Wiki Selling TSLA Options - Be the House

[st_lopes]

I've noticed you all use bps and bcs a lot. Have any of you thought about how B could stand for bull or bear

Put spreads = bull if selling, bear if buying
Call spreads = bear if selling, bull if buying

 

[Flehmenlips]

I agree. Least that what the math says.

I am reporting what happened to my buying power post execution. Maybe IBKR does not like my TSLA heavy account? In all fairness, it only has TSLA in it .

Do you also have shares in the account? Do you have some protective puts in there? Do you know what your PNR is? I have noticed sometimes the margin calculator will pair things up in weird ways and create collars and married puts and other such things which can mess around with your margin requirements. Especially if you have a lot of other trades going on like covered calls and long calls and such.

 

[Flehmenlips]

I closed my +85% 20x 14/1 1255 CCs this morning and Sold 20x 21/1 1310 CCs around 10AM. The only green thing in my portfolio. I was expecting a rebound and green days heading to earnings. In hindsight I would have sold 900 CCs. (Just kidding)

This volatility is insane.

The volatility is keeping it fun and interesting! I am so grateful for this thread. It is so helpful to have strategies to stay safe in these volatile conditions. I wish I had known what I have learned in the last three months a year ago. Would have made a lot more and lost a little less.

 

[Flehmenlips]

By the way, I did something this week that sort of worked out based on lucky timing, but it caused me to wonder if this is a common tactic any of you employ? I had a 14 Jan BPS +1000p/-1050p that I sold back in early Jan. I wanted to close the position, and not roll it, so yesterday, when the SP was high at $1110 or so I BTC the short leg for some decent profit, but kept the long leg, figuring it might improve. Sure enough, I sold the long put leg this afternoon and did much better than if I had closed the full spread yesterday. Is there a name for that approach?

 

[bkp_duke]

By the way, I did something this week that sort of worked out based on lucky timing, but it caused me to wonder if this is a common tactic any of you employ? I had a 14 Jan BPS +1000p/-1050p that I sold back in early Jan. I wanted to close the position, and not roll it, so yesterday, when the SP was high at $1110 or so I BTC the short leg for some decent profit, but kept the long leg, figuring it might improve. Sure enough, I sold the long put leg this afternoon and did much better than if I had closed the full spread yesterday. Is there a name for that approach?

I believe it is called "Legging out" of a credit spread:

Leg Out: What it Means, How it Works, Example

Leg out refers to one side of a complex option transaction that means to close out, or unwind, one leg of a derivative position.

www.investopedia.com

 

[traxila]

Do you also have shares in the account? Do you have some protective puts in there? Do you know what your PNR is? I have noticed sometimes the margin calculator will pair things up in weird ways and create collars and married puts and other such things which can mess around with your margin requirements. Especially if you have a lot of other trades going on like covered calls and long calls and such.

Yes I have shares. Most people would say a lot. Maybe not on this forum.

Have no idea what PNR is.

I only only have sold puts.

I have long calls.

I have covered calls.

Not complaining. Just noting how my buying power decreased 2.5 million over two relatively small BPS.

 

[Flehmenlips]

Yes I have shares. Most people would say a lot. Maybe not on this forum.

Have no idea what PNR is.

I only only have sold puts.

I have long calls.

I have covered calls.

Not complaining. Just noting how my buying power decreased 2.5 million over two relatively small BPS.

I'm thinking something like the BPS getting treated as something else by the margin calculator and splitting it up based on expiration dates lining up. i.e. the long legs get paired with some of your calls, leaving the short legs as naked calls and skewing your buying power and margin accordingly. Haven't thought it through carefully, but something like that could be going on. Doesn't sound like you're in a position where it matters much, but it could be helpful for myself and others to understand better how these things work.

 

[Flehmenlips]

I'm thinking something like the BPS getting treated as something else by the margin calculator and splitting it up based on expiration dates lining up. i.e. the long legs get paired with some of your calls, leaving the short legs as naked calls and skewing your buying power and margin accordingly. Haven't thought it through carefully, but something like that could be going on. Doesn't sound like you're in a position where it matters much, but it could be helpful for myself and others to understand better how these things work.

Try throwing some long puts in an analyze tab and see how it potentially affects your margin requirements, or look at your margin analysis tab and see if some things are getting paired up in weird ways.

 

[Flehmenlips]

I believe it is called "Legging out" of a credit spread:

Leg Out: What it Means, How it Works, Example

Leg out refers to one side of a complex option transaction that means to close out, or unwind, one leg of a derivative position.

www.investopedia.com

Legging. I like it. A new options dance move for me I am going to learn more about.

 

[Flehmenlips]

Legging. I like it. A new options dance move for me I am going to learn more about.

You put your long leg in, you call your short leg out, you do the hokey-pokey and you shake it all about...

 

[vwman111]

Yes I have shares. Most people would say a lot. Maybe not on this forum.

Have no idea what PNR is.

I only only have sold puts.

I have long calls.

I have covered calls.

Not complaining. Just noting how my buying power decreased 2.5 million over two relatively small BPS.

Margin and buying power are two different measurements. Buying power has a multiple based on a cash value. If entered a spread, the value used to generate buying power would be $0 and you would require a certain amount of margin to enter the position. I'm not sure if that explains the entire amount you were looking at, but it might be a piece of the puzzle.

Also if one of the spreads didn't get matched as a spread, that can impact the margin. That happens more often when entering two separate legs rather than 1 spread trade.

 

[OrthoSurg]

Yes I have shares. Most people would say a lot. Maybe not on this forum.

Have no idea what PNR is.

I only only have sold puts.

I have long calls.

I have covered calls.

Not complaining. Just noting how my buying power decreased 2.5 million over two relatively small BPS.

I’m having big margin swings too, I bought 20x +p790 to convert my -p990 naked puts into a BPS last week for margin management but did not see any change. The margin requirement is updated at the end of the day on my platform. Margin calls appear at the end of the trading day and they ask to call asap the next following day. Next time if it happens I’ll call them and convert a naked puts in BPS by telling them to add the extra leg. When I called them 3 months ago to ask them how to place the the 2 legs of the trade for a BPS or 4 legs for an IC, they told me I had to call for any trade requiring more than 1 trade and that they had extra fees for placing those via phone. That’s the reason I opened my IBKR account however I am still in the process of rolling the stock between my 2 companies.

I guess it is easier to manage margin on a underwater naked put than BPS. On a BPS you could make the spread more narrow but when the stock is behaving like the Himalayas, not interesting to do that on the way down. I knew investing in TSLA would be a bumpy road but adding options to the formula made it climbing and going down every damn Himalayan mountains within 1 month. I was not training for this.

 

[InTheShadows]

You put your long leg in, you call your short leg out, you do the hokey-pokey and you *ROLL THEM ALL OUT*

FTFY

 

[Zhelko Dimic]

I’m having big margin swings too, I bought 20x +p790 to convert my -p990 naked puts into a BPS last week for margin management but did not see any change. The margin requirement is updated at the end of the day on my platform. Margin calls appear at the end of the trading day and they ask to call asap the next following day. Next time if it happens I’ll call them and convert a naked puts in BPS by telling them to add the extra leg. When I called them 3 months ago to ask them how to place the the 2 legs of the trade for a BPS or 4 legs for an IC, they told me I had to call for any trade requiring more than 1 trade and that they had extra fees for placing those via phone. That’s the reason I opened my IBKR account however I am still in the process of rolling the stock between my 2 companies.

I guess it is easier to manage margin on a underwater naked put than BPS. On a BPS you could make the spread more narrow but when the stock is behaving like the Himalayas, not interesting to do that on the way down. I knew investing in TSLA would be a bumpy road but adding options to the formula made it climbing and going down every damn Himalayan mountains within 1 month. I was not training for this.

Since you're Canadian... It's possible Canadian institutions are stricter, and definitely are less transparent...

I found hard way last year that put spreads at TD Direct don't count for a margin, they will be "definitely maybe" calculated as naked puts. Depends on the human reviewing one's position.

This involved bruising clash with TD Direct Risk department due to unpublished concentration rule, 10 hrs on the phone, the most experienced options specialist at TD that had wrong info, manager that went to speak to Risk department 3 times and then threatened me, 500K-1M repositioning and much tax bill...

In the process of moving accounts to ibkr, if TD Direct ever lets me go, they received request on Jan 4th...

 

[Yoona]

Since you're Canadian... It's possible Canadian institutions are stricter, and definitely are less transparent...

I found hard way last year that put spreads at TD Direct don't count for a margin, they will be "definitely maybe" calculated as naked puts. Depends on the human reviewing one's position.

This involved bruising clash with TD Direct Risk department due to unpublished concentration rule, 10 hrs on the phone, the most experienced options specialist at TD that had wrong info, manager that went to speak to Risk department 3 times and then threatened me, 500K-1M repositioning and much tax bill...

In the process of moving accounts to ibkr, if TD Direct ever lets me go, they received request on Jan 4th...

TD WebBroker often has different margin computations than TD thinkorswim (i know this because i download data every night); i called TD WB at least 3x to ask about the discrepancy and was told TOS is the correct one.

For ex, BPS 1000/950

• requires 5k margin in TOS any time of day
• requires 5k or 10k margin in WebBroker, depending on what time you checked the acct (7pm or 1am); WB is notoriously wrong most of the time if acct is linked to TOS. Last year, WB almost gave me a heart attack when i saw i am getting a $6M margin call. I called TOS and they said "ignore it, WB is wrong and we have the correct computation".

 

[Discoducky]

If anyone is using E-Trade, they called me today and asked if I wanted more margin. I didn't and when they asked of I needed anything, I asked to not be surprised if rates went up unexpectedly.

That's when I found out if I had asked for more margin my rates would have gone up ON MY ENTIRE MARGINED SUM!!!

This is due to the Morgan Stanley acquisition apparently.

Be careful out there!

 

[OrthoSurg]

If anyone is using E-Trade, they called me today and asked if I wanted more margin. I didn't and when they asked of I needed anything, I asked to not be surprised if rates went up unexpectedly.

That's when I found out if I had asked for more margin my rates would have gone up ON MY ENTIRE MARGINED SUM!!!

This is due to the Morgan Stanley acquisition apparently.

Be careful out there!

Hello sir, do you want an increase in your margin rates?​

 

[jeewee3000]

Legging. I like it. A new options dance move for me I am going to learn more about.

Paging @Lycanthrope , if I remember correctly, he used this strategy sometimes:

Sell BPS, when stock rises exit the short leg a'd let the long leg ride. If the stock reverses you can then either:
-sell a new short leg, creating a bps again (bit like double dipping)
-sell the long leg to take some profits due to the drop.

So many options (ba dum tss).

 

[juanmedina]

If anyone is using E-Trade, they called me today and asked if I wanted more margin. I didn't and when they asked of I needed anything, I asked to not be surprised if rates went up unexpectedly.

That's when I found out if I had asked for more margin my rates would have gone up ON MY ENTIRE MARGINED SUM!!!

This is due to the Morgan Stanley acquisition apparently.

Be careful out there!

Oh wow. They called me recently yo ask if I wanted to get a portfolio margin account and some higher status which I declined. What is your margin requirement now? Mine is 40%

 

[Discoducky]

Oh wow. They called me recently yo ask if I wanted to get a portfolio margin account and some higher status which I declined. What is your margin requirement now? Mine is 40%

Yep, that is mine as well. And since I opened that when the stock was around $600 and that account is all TSLA, I've got a bunch more I could access.