Wiki Selling TSLA Options - Be the House

[TheTalkingMule]

Too much potential for bad craziness for me to do anything today. Maybe I'd sell naked puts if I were as rich as you folks. Things are trending well from a Tesla and national policy perspective, but it only takes one comment from one guy to sink this entire thing. And that guy is in the back pocket of the coal/fossil lobby. Gonna sit on my hands.

While staying out of volatility's warpath, a little house cleaning question:

I bought a single Jun2023 -$1300/+$1000 bull call spread a while back for like $3.5k.....thanks whoever suggested this free money. My problem is that Fidelity has these two contracts separated and the $1300 sold call is sitting as a covered call holding 100 shares of margin. The $1000 strike purchased call is then sitting alone as a very valuable naked call. Isn't half the point of buying this spread that there's no margin/share requirement?

Talked to a guy at Fidelity who said something about hierarchy and pairing, but he didn't seem too sure of himself. I have no other contracts that would conflict with these, and I think I know the root cause. A while back I got a federal margin alert because I used up all my good faith exemptions and wasn't letting things clear properly in my IRA. Don't think they handled it right, but it netted out to Fidelity closing out another sold TSLA call at this Jun2023 $1300 strike that I previously sold as a CC.

Think they basically just closed out the paired contract by accident rather than the single CC? Can I get these two existing contracts "re-paired" somehow so I don't have the short end holding 100 shares? I guess the answer might be to roll them into a new spread? Any help appreciated!

 

[mongo]

Too much potential for bad craziness for me to do anything today. Maybe I'd sell naked puts if I were as rich as you folks. Things are trending well from a Tesla and national policy perspective, but it only takes one comment from one guy to sink this entire thing. And that guy is in the back pocket of the coal/fossil lobby. Gonna sit on my hands.

While staying out of volatility's warpath, a little house cleaning question:

I bought a single Jun2023 -$1300/+$1000 bull call spread a while back for like $3.5k.....thanks whoever suggested this free money. My problem is that Fidelity has these two contracts separated and the $1300 sold call is sitting as a covered call holding 100 shares of margin. The $1000 strike purchased call is then sitting alone as a very valuable naked call. Isn't half the point of buying this spread that there's no margin/share requirement?

Talked to a guy at Fidelity who said something about hierarchy and pairing, but he didn't seem too sure of himself. I have no other contracts that would conflict with these, and I think I know the root cause. A while back I got a federal margin alert because I used up all my good faith exemptions and wasn't letting things clear properly in my IRA. Don't think they handled it right, but it netted out to Fidelity closing out another sold TSLA call at this Jun2023 $1300 strike that I previously sold as a CC.

Think they basically just closed out the paired contract by accident rather than the single CC? Can I get these two existing contracts "re-paired" somehow so I don't have the short end holding 100 shares? I guess the answer might be to roll them into a new spread? Any help appreciated!

Do you level Level 2+ ? I think you need that for spreads.
Since this is a tax-deferred IRA, the main issue is that being assigned the short call will force you to execute the purchased call to reclaim the shares.

 

[phantasms]

Ok. I bought back this week's 1000 and next week's 1020. Sold a March 22 $1070. This way, worst case scenario, I only lose 100 shares at more of a profit versus losing them now at $1000.

Might have to back away from the fun for a bit. lol

 

[Nocturnal]

Im new to selling option, so forgive my ignorance.
Been thinking about ways to take advantage of IV

IV play - Sell both put and call at the money and same expiry
Nov 5 $1,040 put 40.00 call 38.00

Stock Loss break even point at $962
Stock Gain break even point at $1,118

What if stock 1,100? - 1040 = 60 - 38 = (22) call lost + 40 put sold gain = 18.00 gain
What if stock 1,000? Put price sold cancel out - gain sold call 38 = 38.00 gain
What if stock flat 1040 78.00 gain

I'm not an expert with options like some of the folks here, but I believe the risk here is that you can get exercised on either the put or call side of the trade.

 

[juanmedina]

I decided to close my -1200/1300 with a net profit of $0.8, still very scared about what happened to me on Monday...
If there is a rise of SP later today, will open -1250/1350 instead during the rise

I have BCS 1160/2000 10/29 and I am feeling stressed about them. Monday changed my life I was traumatize by BCS.

 

[tradenewbie]

I have BCS 1160/2000 10/29 and I am feeling stressed about them. Monday changed my life I was traumatize by BCS.

I am pretty much stressed no matter how's price action is now...
I still have all cc at 1200, I will probably let it go at this price if they are really crazy this week.

 

[Ad Astra]

All, I’m a long time lurker and I wanted to thank everyone for all of their insights. What recommendation would you make for someone looking to make some additional income from a nice little pile of TSLA shares?

Initial thought was to start with selling conservative CC’s a week out from expiry (I’ve been eyeing 11/5 $1250c for example), but I’ve gathered from this thread that selling short puts might be safer/more lucrative option. The only issue I see with this strategy is the amount of cash I’d have to tie up as collateral. If I understand correctly, this is where the spreads come into play but I’m not at a point where I feel knowledgeable enough to employ that strategy. I’m targeting about $1k a week in income but I’m not sure how realistic that is only selling CC’s.

FWIW I have the luxury of time to spend on managing these positions pretty aggressively. Any not advice would be greatly appreciated.

 

[ammulder]

All, I’m a long time lurker and I wanted to thank everyone for all of their insights. What recommendation would you make for someone looking to make some additional income from a nice little pile of TSLA shares?

Initial thought was to start with selling conservative CC’s a week out from expiry (I’ve been eyeing 11/5 $1250c for example), but I’ve gathered from this thread that selling short puts might be safer/more lucrative option. The only issue I see with this strategy is the amount of cash I’d have to tie up as collateral. If I understand correctly, this is where the spreads come into play but I’m not at a point where I feel knowledgeable enough to employ that strategy. I’m targeting about $1k a week in income but I’m not sure how realistic that is only selling CC’s.

FWIW I have the luxury of time to spend on managing these positions pretty aggressively. Any not advice would be greatly appreciated.

Is this a taxable or non-taxable account?

 

[CLK350]

Posting here, probably a better place than the main thread

Alright - playing the MM's at their own game - Bought 1 Nov 5th 1150 Call @$1675 - let's see if that gamma squeeze for next Monday will work again
Joining the crowd push .. also Waaaaaayyy better odds than playing the Mega Millions Lottery ; )

Explanation of last Monday's gamma squeeze in case you aren't aware of it (also in Papafox's thread)

The fact that all the trading was concentrated in short-dated options can be viewed as a tactic by some traders trying to take advantage of a phenomenon known as a “gamma squeeze” -- betting that as the value of Tesla shares gets closer to an option’s strike price, dealers will have to buy more and more of the underlying stock.

 

[UltradoomY]

All, I’m a long time lurker and I wanted to thank everyone for all of their insights. What recommendation would you make for someone looking to make some additional income from a nice little pile of TSLA shares?

Initial thought was to start with selling conservative CC’s a week out from expiry (I’ve been eyeing 11/5 $1250c for example), but I’ve gathered from this thread that selling short puts might be safer/more lucrative option. The only issue I see with this strategy is the amount of cash I’d have to tie up as collateral. If I understand correctly, this is where the spreads come into play but I’m not at a point where I feel knowledgeable enough to employ that strategy. I’m targeting about $1k a week in income but I’m not sure how realistic that is only selling CC’s.

FWIW I have the luxury of time to spend on managing these positions pretty aggressively. Any not advice would be greatly appreciated.

Depends on what you consider a "pile"
For example - next week $1500 CC's are paying $1 each - so you could sell 10 CC's for just over $1k in income and are about $425 away from the strike.
do you have any margin available with your account?
Options level?
Cash on hand in account?

 

[phantasms]

Ok. I bought back this week's 1000 and next week's 1020. Sold a March 22 $1070. This way, worst case scenario, I only lose 100 shares at more of a profit versus losing them now at $1000.

Might have to back away from the fun for a bit. lol

Last update from the manic and lucky investor.

Sold 50 shares at 1075, closed that March Call and reserved a Roadster to lock in the $200k price I'm sure will go up before release. Met my initial Roadster goal I set in 2018, no more options open, locked in massive gains overall, down only 50 shares, all in TSLA with everything else. Life is good. I'm logging off from my broker now and going for a run.

Love you all!

zoom zoom

 

[TheTalkingMule]

Do you level Level 2+ ? I think you need that for spreads.
Since this is a tax-deferred IRA, the main issue is that being assigned the short call will force you to execute the purchased call to reclaim the shares.

I'm level 2+ and haven't had any issues buying/selling spreads in the past. I have credit spreads sitting in my "options summary" view now with the appropriate cash margin noted.

I'm new to spreads and just never looked at my options summary view with an open call spread before. Do you think that might just be how it is for IRA's since the short call might get executed? I assumed having the long call at the lower strike and same expiration would negate any need to do that. Maybe it's different in IRA's?

 

[TheTalkingMule]

Sold 50 shares at 1075, closed that March Call and reserved a Roadster to lock in the $200k price I'm sure will go up before release.

As with options trading........BE CAREFUL! Congrats and enjoy!

 

[UltradoomY]

Posting here, probably a better place than the main thread

Alright - playing the MM's at their own game - Bought 1 Nov 5th 1150 Call @$1675 - let's see if that gamma squeeze for next Monday will work again
Joining the crowd push .. also Waaaaaayyy better odds than playing the Mega Millions Lottery ; )

View attachment 726662

Explanation of last Monday's gamma squeeze in case you aren't aware of it (also in Papafox's thread)

Not knocking your method or play.... but I have done very well with bought calls this year when IV was very low.
What I liked to do was to be a little farther OTM but add a week or 2 so I didn't get bitten by Theta.
For the same cost basis you could grab the November 12th $1200's
This gives more appreciation as it closes the gap from OTM to ATM and you still have 2 weeks of Theta instead of 1.
Just food for thought.
Cheers

 

[Ad Astra]

Is this a taxable or non-taxable account?

Taxable

 

[tradenewbie]

Sold some BPS -720/+620 @ 1 for next week...At this speed, I guess it takes me at least 6 months to recover my BCS loss on Tues....
Will wait to sell BCS next Mon or Tues, but likely will be even more conservative.

 

[EV forever]

Hi All,
Wanted to post a quick update on the wash sale situation after talking to the brokerage - it is not as bad as I thought first.

The only reason the transaction triggered a wash sale is because I did not close out all the contracts, I only closed some of them. As long as I close them all out in 2021 and don't purchase the same option again within 30 days, the wash sale will disappear. Since these are Nov 12th expiration, they will be closed out in the next couple of weeks and I have no intention of buying these again. So, at that point the wash sale will not apply. There will be some funky cost-basis adjustment, but I should be able to claim the full loss on the position.

I will post a quick update to confirm this did happen after they are closed out.

Thanks for all the info here, it is a huge help.

 

[Ad Astra]

Depends on what you consider a "pile"
For example - next week $1500 CC's are paying $1 each - so you could sell 10 CC's for just over $1k in income and are about $425 away from the strike.
do you have any margin available with your account?
Options level?
Cash on hand in account?

Point taken. Thank you!

According to my etrade account, available margin is exact amount I have in cash (not sure if that is accurate, but I have not made any requests to trade on margin).

Options level 2.

Cash on hand $20k in current account but I have another $200k available (of which I’d probably be willing to employ about $70k-$80k).

 

[Tslynk67]

I decided to close my -1200/1300 with a net profit of $0.8, still very scared about what happened to me on Monday...
If there is a rise of SP later today, will open -1250/1350 instead during the rise

Good choice, unnecessary risks in this game are to be avoided

 

[tradenewbie]

Good choice, unnecessary risks in this game are to be avoided

I am still waiting to sell -1250/1350....but seems the price is really low like .4 at max....The premium was around $1 at open, but I couldn't close my -1200/1300 so afraid to open at that time