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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
you will get an instant margin call.
Or in IB they will liquidate things instantly (most likely they will liquidate the short legs before they are assigned).
mickificki
Member
apple reports earnings later today. Not sure if a good earnings beat by AAPL will soothe the markets.
According to Dan Ives, MSFT already beat earnings, so did TSLA. Need AAPL to do their part to help buoy the tech/growth sector.
I'm regretting not rolling my 1/28 920/820 bps a week out earlier this morning, would've gotten $10 credit. Now, had to roll up and out 12/16 1000/900 for a mere $2.41. Was trying to call the market's bluff, but I think the market was just laughing at me.
One thing to look for - you aren't actually at a max loss until the time value is gone from both legs. It'll be near max loss but there will still be some value remaining
Opened some 700/500 puts for next week. I went for the 700 strike as I consider that to be a particularly strong support level. Over the summer I had started using 730 strike puts using the same basic point of view - I figured I could roll down under 700 if necessary and the higher strike generated a lot of incremental income. Credit is just shy of 2% (3.70).
But right now I am not pushing that strike. Down at this lower strike there isn't a need, the way I see it, for a wider spread. The 500 strike insurance put is about .12 (nearly free) and I can roll down to 600. We may be going that low but we won't be doing that by next Friday.
Also closed the 1000 and 1050 covered calls this morning for 2/3rds and 4/5ths profit. Obeying my long standing rule that was recently violated I am waiting until tomorrow at minimum (or a huge recovery to something like +30 on the day) to sell new CC for next week.
Feeling badly bruised and beaten on. I was starting to get greedy in my pursuit of income - pulling back on that and just working on ridiculously good instead of greedy.
But right now I am not pushing that strike. Down at this lower strike there isn't a need, the way I see it, for a wider spread. The 500 strike insurance put is about .12 (nearly free) and I can roll down to 600. We may be going that low but we won't be doing that by next Friday.
Also closed the 1000 and 1050 covered calls this morning for 2/3rds and 4/5ths profit. Obeying my long standing rule that was recently violated I am waiting until tomorrow at minimum (or a huge recovery to something like +30 on the day) to sell new CC for next week.
Feeling badly bruised and beaten on. I was starting to get greedy in my pursuit of income - pulling back on that and just working on ridiculously good instead of greedy.
Is there not a better use of that capital or margin by starting to sell weeklies again instead of rolling out that far?
mickificki
Member
Great question. So I have on margin 20x contracts 920/820 that I'd been rolling since Elon's stock-selling-spree-for-taxes, and today it would've "cost" $60 per contract to close them out. Max loss is $200k. If I would've closed them out, it would've decreased my cash holdings by $120k, but I'd have $200k on margin to use.
If i can get 2% per week on $200k, that'd have taken me about 30 weeks to regain that $120k.
And that's with everything going right and me not getting greedy.
I've found one of the many dangers of continuously rolling is you can really build up the "trade price" as you continuously roll, but your credit received is fairly paltry compared to that trade price. And when things really go south, the now "market price" of your spread is so huge that the credit you received for that roll is a mere pittance, and now you're scrambling to roll out or close that position, but you're royally screwed.
If anyone has better ideas or find any flaws in my monkey-logic please feel free to chime in. Thanks!
Thank you for the explanation, that was very helpful. One additional question. If you had closed the 20 contracts, would you have had $200k of margin to open new contracts or the $80k net?
Uptick rule has been triggered (10% drop from yesterdays close). Will be in effect rest of today and tomorrow.
Uptick Rule
Uptick Rule
mickificki
Member
The way it works(I think) is when I open the $100 wide BPS contracts it's $10k per contract(100 shares/contract x $100 spread) in margin that's set aside. So in my case $200k of margin was set aside or reserved/used up. Once the 20 contracts are sold, I've freed up $200k in margin.
If I'm mistaken someone please chip in.
Ok did not like the action, closed 10X for a small loss. I just have a sneaky feeling they will go for the 813 tomorrow(200 day SMA). Second wave of retail capitulation probably starting.
Flehmenlips
Member
That sounds right, but depending on your account value and margin usage the realized losses when closing contracts combined with current stock price downturn will reduce available margin. You may have less margin available than you started with. At least that is the case for me.
TheTalkingMule
Distributed Energy Enthusiast
I have some 4Feb $1060/$960 that I can widen and roll to 20May $900/$1050 for about $12 credit. Holds a bunch of margin cash in my IRA for 4 months, but that's not the end of the world.
Think I'll set this up as my panic move if I don't like what I see Monday. I'm still of the opinion that models are being updated and we'll bounce hard. Maybe triggered by AAPL.
Think I'll set this up as my panic move if I don't like what I see Monday. I'm still of the opinion that models are being updated and we'll bounce hard. Maybe triggered by AAPL.
Also have a few 1/28 950/900 BPSs. How likely is overnight early assignment? I imagine we will bounce tomorrow and open better roll opportunities but if my -950s are assigned overnight it’s a moot point.
wow I end up rolling my stuff....... sad, at least for a credit. I still have 810/760's.
IMO you should be prepared for early assignment. Happened to me last week on Thursday AH for $FOUR.
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