Wiki Selling TSLA Options - Be the House

[MikeC]

You could move to a different brokerage but would have the same problem. You need to either keep enough cash to not rely on unsettled funds, or you need to have margin enabled on your account to avoid the good faith violations. (It would be "limited margin" in an IRA account.)

I do have limited margin in that IRA, but I rolled a set of contracts that I had already purchased that day using the limited margin, so I think that was considered a free ride.

I was hoping by switching brokerages the restriction wouldn’t carry over and I could start fresh.

 

[vwman111]

I now have deep ITM Leaps, much deeper and much sooner than expected. I'm starting to think about exercising the options instead of selling them in order to avoid paying taxes on the gain. Is there a disadvantage of exercising them before the expiry date?

 

[ammulder]

What does it mean that we are past half the daily volume in the first 45 minutes and the stock is only up 1.4%? Are we at the top and about to drop 20% this week? My CC could use at least a 10% drop

Ruh Roh. I was just thinking I'd be perfectly comfortable settling on a $20 gain today. I'm afraid we're going to fracture into the call-sellers and the put-sellers who each want different movement!

Make you a deal: the stock is allowed to momentarily drop 10%, so long as it recovers within a few minutes. So... have your call close orders ready.

P.S. The first few minutes of the TSLA chart are shaped the same as the first few minutes of the NASDAQ chart. But TSLA resisted the giant spike down in the NASDAQ a bit after 10 AM. I guess volume is good for something!

 

[stealthyc]

IV crushing hard today

 

[BornToFly]

What does it mean that we are past half the daily volume in the first 45 minutes and the stock is only up 1.4%? Are we at the top and about to drop 20% this week? My CC could use at least a 10% drop

That aged well....

 

[bballshinobi]

I now have deep ITM Leaps, much deeper and much sooner than expected. I'm starting to think about exercising the options instead of selling them in order to avoid paying taxes on the gain. Is there a disadvantage of exercising them before the expiry date?

You lose the time value on the contracts. For example, your $1,000 call will be worth more than $151 (assuming stock price at the time is $1,151). By exercising early, you lose on the "time" part of the option.

 

[CLK350]

That aged well....

You can bet we'll be treated to a symphony of plunges/ bumps in the coming days - just waiting for some really new creative FUD or DUF (inverted FUD, like the Lucid total BS 30% daily jump paid for by the Saudis, to distract from Tesla rising and gaining credibility among the unwashed naive investors, small and huge).
This is why I developed my own HFT methodology, (getting a feel for the real trend, not being fazed by the volatility meant to fleece the unsuspecting retails ) see quick note posted earlier today.

 

[samppa]

I now have deep ITM Leaps, much deeper and much sooner than expected. I'm starting to think about exercising the options instead of selling them in order to avoid paying taxes on the gain. Is there a disadvantage of exercising them before the expiry date?

Depends on your country.. here exercising an option is regarded as realized gains, so taxes will be paid..

 

[mongo]

I now have deep ITM Leaps, much deeper and much sooner than expected. I'm starting to think about exercising the options instead of selling them in order to avoid paying taxes on the gain. Is there a disadvantage of exercising them before the expiry date?

Loss of time value. It does get calculated into your basis via the original option price, but run your own numbers.

Jan24 600: Trading @650 ($100 TV, $10k for contract) purchased at 500
Sell: $65,000 with $15,000 gain
Execute: -$60,000 cash, +100 shares (value $115,000), basis of (600+500)*100=$110,000, gain only $5,000

 

[samppa]

Desperately seeking CC rolling advice

The consensus has been to roll our weeklies as soon as we got close to ATM, kind of go by feel for the week with charts, technicals, etc but generally not wanting to get too ITM. Now that particular strategy has imploded for most of us, since we have been rolling out and up and are still ITM or just getting to ATM with expiration 2-6 weeks away.

Is the recommendation still to roll even further out? For example, a Dec 3 1050C, ITM and the entire world seems to believe $TSLA is unable ever to fall back down to that level. Since it still has extrinsic value, should it be rolled? Or alternatively, is there a benefit in waiting until closer to expiry, taking the risk that it might be deeper ITM and rolling with less extrinsic value?

You could look into converting the CC to a few spreads (bcs or bps) this can result in a big strike improvement.
But it can also result in you digging a deeper hole.

 

[elasalle]

I now have deep ITM Leaps, much deeper and much sooner than expected. I'm starting to think about exercising the options instead of selling them in order to avoid paying taxes on the gain. Is there a disadvantage of exercising them before the expiry date?

Find a strike that now costs the same as your original Cost, Sell and create a Vertical.
If the strike is large, if SP goes up you have guaranteed profit. If SP tanks, loss this way is $0

Use the original principal, for more

No taxes, stay long term and everything goes to lower tax on Cap gains. cheers!!

 

[TheTalkingMule]

IV crushing hard today

I'm gonna have to insist that Wall Street come up with a name other than "implied volatility". Seems whenever volatility gets crazy, the call premiums plummet.

Been trying to sell a $1200 CC for this Friday and it's moved from like $15 to $19 while SP moved up $20. That doesn't seem rational.

IV should be called MMM or "Market Maker's Mood".

 

[MP3Mike]

I do have limited margin in that IRA, but I rolled a set of contracts that I had already purchased that day using the limited margin, so I think that was considered a free ride.

I was hoping by switching brokerages the restriction wouldn’t carry over and I could start fresh.

Normally you are only restricted for 90-days. (Until you trigger it again. And if you trigger it enough I heard that they will close your account.)

So yes, you could switch brokers but if you keep up the same activity it will just happen again at the new broker. (But it takes a week or more to move to a new broker.) Even easier is just to move the assets to a different account at the same broker, since, as far as I know, the restrictions are account based. (At least I think it works that way.)

 

[tradenewbie]

For those familiar with technical indicator, RSI (14) is showing like 93.3 as of today and it seems RSI has never been that extremely high before in the past few years, wondering what you guys think?

 

[TheTalkingMule]

For those familiar with technical indicator, RSI is showing like 93.3 as of today and it seems RSI has never been that extremely high before in the past few years, wondering what you guys think?

TSLA is up 29.55% from it's January highs.
SPY is up 22.89% year-to-date.
There's a lot of ways to look at things.

Personally I lean on my own opinion of market appetite for more shares to tell me where price is going. Yes, there is some squeeziness to this runup, but it's more like post-4Q earnings demand being pulled forward IMO. I think we'll flatten out in a bit, correct bigly over the holidays, then resume to a slight new ATH after 4Q earnings(and maybe another split).

 

[pz1975]

I'm gonna have to insist that Wall Street come up with a name other than "implied volatility". Seems whenever volatility gets crazy, the call premiums plummet.

Been trying to sell a $1200 CC for this Friday and it's moved from like $15 to $19 while SP moved up $20. That doesn't seem rational.

IV should be called MMM or "Market Maker's Mood".

I personally think selling CCs right now is insane. This SP movement is unnatural and could just keep going up. You may win on those but IMO it is absolutely not worth the risk.

 

[Knightshade]

Any not-advice on some 1150 sold calls expiring Friday in an IRA?
(note spreads are not a thing in this account)


A) Roll 1 week out at 1150 for $17.50 credit
B) Roll 1 week out at 1180 for $2.05 net credit (1190+ is debit)
C) Roll out further at 1150 expecting it's gonna dip a bunch before then- $35 net credit rolling at 1150 3 weeks out for example
D) Don't do anything till Friday then roll if much above 1150 that morning
E) Just let em go.

 

[bballshinobi]

Any not-advice on some 1150 sold calls expiring Friday in an IRA?
(note spreads are not a thing in this account)


A) Roll 1 week out at 1150 for $17.50 credit
B) Roll 1 week out at 1180 for $2.05 net credit (1190+ is debit)
C) Roll out further at 1150 expecting it's gonna dip a bunch before then- $35 net credit rolling at 1150 3 weeks out for example
D) Don't do anything till Friday then roll if much above 1150 that morning
E) Just let em go.

Do B on Friday lol

 

[mongo]

Any not-advice on some 1150 sold calls expiring Friday in an IRA?
(note spreads are not a thing in this account)


A) Roll 1 week out at 1150 for $17.50 credit
B) Roll 1 week out at 1180 for $2.05 net credit (1190+ is debit)
C) Roll out further at 1150 expecting it's gonna dip a bunch before then- $35 net credit rolling at 1150 3 weeks out for example
D) Don't do anything till Friday then roll if much above 1150 that morning
E) Just let em go.

Depends, does the climb continue or not?
Mine went ITM two weeks ago, and I regret not buying back sooner.
Rolls are like adding a spread to your current position. Would you do that if you didn't have the CCs?

 

[MindOverMatcha]

Any not-advice on some 1150 sold calls expiring Friday in an IRA?
(note spreads are not a thing in this account)


A) Roll 1 week out at 1150 for $17.50 credit
B) Roll 1 week out at 1180 for $2.05 net credit (1190+ is debit)
C) Roll out further at 1150 expecting it's gonna dip a bunch before then- $35 net credit rolling at 1150 3 weeks out for example
D) Don't do anything till Friday then roll if much above 1150 that morning
E) Just let em go.

In these situations, I assume that we gain another 10% this week. Then I think about what I wish I could've done in the week to minimize my loss. Sometimes getting out of a bad trade quickly to minimize losses is the best path. Live to trade another day; not every week leads to a gain.