Hi guys I'm brand new to the forum, which is crazy because I have been on car forums for a long time. I own 2 Teslas (original Roadster, Signature Model X) and have had a deposit on the new Roadster for awhile now.
My father passed away last year but left me his portfolio which contains a LOT of Tesla shares he bought @ $7.10, then a lot more at $15.09.
I don't wish to ever sell these as I can borrow against them and the rest of the things in my portfolio. But I would like to use them to extract money out of the marketplace to cover monthly income, taxes, etc.
Couple questions before I start scanning the 690pgs of this thread:
- My research shows that selling cash-secured puts (I wouldn't mind accumulating more shares if the price drops) may be the best way for me to go about producing monthly income. Would anyone confirm that this would be a reasonable "set and passively monitor" scenario?
- In this scenario I would look to sell 10 contracts, 45-day puts around ~20% down (so if I bought today the strike would be around 850). I have enough shares to use as margin, and would be able to get enough cash to purchase shares if I ever got called.
- If any of the above does not compute, I would be interested to know how far out you would recommend going (30days, 60days, etc), and what kind of downside strikes I may consider targeting (15%, 10%, etc) outside my own conviction of where I'd be happy buying the stock.
- Should I pay more attention to the premium as good guidance?
My options manager is willing to start helping me with these trades, but I'd like to get a firm understanding of the process before I start executing.
My welcome as well. Its good to see a fellow Roadster owner on board.
Lots of not-advice suggestions (we all have opinions and we all have input, but ultimately we all make our own decisions and experience our own (good and bad) consequences. We're not financial advisors.
I do have some suggestions. Somebody else mentioned reading the last few months of the thread rather than the whole thing. I think that is entirely reasonable. Unfortunately the posting volume picked up a lot over the summer so that will be a disproportionately large subset of the thread. Ah well - such is life, and there are indeed many examples of risks and rewards, good and bad consequences, that people have experienced. Many many learning opportunities of the best kind - the opportunity to learn from other's experience.
But step 1 is that you've already acquired option basics knowledge from other sources, find your own beginner / introductory options learning material, or go through the Options Alpha learning series linked on the first page. That basic level of knowledge is assumed throughout the thread.
There is also a link over to our Glossary thread where terminology and some historical posts people have found particularly valuable can be found. Read as much or as little as you are inspired to do - there is good beginning stuff, as well as plenty to refer back to as you learn and experience more.
So assuming that background knowledge there is unfortunately no one right or best way to do things. OA talks mostly about 30-60 day options that get closed 2-4 weeks prior to expiration. Except for the people that leave positions to go to expiration (save the commissions to close). And a lot more. This is an important limitation on the OA stuff - they are both teaching option basics in addition to an approach to trading / selling options. There are really big, really important differences between what they are doing in their trading strategy(s) and what we're doing.
The big difference as I see it is that OA is trading a huge number of underlying companies etc.., while most of us are trading a single underlying (TSLA). At least for me I believe that my study and tracking of Tesla provides me with a material information edge over Wall Street, and that information edge is something I use as I sell TSLA options. That doesn't mean that I'm right - but I do carry through and put money on the line due to that belief. It also means that I need to stay connected to both short and long term stuff going on with the company.
Generally speaking I don't see a good "set and passively monitor" approach, mostly because I haven't personally experienced such a thing nor have I seen anybody else active in the thread talking about achieving that. But there IS more and less attention needed, so this becomes a reasonable vector to tune your own strategy for. And if you find something along these lines that is working for you, please do post about your strategy, what is working and not, what you're learning as you go along, etc.. because there are almost certainly others here that will find that valuable (I know that I would!).
Choosing strikes is also a non-trivial exercise and is a frequent topic. The mechanism you mentioned for the puts - what price would you be happy to buy shares at - is something I used when I got started, and that served me well.
I think most all of us would agree that the premium is only useful as an "is this even worth it" test - not guidance on which strikes to choose.
I see plenty of good reason to use those 45ish day expirations. The problem when you're new to this is that even if you're closing 2 weeks early, thus positions open for 1 month, then you'll gain 12 experiences in a year. If you're doing weekly trades then you'll have access to 50ish experiences a year, and that'll mean faster experience / knowledge gain. That is what led me to weeklies originally, along with a better weekly income, and the ability to make strike price adjustments more frequently.
I think that the main thing we would all provide as not-advice ... start with small positions and repeat. There is a good post in the Glossary about how to get started. The idea in a small position is that it is small enough that a max loss won't carry a meaningful financial impact to you, while also being large enough to get and keep your attention.
