA : How Far is Friday's Close vs. Prev Friday's Open (7 DTE)? - History

View attachment 894971

15.57% was the safe bet for 2022 - but there have been much higher weeks before ? That makes sense.

I guess the new "safe" bet is 36% OTM. On weeklies that gives us may be 2 cents of premium

 

[EVNow]

Another newbie question. So I had x20 1/13 120CC and it looks like my luck is finally running out after a year of pretty good trades.

This will be my first time getting assigned. So say I get assigned/shares called away, and now we're at Monday, 16 January.

My cost basis on those shares is right around $50, so it's not a loss selling at 120. Can I use the money gained to re-buy the shares? Do I have to wait X days to re-buy? If so, I will probably put the money in some index ETF, just wanted to confirm what NOT to do because I hear so much about wash sales.

Thanks!

You probably won't have money for a couple of days ... after that you can buy. BTW, is this in your 401k / IRA or taxable account ? If taxable account, you have to pay tax - so can't buy shares again for all the money.

BTW, why are you not rolling ?

 

[Blitz3RS]

Thanks team for the explanation. I will indeed be rolling (again) after the explanation. It's indeed a taxable account, so definitely trying to avoid a hefty tax bill from my folly of breaking my rules from last week and also going against Yoona's signature about not getting greedy.

Really appreciate the community and everyone that replied to my question!

 

[juanmedina]

So tomorrow the stock is going to tank I assume with the recent price cuts in the USA. We can't win :/... In the short term.

 

[kabin]

It looks like Tesla dropped pricing on MYs. $52990 and it qualifies for the $7500 tax credit. $56990 for the performance.

The stock price might take a hit tomorrow.

 

[JustMe]

The next earnings call is going to very interesting listening, I reckon. Margins, future growth, costs of production, supply chain, delivery wave, new factories, Tesla Energy, FSD, new leadership (zhu), new products, and ever-present wildcard EM. I imagine many deep-pocket investors are on the fence right now, at least with regards to price targets.

I am really not sure whether to buckle up or buckle down.

Lord have mercy

 

[JustMe]

So tomorrow the stock is going to tank I assume with the recent price cuts in the USA. We can't win :/... In the short term.

Well at least we are not the poor sods who invested in the “competition“. Tesla price drops in China pummeled local EV stocks.

 

[kabin]

The next earnings call is going to very interesting listening, I reckon. Margins, future growth, costs of production, supply chain, delivery wave, new factories, Tesla Energy, FSD, new leadership (zhu), new products, and ever-present wildcard EM. I imagine many deep-pocket investors are on the fence right now, at least with regards to price targets.

I am really not sure whether to buckle up or buckle down.

Lord have mercy

Yep. Until Mar 31 2023, profits will be tied to 1) how fast Tesla can produce and 2) Model 3/Y demand.

It's a sizeable cut in profit per vehicle that can be made up if everything comes together. And there's always the new production line ramp up of CT etc.

 

[GrmMastrDoobie]

I guess the new "safe" bet is 36% OTM.

Is this officially your thinking, or just sarcasm?

 

[Oil4AsphaultOnly]

Another newbie question. So I had x20 1/13 120CC and it looks like my luck is finally running out after a year of pretty good trades.

This will be my first time getting assigned. So say I get assigned/shares called away, and now we're at Monday, 16 January.

My cost basis on those shares is right around $50, so it's not a loss selling at 120. Can I use the money gained to re-buy the shares? Do I have to wait X days to re-buy? If so, I will probably put the money in some index ETF, just wanted to confirm what NOT to do because I hear so much about wash sales.

Thanks!

Welps, with tonights model 3/Y price cuts, your 120CC's might still close for a profit!

 

[GrmMastrDoobie]

It looks like Tesla dropped pricing on MYs. $52990 and it qualifies for the $7500 tax credit. $56990 for the performance.

The stock price might take a hit tomorrow.

I sure hope I don't wake up at 3am and panic sell again. Or maybe I should

 

[bingoz]

Guys, remember what happened last time when Tesla dropped pricing in China. Just don't panic

 

[ReddyLeaf]

Welcome to the TSLA roller coaster. What ever happens, it will be interesting. My plan was always to hold my 11/13 -p/-p120 straddles until tomorrow, no matter what. Now……..WHAT……oops, didn’t expect a massive drop in vehicle prices.

 

[intelligator]

The day played out as anticipated, except I didn't have the courage to open another 1/13 BPS before noon. Late afternoon, I did close the +105/-110 BPS at 95% and opened a -130/+135 BCS for the 20th. If we do go down, prefer we don't ... make me roll instead, I'll close that at whatever profit i can snag and reset next week. GLTA!