You took the right decision with the information you had on hand at that peculiar moment. With hindsight bias, after we realize we are not climbing to $1500 after a stock split announced this afternoon, it must be frustrating. Hope you recover from that loss!The SP is doing exactly what I expected, but I was chicken because I just couldn't afford to be wrong.$2M+ down the toilet for nothing, and the 900/850 BPS are potentially going to be a problem real soon.... F'ing awesome.
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
extra margin needed to open the new positions; they are all comfortably 20-30% away from sp now with the exception of -c1100 which i will keep a close eye out on
Did you roll your 11/5 -1020c also? I have -1020c for 11/12, deciding what to do...
If your portfolio is effectively all TSLA, interestingly I found Regular T Margin is more helpful than Portfolio Margin.
Did you happen to ever do the comparison?
Depends on the premium. Cost bases for the shares will be 800 + the premium. So not bad considering we are currently at 1,000 and might not ever see 800 again. If he doesn't want the shares assigned, it is easy to roll a naked Put down and out, or just out while you collect more premium. No problem keeping Puts in the money as long as the premium + current stock price is more than the strike price.
bballshinobi
Member
If you can lose $2m and still post emojis, you are doing something right in life. I wish I can get to that point lolThe SP is doing exactly what I expected, but I was chicken because I just couldn't afford to be wrong.
To add to this, naked Puts are a great way to learn. They make a lot less money than spreads on available margin, but you almost never really need to take a loss unless the stock is going to zero.
After I got into trouble with myself during the SEC fiasco, I decided to go a bit conservative and the portfolio margin is just fine for single stock, especially one as volatile as ours.
I like the way IB margins short vol positions rather than the dumb approach reg T takes where you can't use short term long options to hedge long term short options.
Yeah, there are tradeoffs, but after flipping back n forth, I like portfolio margin a ton better.
it's gone; all credits collected were used to close -c1020
all 11/5 positions are 20-30% away, except -c1100 which needs extra babysitting while collecting theta
On naked Puts, going a month out is usually best. 800 strike November 26 give $9 for $20k in margin (about $2/week). But if the SP drops, the margin requirement will go up significantly. The same income with a $50 spread was costing me only $5k in margin, AND the margin requirement won't change. But as many of us have found out the last two days, rolling possibilities are much more limited with spreads, and therefore the losses pile up fast if the spreads gets in the money.
corduroy
Active Member
This was long day on the "doing nothing strategy." All those repair possibilities evaporated almost immediately. Not gonna lie, I was at pucker factor 10 when we were hitting 1090 and had my finger on the send button for my close orders. But I decided to walk away from the computer for an hour and came back to find my BCSs improving. I'm definitely still not out of the woods, who knows what will happen the rest of the week - but I live to fight another day.
Edit: also sold some 10/29 BPS 895/800 on the dip for $1.80
I need to look more into this aspect.
I thought primary drawback with Portfolio margin when portfolio is pretty much all in one company is you don't get the cushion from other positions in your portfolio.
Looks like I was wrong on margin-ability of long options. I thought they get almost no margin. I need to check this with TWS.
OK I entered my first bear call spread today after much angst with IAB which is really not intuitive at all yeesh, TD Ameritrade (did some small BPS there last week which really should be more profitable if you ask me. Oct 29 830/770 actually LOST money today lol.) much easier to figure out and switch around but I currently have almost 8 figures of margin in this account so I figured I should put it to work.
OCT 29 1300 / 1400 Bear Call x 100 contracts at 0.67 each.
Max profit is 6560. Max loss is just shy of a million (yeah that set me back a bit just looking at it. I mean damn.)
IAB claims the chance of 100% profit is 100%.
It claims the chance of a max loss is 0.000001%.
Please correct me if I am wrong, but I classify this as a extremely low risk, low reward trade. Please let me know if I did something stupid. It is currently in the green by 2K. My margin was barely affected. Because I have a lot of TSLA in this account? Is this the kind of trade you go with 1000 contracts on? But a ten million black swan.... thought the idea was to sleep at night.
Thanks!
OCT 29 1300 / 1400 Bear Call x 100 contracts at 0.67 each.
Max profit is 6560. Max loss is just shy of a million (yeah that set me back a bit just looking at it. I mean damn.)
IAB claims the chance of 100% profit is 100%.
It claims the chance of a max loss is 0.000001%.
Please correct me if I am wrong, but I classify this as a extremely low risk, low reward trade. Please let me know if I did something stupid. It is currently in the green by 2K. My margin was barely affected. Because I have a lot of TSLA in this account? Is this the kind of trade you go with 1000 contracts on? But a ten million black swan.... thought the idea was to sleep at night.
Thanks!
if that bcs is mine, i wouldn't worry
my CCs are chillaxing
in 10/29 -c1200 (18% away with 3 DTE and 5 delta)I'll be sure to refer to this post often
Sounds good!if that bcs is mine, i wouldn't worry
my CCs are chillaxing
Sold CCs at 1000, 1100, 1200 and 1300 (the 1200 and 1300 got some major red before the collapse. crazy action!), plus I have a couple I rolled from last week at 875 and 905 that obviously I wish I didn't lol.
Think even my 1000 might finish green as I got 20 for it, but will unload tomorrow if we get a dip.
NOT-ADVICE of course.
Yep -that looks like a low risk, low reward trade, to me.
Outside of the size of the trade ($1M is larger than 'small' and keep my attention
), that also looks like a great place to start to me. The size of the trade may qualify as "small" to you, where its overwhelmingly big to others- big enough to get your attention, and small enough that a full loss is annoying and a learning experience, but not much more. You make your own decisions about what is small. You might find that 10 contracts is a better sized "small" position for you, but in this particular trade, that only turns into $670 in collected premium and that might be too small to get and keep your attention.One thing that I've learned by hanging out with Tesla owners the last decade is that there is ALWAYS somebody that is better off than you are, and somebody that is less well off. So I try to stick to % over absolute positions sizes / results. Or as I've described it in other contexts - for each of us there is a $$ amount below which the $$ is noise, and above which it might be worth some research time.
An example - if you're checking out at the grocery store and see a pack of gum there at the checkout, and decide that you want the gum, then that's the end of it. See gum, want gum, get gum. It doesn't matter if it's $1, $1.50, or $5. See / want / get.
Awhile back when Ludicrous Model S first came out there were people that traded in their Model S to get the new one. Some of those trade ins were < 6 month old cars, drawing many observations from the peanut gallery about people having money to burn. Except that for somebody with $10M (or some number - you decide) in the portfolio and modest claims on that portfolio, $150k for a car that they want may well be in that See/Want/Get category. As freaky as that might seem to others.
Back to your setup - a very large number of small gains can add up to a lot of money. It also means that a particularly bad move towards your spread can turn into a really big loss. If you're earning 1% per position / week, then 50 weeks with 1 loss that is managed down to the 10% range is a great year (+50%, -10%, net 40% -- no compounding). 50 weeks of 1% gains with 1 week of 100% loss is not great at all (50% - 100% = -50%, and that's if the loss is at the end of the year - assumes constant position sizes rather than compounding; compounding will make it particularly disastrous. And the timing on that loss can make it worse.
An update on this trade: after the drop I could have immediately bought back these 10 c1450 11/5 with 75% profit, but I’m going to sit on this position. It feels like the run-up is losing steam and I don’t expect us to go up another 400+ points in just one and a half week. Those call premiums were really good this morning.
During the drop, at 1015, I sold 10 p860 11/5 for $6. I’m expecting the 15 p810 and p820 10/29 I sold on Friday to stay safe, but will still keep my eye open for an opportunity to roll them up in strike and date.
Although I’m not doing spreads yet it’s very helpful to read about everyone’s experiences and insights. I do feel bad about the painful losses some of you have had to endure.
Similar threads
