Wiki Selling TSLA Options - Be the House

[Criscmt]

Got a quick long call spread question for y'all. In the main thread I was posting about the following simple long call spread:



Question is, what does it look like to unwind this position if SP crosses the long call strike far earlier than expiration? I know the spread itself doesn't reach full profit til near expiration, but is there a way to roll to a far closer expiration or similarly capture the leveraged value of the SP run-up immediately? If so, what kind of % profit can be captured.

In the instance above, what if we're at $1250 in April 2022 and I think that's where we'll still be in Jan 2024?

How about adjusting the strikes to take out some of the gains, for example, roll to 1250/1500?

 

[ZeApelido]

2017-2019: Check taxable, IRA, and Roth accounts a few times per year
2020: Check accounts a few times a week
2021: Sell covered calls, puts, bull put spreads, buy some leaps and leap spreads.

Check accounts a few times per hour.

 

[samppa]

Closed all my oct15 BPS on the peak around 814, lol, caught the peak! Around 90% profit.

Then just before market close I sold some
-p750/+650 for next week, oct22, $9.40 premium.
IV has risen a bit, I'l look to close these after earnings, counting in that IV crush.. but still being fairly cautios here, left plenty of margin buffer.
If we get a steady rise going into earnings, then I may close these just before er, see how they decay..

 

[Discoducky]

This is interesting and makes me think of staying away from selling calls....

https://twitter.com/x/status/1448334959727374338

 

[Drezil]

ha! Sold 820 calls on the spike @5.xx, bought back at :59 for 3.95. Effectively that increased my cost-basis on the coverd calls from 4$ -> 4.56 while also taking in a bit of beer money.

 

[bonk3125]

2017-2019: Check taxable, IRA, and Roth accounts a few times per year
2020: Check accounts a few times a week
2021: Sell covered calls, puts, bull put spreads, buy some leaps and leap spreads.

Check accounts a few times per hour.

Just a few?

 

[bonk3125]

has anyone considered or thought about cashing out 401k and moving the profits to cash acct as new margin?

my initial estimate is maybe i can make 9-12x more income per week (on those useless shares) by doing that, even after paying the tax guy 50% for the 401k collapse

i know, i know - all eggs in one basket...

TIA!

I've thought about it, as the bulk of my portfolio is in retirement accounts. There's something about having investments spread across both taxable and tax-advantaged accounts that gives me comfort though.

I think you can accomplish the same thing by rolling the 401k to an IRA.

I can do cash-backed spreads in Fidelity, so I've been moving funds out of the 401k to the IRA.

Just make sure it's a direct transfer, not one where you lay hands on the money, to avoid any potential tax implications.

I've also thought about doing this, but am trying to avoid having any $ in a traditional IRA. Pro-rata rule and all that. Might change with upcoming legislation so something I'll have to consider if it passes.

 

[bonk3125]

Closed 10/15 BPS 670/720 and 680/730 for ~ 70% gain. Did this mainly to open up my cash for...
Opened 10/22 BPS 670/720 for 4.55. Will add more as the opportunity arises.
Still have my 10/15 BPS 690/740. Probably will close tomorrow.

My guess is as good as everyone's about how things will play out after ER next week. I always tell myself to lock in at least half my contracts for profit prior to ER, and then close out the rest with IV crush the next day. Yet, I usually just end up holding all my contracts till Fri expiration, watching SP like a hawk and trying to time the most optimal exit. I do think hiding behind my 720 strike gives me enough room. We shall see.

 

[buttershrimp]

Evil Buttershrimp trade idea:

1) drive perfectly and get 100 safety score....
2) get beta download...
3) buy to open 1000 puts
4) run over a "low occlusion" pack of baby ducklings....
5) upload graphic footage, wait for news to pick up story
6) sell to close 1000 puts.
7) with profits, buy plaid model S

-----> 100/100 -----> . -------> ------> ------> !

 

[AquaY]

Evil Buttershrimp trade idea:

1) drive perfectly and get 100 safety score....
2) get beta download...
3) buy to open 1000 puts
4) run over a "low occlusion" pack of baby ducklings....
5) upload graphic footage, wait for news to pick up story
6) sell to close 1000 puts.
7) with profits, buy plaid model S

-----> 100/100 -----> . -------> ------> ------> !

That’s some complex option strategy there

 

[EV forever]

I think you have to quit your job to do a rollover though.

Not always. My company allows rollovers while still employed.


Working to move my wife's funds (with her permission) out of her Solo401k and into her IRA (both at Fidelity). Solo401ks are a "special sauce" that makes this a little more difficult to accomplish.

Be careful and ask lots of questions when you do this - there are all kinds of rules which sometimes can be hidden or not understood.

My company with 401K in Fidelity allows conversion of the the 'after-tax' portion of 401k to Roth IRA. I did this end of last year - they explained that I would have to pay tax on the gains in the account, but my after-tax contributions would roll over without penalty. This part I understood - out tax bill was a shocker. What I did not know is that after this conversion, I was blocked from any contributions to my 401K for 6 months! So the entire correction of growth stocks in 1Q and 2Q - no contributions from me or company match. Now for the 2nd half of the year, I am trying to max out the contributions for 2021, not sure if I can get the full the company match.

Worst part - I put all the newly available Roth IRA money into $TSLA and TSLA calls in January - which promptly dropped 50% in value over the next few months. It is still not back to its original value to this day.

So, finally about 2 weeks back, I cashed out all the stock and calls to convert the account to cash with intent of using it for trading options. It is not a very large account - but enough to sell ~20 BPS to start with. The very first week I sold BPS for some gains - promptly landed with a Fed Call. Talk about comedy of errors! If making mistakes is how a person learns, well I am learning a lot!

On a positive note, I did make decent gains in that account this week - so hopefully can make enough to cover my mistakes in the long run.

 

[Tslynk67]

Only 12 times?!? 9 times in 2020! Kind of scary for those of that have started with BPS recently. Thanks for posting this. I may start going 15% below the SP in the future, or go back to 100 spreads instead of $50. Did you find any in 2021?

I don't stress too much about 2020, we had that "flash crash" in Feb with the cascading stop-losses after a huge run-up, the several days in March where the whole market crapped it's pants over C19, then the S&P snub, etc.

Likewise, too many non-indicative rises in 2020 due to the split and then the S&P inclusion

 

[samppa]

Been reading about Elon's tranche and options, and his incoming huge tax bill.. methinks we should tweet him our faq so he could just sell Bull Put Spreads to pay those taxes

 

[Tslynk67]

An interesting view showing the trend towards puts or calls: Market Chameleon

 

[Drezil]

An interesting view showing the trend towards puts or calls: Market Chameleon

View attachment 721336

Aka: sell puts if that thing is high, calls if that thing is low to maximize premiums

 

[AquaY]

Been reading about Elon's tranche and options, and his incoming huge tax bill.. methinks we should tweet him our faq so he could just sell Bull Put Spreads to pay those taxes

I read that Musk will owe $9.7 BILLION in taxes. That's a lot of Bull Put Spreads.

I wonder what he will do.? He has stated he does not want to sell any TSLA but he doesn't have any cash. He borrows money to live off and keeps his cash in investments in his businesses.
Seems to me to make the most sense to take out a loan against the shares, and slowly liquidate shares to pay his enormous tax bill.

 

[samppa]

I read that Musk will owe $9.7 BILLION in taxes. That's a lot of Bull Put Spreads.

I wonder what kind of effects selling 9.7B worth of put spreads would have on the stock?
Lol that would be one humongous put wall

 

[Knightshade]

I read that Musk will owe $9.7 BILLION in taxes. That's a lot of Bull Put Spreads.

I wonder what he will do.? He has stated he does not want to sell any TSLA but he doesn't have any cash. He borrows money to live off and keeps his cash in investments in his businesses.
Seems to me to make the most sense to take out a loan against the shares, and slowly liquidate shares to pay his enormous tax bill.

He's sold shares every time in the past to exercise his options AFAIK.

I expect he'll do so again here---IIRC he stated he'd be doing that at the code conference recently.

Some folks are concerned because it'd be a large amount of shares (relatively) being sold and it might dip the price.

The question then is how he sells em... he's got some time yet to do it, and roughly 7 weeks out of the quarter where it's legal for him to sell- question is does he do it in a large sale or in small sales.

The first might have a more real immediate SP impact... the second will for sure have a ton of FUD impact with headlines weekly screaming MUSK DUMPS TSLA SHARES.

 

[vwman111]

10/15 Puts just don't seem to be giving up throughout the past couple days

 

[BornToFly]

I don't stress too much about 2020, we had that "flash crash" in Feb with the cascading stop-losses after a huge run-up, the several days in March where the whole market crapped it's pants over C19, then the S&P snub, etc.

Likewise, too many non-indicative rises in 2020 due to the split and then the S&P inclusion

I didn't sleep well last night thinking about my current trading risk. I'm trying to be safe by using strikes that are far from the current SP, $50 spreads, and knowledge on how and when to roll. However, I realized that I'm still trading using my old naked Put strategy, where I don't lose everything if the SP goes below the strike (the SP would have to go to 0 on the assigned shares). The fact that with BPS you "lose" everything if the SP gets to the long leg, and now learning that others here are using only part of their available cash/margin so they can "start over", isn't part of my new trading strategy yet. I'm currently throwing all available cash/margin so that I can sell as many contracts as possible. I'm thinking now that I should follow the strategy of keeping a "start over after a Black Swan event" reserve. However, I am also not trading blindly like someone who is selling TSLA BPS without really understanding the company and the EV space, and is just using the same % gap to the SP every week without knowing about P&D release dates, earning report dates, etc.. I'm also taking into account the Bollinger bands, the 50 MA, and Tesla's trajectory with higher than expected earnings, new factories coming on line, and so forth. Anyway, I appreciate the knowledge I'm gaining from this thread. I traded my old career for this new one that gives me a lot more time and flexibility. Always learning....