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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
A few minutes before the closing bell I dipped my toe in the water and sold 5 naked p810 10/29 for 5.20 each. I’ve been looking at BPS too but there is still too much value in the long leg to produce an enticing net premium. Maybe those times will come again.
If we dip tomorrow or next week I’ll start selling more puts.
I’m still short 20 p750 for tomorrow. Why those have a 0.30 premium is beyond me.
If we dip tomorrow or next week I’ll start selling more puts.
I’m still short 20 p750 for tomorrow. Why those have a 0.30 premium is beyond me.
If still too much value in the long leg, why not go to a 150 or 200 point spread? Or even a super wide 400 point spread would allow you to sell twice as many contracts as the naked puts for almost the same premium.
For me such big spreads are riskier than naked puts, because I need to open a lot of them to get the same premium. I have plenty of cash in the account so don’t really need the lower maintenance margin of those spreads.
Huh?
The 400 Puts are cheap, costing around $0.10. So for your 5) puts you got $2,600 but tied up $405k in cash. You could sell 6) 400/810 BPS to bring in $3,060 while only tying up $246k of your cash. (One extra contract, 18% more return, 40% less cash at risk.)
Or you could sell 10) 400/810 BPS and bring in $5,100 while only tying up an extra $5k in cash. So essentially doubling your income with the same risk.
Wondering if anyone trading in their retirement accounts considered paying the 10% penalty on top of the taxes owed to withdraw their gains early.
I was reading this article about strategies to withdraw funds early.
How to Access Retirement Funds Early
My thinking is that you trade in the IRA/401k, let it grow faster without paying capital gains taxes, and then just withdraw it by paying 10% penalty + income taxes owed. In some ways, it seems better than using a taxable/brokerage account, where you may pay 40% in capital gains tax, reducing your growth potential. I’m not an accountant or tax professional, so I have no idea what the pros and cons are to this situation.
Situation: Trade in IRA/401k, keep 100% of profit, increasing the amount of leverage you have to build wealth faster. Then take out enough for living expenses, paying 10% penalty and then paying income taxes, but no capital gains tax.
This almost seems too good of a deal. Unless I’m missing something and they calculate capital gains tax on top of income tax upon early withdrawal.
Of course, the benefit of the Brokerage account is the access to margin you have, as you keep cash/shares and trade.
I was reading this article about strategies to withdraw funds early.
How to Access Retirement Funds Early
My thinking is that you trade in the IRA/401k, let it grow faster without paying capital gains taxes, and then just withdraw it by paying 10% penalty + income taxes owed. In some ways, it seems better than using a taxable/brokerage account, where you may pay 40% in capital gains tax, reducing your growth potential. I’m not an accountant or tax professional, so I have no idea what the pros and cons are to this situation.
Situation: Trade in IRA/401k, keep 100% of profit, increasing the amount of leverage you have to build wealth faster. Then take out enough for living expenses, paying 10% penalty and then paying income taxes, but no capital gains tax.
This almost seems too good of a deal. Unless I’m missing something and they calculate capital gains tax on top of income tax upon early withdrawal.
Of course, the benefit of the Brokerage account is the access to margin you have, as you keep cash/shares and trade.
This was super helpful, btw. Thank you! Still learning IB’s TWS…
Huh?
The 400 Puts are cheap, costing around $0.10. So for your 5) puts you got $2,600 but tied up $405k in cash. You could sell 6) 400/810 BPS to bring in $3,060 while only tying up $246k of your cash. (One extra contract, 18% more return, 40% less cash at risk.)
Or you could sell 10) 400/810 BPS and bring in $5,100 while only tying up an extra $5k in cash. So essentially doubling your income with the same risk.
You’re absolutely right that the spreads allow me to open more positions with the same amount of cash. That’s definitely something to take into account.
But I don’t agree with the phrase ‘same risk’. If a black swan drops the stock to 600 overnight my 5 p810 will cost me $105,000. The 10 bps 810/400 will cost me close to $210,000.
Edit: I just looked up the maintenance margins for both positions with Lynx (Interactive Brokers). It’s $36,000 for the p810 and $33,000 for the bps 810/400, so not much difference.
So say you are making $500k in short term trades, you would pay 35% tax on most of it. If you did it in your IRA and only withdrew $100k for expenses you would pay ~22% on most of it plus the 10% penalty. So ~32% vs. ~35%. So it doesn't seem like a big difference, but hey, that is an extra 3% savings. (But you get to grow the other $400k tax-free until you withdraw it.)
But not everyone has the same amount of resources in their IRA as in their taxable accounts, and you can't just load them up all at once.
Ok true, I guess I should have said same maximum risk. (Which is less likely with the naked puts.)
I’d long thought the 10% was prohibitively high penalty, but it certainly seems like a decent way to run things. Particularly if you keep your expenses low so your marginal rate stays low. I could almost get away with retiring just pulling from my IRA, but I‘d have to withdraw and pay taxes on health insurance as well which would ruin it all.
Also worth considering a ladder Roth conversion. After each rollover sits 5 years the converted amount can be pulled penalty free. You do pay tax on the rollover though.
Also SEPP 72(t) are penalty free (but Roth earnings are taxed with it).
If he is on portfolio margin it may not require the margin equal to the full strike price. It’s equivalent at the current price for me as about a $250 spread.Huh?
The 400 Puts are cheap, costing around $0.10. So for your 5) puts you got $2,600 but tied up $405k in cash. You could sell 6) 400/810 BPS to bring in $3,060 while only tying up $246k of your cash. (One extra contract, 18% more return, 40% less cash at risk.)
Or you could sell 10) 400/810 BPS and bring in $5,100 while only tying up an extra $5k in cash. So essentially doubling your income with the same risk.
Edit: I see he does in fact have such requirements.
I don't follow this.
In a taxable account, your short-term gains are taxed at your income rate. Long-term gains are taxed at 15 or 20%. If you take the 10% penalty in your IRA, you're paying at your income rate plus another 10%.
A better way to get money out of your IRA would be to do a Roth conversion and wait 5 years. Or do a SEPP 72T plan if you can't wait 5 years.
One of the retirement threads may be a better place for this discussion.
Thank you for the summary! I could not find the computation on the original thread #8725. Could you post a link here?
I almost sold SNAP IC's 20% OTM for tomorrow for a 5% return.... the stock is down 21%
. I am going to stick with Tesla only.
Well... Those are leftovers after closing most things
Both of those positions were halved during the trading today.
I started the day with ~10% margin left and ended the day with ~60% margin left.. so it's pretty much risk reduced compared to normal days
InTheShadows
Active Member
No better time for a BPS!I almost sold SNAP IC's 20% OTM for tomorrow for a 5% return.... the stock is down 21%
TheTalkingMule
Distributed Energy Enthusiast
Isn't avoiding the few outlier trouble weeks the same as making money?CAN SOMEONE PLS TELL ME HOW TO MAKE $$$ NEXT WEEK? (not yelling)
this is all i have
View attachment 724061
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