Wiki Selling TSLA Options - Be the House

[generalenthu]

As a wayward BCS seller, Please Elon, sell your shares thursday to pay those taxes.... just dump them ok? ... rip that bandaid off please.... sincerely, buttershimp

At the last company I worked for, before calling it quits, we used to report on Wednesdays and as employees with access to some potentially sensitive info, my entire group would be barred from trading our ESPP or other company shares until Monday after.

I think a day of wait is normally enough, and there is certainly more liquidity sooner than later, but it's likely Elon's lawyers would ask him to wait until the week after.

Just my 2c.

 

[M3Rider]

As a wayward BCS seller, Please Elon, sell your shares thursday to pay those taxes.... just dump them ok? ... rip that bandaid off please.... sincerely, buttershimp

Elon hates option traders, so he won't comply.

P.S. Sold 990cc and 1000cc today for sucky prices of 1.02 and 1.05. Very disappointed.

 

[M3Rider]

Btw, bought some 750/850 & 800/900 BCS couple of months back @25 to try out bcs, cause I thought 1:4 growth was quite likely. Surpised I can only realize 1:3 with $20 over the strike...gotta wait for December I guess. Weird.

 

[buttershrimp]

Elon hates option traders, so he won't comply.

P.S. Sold 990cc and 1000cc today for sucky prices of 1.02 and 1.05. Very disappointed.

Elon hates option traders? But I’m accumulating resources to make life interplanetary, wtf?

 

[Ogre]

Btw, bought some 750/850 & 800/900 BCS couple of months back @25 to try out bcs, cause I thought 1:4 growth was quite likely. Surpised I can only realize 1:3 with $20 over the strike...gotta wait for December I guess. Weird.

You can never get those last few dollars on call spreads until very near expiration. The time value usually skunks things up.

Usually I roll the position once I’ve captured most of the value. Otherwise you end up sitting on a position to capture that last 20% return. Of course if it’s taxable and you have tax reasons for waiting, then it’s all a bit different.

 

[Criscmt]

Managing CCs or Bear Call Spreads with strikes at ATHs
Managing Covered Calls, or Bear Call Spreads can be different when the (short) strikes are over ATH so far.
I have -900/+920C expiring this Friday 10/22.
I also have BPS with short leg at 695P.
Here are the thoughts on managing the call side. Would appreciate your inputs.

• Keep rolling increasing the strike a bit, based on following some assumptions. Since the strike is at ATH, there's a good chance, at some point in the coming weeks or months, the SP will get below $900. If that can be counted on, and in the meantime if the SP doesn't go too far away from 900, keep rolling these spreads, likely moving the strikes higher with minimal credit. Rolling to Oct-29 -910C/+930C is at debit of .35. I don't mind moving my BPS higher for this week, to fund the .35 debit for Call spread roll to next week.
• Keep rolling at the same strikes, collect credit: This will give me credit as of now, but as weeks go, as the strikes get DITM, I will get no credit, and would be risk to not close the position at that time, or I should roll out by a few months.
• Play safe on Call Spread side & leverage BPS: Get aggressive with BPS, moving strikes higher. Moving the put side, 675P/695P to the same expiry 705P/745P would give enough credit to be able to roll the call spread to next week at higher strikes -920C/+940C.
• Take loss to roll to safer strike this week or next week (1000+)

@generalenthu @adiggs @bxr140 @dl003 @Lycanthrope @Singuy, @All...

 

[Tslynk67]

Managing CCs or Bear Call Spreads with strikes at ATHs
Managing Covered Calls, or Bear Call Spreads can be different when the (short) strikes are over ATH so far.
I have -900/+920C expiring this Friday 10/22.
I also have BPS with short leg at 695P.
Here are the thoughts on managing the call side. Would appreciate your inputs.

• Keep rolling increasing the strike a bit, based on following some assumptions. Since the strike is at ATH, there's a good chance, at some point in the coming weeks or months, the SP will get below $900. If that can be counted on, and in the meantime if the SP doesn't go too far away from 900, keep rolling these spreads, likely moving the strikes higher with minimal credit. Rolling to Oct-29 -910C/+930C is at debit of .35. I don't mind moving my BPS higher for this week, to fund the .35 debit for Call spread roll to next week.
• Keep rolling at the same strikes, collect credit: This will give me credit as of now, but as weeks go, as the strikes get DITM, I will get no credit, and would be risk to not close the position at that time, or I should roll out by a few months.
• Play safe on Call Spread side & leverage BPS: Get aggressive with BPS, moving strikes higher. Moving the put side, 675P/695P to the same expiry 705P/745P would give enough credit to be able to roll the call spread to next week at higher strikes -920C/+940C.
• Take loss to roll to safer strike this week or next week (1000+)

@generalenthu @adiggs @bxr140 @dl003 @Lycanthrope @Singuy, @All...

Hey, I'm really a noob with spreads, so cannot offer much in the way of experience, and zero for rolling them, however, I have dwelt much on the matter recently...

My strategy, purely theoretical (and I should try this out one of these weeks with a modestly aggressive spread), would be to close the short leg, leave the long in place, see the direction of the stock - maybe it moons and the long covers the short loss, maybe it pulls-back and you can re-enter the short, maybe it trades sideways and you can day-trade the short

The idea of the stock shooting up is more attractive because you've such a narrow strike, which otherwise limits your options a bit

But in any case, I would personally want to de-risk this ASAP, better to take a smaller loss now than an a massive one later

 

[strago13]

Great minds, I need some advice. We're buying our dream house and I need a bit of cash for downpayment since we'll be carrying 2 mortgages for a while. I am running BPS weekly, but that wont generate enough to cover the amount we need by closing. Other possible options are to sell some CC for way off in future (Jan 2024 1600) against ALL my shares and then buy it back when we inevitably dip or just take a cash margin loan out from my account. For instance, I could easily cover what I need for the down payment now (with BPS active) w/ a margin loan. Im leaning towards the latter since I will be able to repay that in full via several means in < 6 months and also still sell options. This is a taxable account and I prefer to not sell shares since

This wouldn't be possible if I hadn't invested in Tesla, and listened to the collective TMC great minds...so thank you all so much for all your advice! It is truly amazing to think we are in the position we are because of this company and this forum.

 

[AquaY]

I have been playing with a BPS (just 1 contract) w/ my broker to get a feel for how it works. With eTrade its a bit of a pain in the ass to be honest since I cannot close or roll the entire spread in one trade. It looks like I either need to upgrade to Power Etrade (whatever that is) or close/roll each individually?

I will likely let the long put expire worthless Friday and BTC the short put before then. If I wanted to take profits, is there a preference for which leg gets closed first? I assume the short.

Power E*TRADE isn’t an upgrade.
Its just a system or a tool they use that you launch off their website.
while it isn’t the greatest system It is their best options trading platform and you should use it To run spreads
Its far better than their old clunky website for orders. Especially option strategies.
of course to run margin you need to use the portfolio screen on the website .

if you want an example of how to run possible trades and place a spread trade I can walk you through it.
PM me so we don’t go OT with it

 

[mongo]

Great minds, I need some advice. We're buying our dream house and I need a bit of cash for downpayment since we'll be carrying 2 mortgages for a while. I am running BPS weekly, but that wont generate enough to cover the amount we need by closing. Other possible options are to sell some CC for way off in future (Jan 2024 1600) against ALL my shares and then buy it back when we inevitably dip or just take a cash margin loan out from my account. For instance, I could easily cover what I need for the down payment now (with BPS active) w/ a margin loan. Im leaning towards the latter since I will be able to repay that in full via several means in < 6 months and also still sell options. This is a taxable account and I prefer to not sell shares since

This wouldn't be possible if I hadn't invested in Tesla, and listened to the collective TMC great minds...so thank you all so much for all your advice! It is truly amazing to think we are in the position we are because of this company and this forum.

Not advice
Since it is a taxable account, any profitable cash generating activities will be taxed. If you only need the money as an interim holdover, I'd go with the margin loan.

@Lycanthrope's point about shares->LEAPS->Covered calls is a good one in terms of potential return per $ (barring a continued steep rise), but the sale of the shares (assuming they are green at this point) will hit you in the total assets due to taxes. You could get cash via margin loan and do the second part of that series by selling shorter term calls against the shares.

Verify the interaction of the margin loan against your ability to perform the future actions (how much, if any reduction in STO do you incur).

 

[tradenewbie]

Today I am really tempted to sell the BCS -1000/+1000 if it hit $1 premium.....
(if it really hits 1000, I think the world is crazy)

 

[ammulder]

Great minds, I need some advice. We're buying our dream house and I need a bit of cash for downpayment since we'll be carrying 2 mortgages for a while. I am running BPS weekly, but that wont generate enough to cover the amount we need by closing. Other possible options are to sell some CC for way off in future (Jan 2024 1600) against ALL my shares and then buy it back when we inevitably dip or just take a cash margin loan out from my account. For instance, I could easily cover what I need for the down payment now (with BPS active) w/ a margin loan. Im leaning towards the latter since I will be able to repay that in full via several means in < 6 months and also still sell options. This is a taxable account and I prefer to not sell shares since

This wouldn't be possible if I hadn't invested in Tesla, and listened to the collective TMC great minds...so thank you all so much for all your advice! It is truly amazing to think we are in the position we are because of this company and this forum.

If you have $100k of margin, you could sell a Jan 2024 $1000 put for about $32k immediate cash… or with a bit more margin an $1100 for about $40k up front. Those are presently ITM, of course, so there’s some risk… but do you honestly think TSLA won’t gain another $150 in 2 years?

I would have a lot more confidence in a $1000 put being safe in 2024 than the max available $1600 call.

You would likely have to wait quite a while to close that out cheaply, and the margin would be locked up in the mean time, but on the up side you wouldn’t be paying interest.

Edit: or, to cut the margin locked up, maybe an $800-1100 spread for $20k cash or so on $30k margin.

 

[mongo]

If you have $100k of margin, you could sell a Jan 2024 $1000 put for about $32k immediate cash… or with a bit more margin an $1100 for about $40k up front. Those are presently ITM, of course, so there’s some risk… but do you honestly think TSLA won’t gain another $150 in 2 years?

I would have a lot more confidence in a $1000 put being safe in 2024 than the max available $1600 call.

You would likely have to wait quite a while to close that out cheaply, and the margin would be locked up in the mean time, but on the up side you wouldn’t be paying interest.

That's a cool idea. I think, due to account value being based on TSLA stock, the margin requirement may be higher than just 100k. A dip in the intervening time could be problematic if too much is used.

Side note: Ameritrade is showing Jan 24s out to $1725 now. Pricing TBD.

 

[Right_Said_Fred]

With all the warnings about heavy taxes on selling or trading, I'm so glad I live in The Netherlands. We have a tax system where you pay about 1,5% in taxes every year on the total value of your cash and shares, no matter what you do. It hurts when you only have savings (which get you no interest payments at all and above 100k even have a -0,5% rate, which means you actually have to pay interest to the bank), but at this moment it's heaven when you are holding or trading TSLA stock and options and made 700% last year and 50% so far this year.

As for trading: just like many others I'm not too keen about opening new positions this week. We're too high for selling naked puts and the movements around earnings are a bit tricky for BPS/BPC. I am still short 20 x p750 and p780 for 10/22, which I will probably leave untouched until expiry.

 

[ammulder]

That's a cool idea. I think, due to account value being based on TSLA stock, the margin requirement may be higher than just 100k. A dip in the intervening time could be problematic if too much is used.

Side note: Ameritrade is showing Jan 24s out to $1725 now. Pricing TBD.

Yes, you’d want there to be a balance between margin locked away by long-term puts for the down payment, margin used for weeklies to continue generating smaller amounts of ongoing cash, and margin reserve in case of stock price dips. It did occur to me after the initial post to note that you could sell spreads to generate cash with less margin locked away.

I don’t believe you’d have to use more Reg T margin than normal for a put or put spread just because it’s long-term… unless the account uses portfolio margin and those calculations are different somehow. It wasn’t any different for me when I did that for some home improvements, in any case.

For what it’s worth, I originally sold puts, then later sold duplicates and offsetting long legs to turn them into more smaller spreads to recover margin and chunk up the options a bit, then bought back the individual spreads over time. Would skip some of the effort to just sell spreads from the start.

One caveat is that with IV presently low you could initially show a loss just due to rising IV… though if the stock price catches up to the strike it should overwhelm the IV changes.

 

[mongo]

I don’t believe you’d have to use more Reg T margin than normal for a put or put spread just because it’s long-term… unless the account uses portfolio margin and those calculations are different somehow. It wasn’t any different for me when I did that for some home improvements, in any case.

Not due to long term, but due to, if TSLA drops, the put goes red at the same time as the account loses value for a double whammy. I think it was Mike showed 2x margin requirements on one example.

It did occur to me after the initial post to note that you could sell spreads to generate cash with less margin locked away.

Yeah, I thought of that on the call side, a $250 call spread nets $80 also, but gives up 25k in gains. Put spread would reduce margin and, one hopes, not cost anything long term.

 

[doddiozil]

Good morning everyone. I have a $860 covered call 10/22 exp. that I opened last week. I don't want to loose my shares as the tax consequences would be terrible. My plan was to roll them but I remember reading in this thread somewhere that if you sell a covered call in the money ( For example $870 cc 10/29 exp), then the underlying shares will reset from long term holding to short term holding (and be taxed at short term capital gains rate) Can anyone confirm this?

 

[juanmedina]

If you have $100k of margin, you could sell a Jan 2024 $1000 put for about $32k immediate cash… or with a bit more margin an $1100 for about $40k up front. Those are presently ITM, of course, so there’s some risk… but do you honestly think TSLA won’t gain another $150 in 2 years?

I would have a lot more confidence in a $1000 put being safe in 2024 than the max available $1600 call.

You would likely have to wait quite a while to close that out cheaply, and the margin would be locked up in the mean time, but on the up side you wouldn’t be paying interest.

That's a cool idea. I think, due to account value being based on TSLA stock, the margin requirement may be higher than just 100k. A dip in the intervening time could be problematic if too much is used.

Side note: Ameritrade is showing Jan 24s out to $1725 now. Pricing TBD.

That was Emmet's idea. I actually sold some Jun 23 1000's for $45k each when the stock was down and I am up $16k on those. I think Emmet got $50k on the Jun 23's.

 

[bkp_duke]

Well . . . this is unexpected. Stock is going the wrong direction.

 

[corduroy]

Good morning everyone. I have a $860 covered call 10/22 exp. that I opened last week. I don't want to loose my shares as the tax consequences would be terrible. My plan was to roll them but I remember reading in this thread somewhere that if you sell a covered call in the money ( For example $870 cc 10/29 exp), then the underlying shares will reset from long term holding to short term holding (and be taxed at short term capital gains rate) Can anyone confirm this?

Not advice, but I would wait until later in the week to see what happens. That might be safe.