Wiki Selling TSLA Options - Be the House

[MikeC]

Well, it looks like I will owe about $173k in taxes.

Roughly $-57m in losses, but wash sale eliminates Roughly $48m of the loss. Then I had $9.5m in long term gains from the stock I had to sell to buy the BPSs and avoid margin calls. So I end up with almost $1m in gains, even though I had to sell 60,000 shares to do it, and will be down $24m when the stock gets back to 400 compared to Jan 2022 (because I will have 60,000 fewer shares than I had before this all started).

What exactly triggered the wash sales?

Sometimes brokerage software doesn’t pair options right, I’m wondering if you reviewed what they’re calling wash sales you might be able to reconfigure them in a way to decrease the amount that is washed. Or to make a case that they were not substantially identical and shouldn’t be wash sales in the first place.

 

[Cherry Wine]

Anyone you recommend? (Yes, we do our own taxes with Turbo Tax).

P.S. - Sorry about hijacking the thread AH a little bit friends. I appreciate the help.

I'm in a similar situation to our friend @BornToFly . My tax liability is very similar, actually. @Jim Holder is making me wonder if I shouldn't try and squeeze in some consults of my own...something tells me getting in will be very difficult.

 

[vikings123]

Man sorry to hear that. So a couple of questions and pointers for you:

1. When you say wash sale “eliminates” it usually gets added to the cost basis of the position that is holding the wash sale disallowed unless

2. You traded the same position in your IRA in which case the wash sale is permanently disallowed.

If you have both your taxable and non taxable accounts with the same brokerage I would suggest keeping them with different brokerages to avoid point #2 above.

Check the cost basis of your current open positions if #2 above does not apply to you. You should see the wash disallowed total get reflected in the cost basis of open positions.

IBKR monthly statements actually incorporate wash sales so you get a really good idea. Also ask your brokerage for a custom report for wash sales or schedule some time to help you.

 

[BornToFly]

Man sorry to hear that. So a couple of questions and pointers for you:

1. When you say wash sale “eliminates” it usually gets added to the cost basis of the position that is holding the wash sale disallowed unless

2. You traded the same position in your IRA in which case the wash sale is permanently disallowed.

If you have both your taxable and non taxable accounts with the same brokerage I would suggest keeping them with different brokerages to avoid point #2 above.

No IRA.

Short Term loss is around -$56.5m
Short Term Wash sale is around $47.9.
That leave me we with a Short Term loss of -$8.546m

Long Term gain was $9,525m

Deducting the Short Term loss (after taking out the wash sale) from the long term gain gives me $979k

So I owe tax on $979k of long term gains....

 

[bkp_duke]

Anyone you recommend? (Yes, we do our own taxes with Turbo Tax).

P.S. - Sorry about hijacking the thread AH a little bit friends. I appreciate the help.

Not meaning to offend for being direct/blunt - but you are in an income bracket you should never do your own taxes. It's a big red flag for an audit.

Get a CPA, get a good one (not all of them are versed in options, etc.).

There are many reasons for this, but the big one is that they SIGN OFF on your taxes and have a degree of legal responsibility.

If you don't have one, PM me, I have a great one that I can recommend to you (and he drives a Tesla and owns TSLA, and has traded TSLA options).

 

[BornToFly]

What exactly triggered the wash sales?

Sometimes brokerage software doesn’t pair options right, I’m wondering if you reviewed what they’re calling wash sales you might be able to reconfigure them in a way to decrease the amount that is washed. Or to make a case that they were not substantially identical and shouldn’t be wash sales in the first place.

Exactly. If the options were substantially identical, there would be no reason to roll. I roll because they have different dates and/or premiums, which makes them very different (IMHO).

 

[Jim Holder]

Anyone you recommend? (Yes, we do our own taxes with Turbo Tax).

P.S. - Sorry about hijacking the thread AH a little bit friends. I appreciate the help.

No worries, we are all family now having bonded over the 2022 TSLA nightmare…

Re stock-trader friendly accountant, the one I know is not taking new clients but I asked him for a referral and will share via PM if I get a response.

Slow and steady!

 

[OrthoSurg]

No IRA.

Short Term loss is around -$56.5m
Short Term Wash sale is around $47.9.
That leave me we with a Short Term loss of -$8.546m

Long Term gain was $9,525m

Deducting the Short Term loss (after taking out the wash sale) from the long term gain gives me $979k

So I owe tax on $979k of long term gains....

I am still hesitant to open my brokerage tax report which was made available last week. If the assigned puts from December 28th activate was sale rule on my shares I sold on December 28th while converting to LEAPS I will owe taxes on 2.3M- 1.2M capital gains. Effectively emptying all the money I made last year from working, again.

It’s spring break week here in Canada and I am skiing with the kids, I want to wait to Sunday before knowing I have worked another full year to only pay the tax man, while losing 100% of my shares and converting to LEAPs.

 

[CHGolferJim]

No IRA.

Short Term loss is around -$56.5m
Short Term Wash sale is around $47.9.
That leave me we with a Short Term loss of -$8.546m

Long Term gain was $9,525m

Deducting the Short Term loss (after taking out the wash sale) from the long term gain gives me $979k

So I owe tax on $979k of long term gains....

TBH and completely blunt, you are crazy not to have an accountant, could save you 20x the fees.

 

[MikeC]

Exactly. If the options were substantially identical, there would be no reason to roll. I roll because they have different dates and/or premiums, which makes them very different (IMHO).

So all the wash sales are from options that had different expirations? What brokerage?

Maybe you can submit the trades manually to avoid being forced into using your brokerage's interpretation of the wash sale rule.

 

[OrthoSurg]

TBH and completely blunt, you are crazy not to have an accountant, could save you 20x the fees.

We are all crazy selling options and not having financial advisors managing our money.

 

[Jim Holder]

We are all crazy selling options and not having financial advisors managing our money.

Financial advisors are boring (!) we beat them here handily. But hiring a reputable CPA for advising and doing our taxes (doesn’t cost that much!) and an estate atty to advise and help us set up appropriate trusts and retirement structures (also not very expensive) is mandatory especially when dealing with the kinds of money many of us are playing with here. It’s a no-brainer!

 

[Jim Holder]

210 maybe but Im not betting on it anymore. Macros are turning south faster than I thought.

I sold -230C and no new puts. Will certainly close some of the -c before EOD on Wednesday due to my principle of lightening up before an event. Wont be selling puts until I can see a bullish divergence developing on the next leg down.

Hopefully we can get some FOMO action tomorrow and Wednesday to at least $225+ before retracing to $170.

I have 700 shares trapped @$215 which I’d love to turn to cash (for next dip) and another 1,900 @$243 that I’d love to liquidate to cash as well, but I doubt we’ll get that high (). Not to mention 3,000 trapped @$358 . I’ll have to wait a while on those.

I plan to hold all of them for years, though by liquidating to cash at trend tops and rebuying at lows (as taught by the great Pierre Roberge…) easily helps double and triple one’s portfolio over time. Proof? Had I gone to cash at $358 and bought back at $102…thats a 3.5x move right there (358/102=3.50)! It’s also not the reckless “timing the market” if you do it with a rational and clear system. Lookup Pierre’s YouTube videos where he teaches it.

 

[MrMoo]

Hopefully we can get some FOMO action tomorrow and Wednesday to at least $225+ before retracing to $170.

I have 700 shares trapped @$215 which I’d love to turn to cash (for next dip) and another 1,900 @$243 that I’d love to liquidate to cash as well, but I doubt we’ll get that high (). Not to mention 3,000 trapped @$358 . I’ll have to wait a while on those.

I plan to hold all of them for years, though by liquidating to cash at trend tops and rebuying at lows (as taught by the great Pierre Roberge…) easily helps double and triple one’s portfolio over time. Proof? Had I gone to cash at $358 and bought back at $102…thats a 3.5x move right there (358/102=3.50)! It’s also not the reckless “timing the market” if you do it with a rational and clear system. Lookup Pierre’s YouTube videos where he teaches it.

Disagree, you should of sold at $358 and loaded up on 60% OTM Puts with all the free cash proceeds from your sale. Then sell your puts and load up on 80% OTM Calls at $102. If you cashed in those calls now and turned it into cash. I would think you would have enough to buy a couple of million TSLA shares.

 

[Jim Holder]

Disagree, you should have sold at $358 and loaded up on 60% OTM Puts with all the free cash proceeds from your sale. Then sell your puts and load up on 80% OTM Calls at $102. If you cashed in those calls now and turned it into cash. I would think you would have enough to buy a couple of million TSLA shares.

Not sure if you forgot the /s at the end or are serious

The idea behind this type of trend trading is there’s no knowing or trying to guess the depth of the retracement and just act/trade what the market is presenting. Hence going all in on Puts with time-based options can blow up, and the same with calls. Going to cash is safest because then you are out from a couple of days to a few weeks or even more, until the signals indicate next move, and thus are not on a clock.

 

[MikeC]

Hopefully we can get some FOMO action ts well, but I doubt we’ll get that high (). Not to mention 3,000 trapped @$358 . I’ll have to wait a while on those.

I plan to hold all of them for years, though by liquidating to cash at trend tops and rebuying at lows (as taught by the great Pierre Roberge…) easily helps double and triple one’s portfolio over time. Proof? Had I gone to cash at $358 and bought back at $102…thats a 3.5x move right there (358/102=3.50)! It’s also not the reckless “timing the market” if you do it with a rational and clear system. Lookup Pierre’s YouTube videos where he teaches it.

Not sure if you forgot the /s at the end or are serious

The idea behind this type of trend trading is we don’t know or try to guess the depth of the retracement and just trade what’s in front of us. Hence going all in on Puts with time-based options can blow up, and the same with calls. Going to cash is safest because then you are out from a couple of days to a few weeks or even more, until the signals indicate next move, and thus are not on a clock.

Just don’t do it with all your shares if you’re really planning to hold for years. It can work for a while but the stock will eventually run up and not come back down, leaving you the choice of buying back higher or missing out on the rest of the TSLA ride.

There have been a lot of people with the same idea over the years (including me) and it’s a lot of stress for what usually ends up being a net negative. Don’t deceive yourself with hindsight bias or the idea that using a “rational and clear system” for timing the market is somehow not attempting to time the market.

 

[Jim Holder]

Just don’t do it with all your shares if you’re really planning to hold for years. It can work for a while but the stock will eventually run up and not come back down, leaving you the choice of buying back higher or missing out on the rest of the TSLA ride.

There have been a lot of people with the same idea over the years (including me) and it’s a lot of stress for what usually ends up being a net negative. Don’t deceive yourself with hindsight bias or the idea that using a “rational and clear system” for timing the market is somehow not attempting to time the market.

True! Although one thing—among many others—that I learned from Dan Shapiro is that there are always dips and never panic-buy. As Dan says, “You always want the easiest path to the goal line, not the fanciest one.”

Slow, steady, and reasoned is indeed crucial.

And always leave a runner

 

[SpeedyEddy]

looks like a bottom island reversal happened yesterday (QQQ, SPY, AAPL too....) so I'm (pre-market) back in on the stock and will put pause on -cc somewhere after opening. Looking more and more like maybe still 2 more exceptional up-days likely ahead and then Investorday.....which can get us anywhere... Really puzzled now. Maybe take 50% shares aside tomorrow and then watch closely after hours

 

[OrthoSurg]

Hopefully we can get some FOMO action tomorrow and Wednesday to at least $225+ before retracing to $170.

I have 700 shares trapped @$215 which I’d love to turn to cash (for next dip) and another 1,900 @$243 that I’d love to liquidate to cash as well, but I doubt we’ll get that high (). Not to mention 3,000 trapped @$358 . I’ll have to wait a while on those.

I plan to hold all of them for years, though by liquidating to cash at trend tops and rebuying at lows (as taught by the great Pierre Roberge…) easily helps double and triple one’s portfolio over time. Proof? Had I gone to cash at $358 and bought back at $102…thats a 3.5x move right there (358/102=3.50)! It’s also not the reckless “timing the market” if you do it with a rational and clear system. Lookup Pierre’s YouTube videos where he teaches it.

Yeah but he’s on vacation for the week!

 

[CHGolferJim]

TBH and completely blunt, you are crazy not to have an accountant, could save you 20x the fees.

A big blip in earnings in one year is a red flag for audit, so having had the return prepared by a CPA can be very helpful.