bballshinobi
Member
No, because MMs would do their job and sell these puts even if you don't. We are fifty bazillion to their fifty gigazillion, so don't worry about it.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
No, because MMs would do their job and sell these puts even if you don't. We are fifty bazillion to their fifty gigazillion, so don't worry about it.
what kind of warning?
There are several. Most times it is Excess Liquidity. But before a weekend it can also be "overnight funds/liquidity" or Post-expiry excess.
In TWS: Account -> Account Window. There the lines should be highlighted.
For "shitputs": they are VERY helpful. Portfolio Margin simulates rare stock-market situations (basically: "everything drops 30%, how does your portfolio look now?"). Buying 1k worth of puts (i.e. 10x 770 for today or so) CAN yeet up your margin by a significant amount.
It is very portfolio specific & the calculations behind are broken.
I.e. i have a total Tesla-delta of ~1.5k. I can go short 100 stock, i CANNOT go short 500 stock due to margin, but i can go 1500 short with plenty margin freed up. So taking LESS risk (500 short instead of 1500) can't be done due to their insane calculations.
Mathematically they SHOULD take the P/L-Integral over their risk-area (i.e. +-30%) before & after the trade and use that .. but they don't .. they do something ... else. And they won't explain it to you .. so you have to reverse-engineer -.-
the whole margin-thing at IBKR is quite opaque. You can create a new "what-if" portfolio (new window -> what if) and import your positions there. On the most right tab you have the margin-implications of each position. There you can (painfully) enter new positions to try & test.
And i have the feeling in 2 of 4 settings (what to show .. per item, per position, per batch) the margin-calculation is plain wrong.
Maybe we should open another thread for IBKR-related stuff? as many people seem to struggle with it when things get tight.
Amazing
Did you manage to close your BPS 900/800 before this crazy drop?
Well, was managing my 1/28 spreads yesterday and today.
Since 60x 100-width spreads were fully ITM, moved them up and narrower to 12/16/22 -1100/1050 at probably ~20 debit.
Today my 75x -910/710 breached midpoint…tried to roll them above midpoint to -1190/1090 Jan 2024.
Got some credit and closed 30x with it.
Also had 20x -840/820 which I thought there was no way it’d go ITM.
They did, I had no nerve keeping them and closed @5 debit.
After all this, all my rolled spreads are with expirations 7/22, 12/22, 1/24.
I had 1m+ margin and $200k cash left.
Bought 100 shares @845 and sold 2/4 50x -700/600 @2.5. Not feeling like risking too much in the near term.
The main outcome is I sold no shares, which makes me happy about the end result for this week. Probably 400k+ cash burned rolling and closing.
Can I withstand a prolonged drop to 700? Still not sure. I think I need to be working on reducing the number of rolled spreads.
Since 60x 100-width spreads were fully ITM, moved them up and narrower to 12/16/22 -1100/1050 at probably ~20 debit.
Today my 75x -910/710 breached midpoint…tried to roll them above midpoint to -1190/1090 Jan 2024.
Got some credit and closed 30x with it.
Also had 20x -840/820 which I thought there was no way it’d go ITM.
They did, I had no nerve keeping them and closed @5 debit.
After all this, all my rolled spreads are with expirations 7/22, 12/22, 1/24.
I had 1m+ margin and $200k cash left.
Bought 100 shares @845 and sold 2/4 50x -700/600 @2.5. Not feeling like risking too much in the near term.
The main outcome is I sold no shares, which makes me happy about the end result for this week. Probably 400k+ cash burned rolling and closing.
Can I withstand a prolonged drop to 700? Still not sure. I think I need to be working on reducing the number of rolled spreads.
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These are with IBKR, they will liquidate the short legs before they allow them to get assigned. This happened to me a few weeks ago at 11 am PST on expiration day. Am waiting to see if stock price can hit the midpoint of 875 for that spread and roll to next week, but time is sure ticking, may have to move the strikes up a bit too in the end.
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Rolled all my 2/11 BPS forward a week at same strike or up $10 for small credit.
Thinking about a creative way to wheel my open Put's that are $1120's for next week.
Take assignment - immediately STO January 2024 $2000 calls - Immediate $10k each and an additional $88k each in 2024 for LT gains!
Yay for being creative!
Take assignment - immediately STO January 2024 $2000 calls - Immediate $10k each and an additional $88k each in 2024 for LT gains!
Yay for being creative!
Today has been a huge learning day for me.
I was on the phone to IBKR trying to figure out their Risk Navigator (modeling tool wasn't working) when the SP dropped to 790, which was well below the half-way mark for my 2/4 -900/+700. I was in a screen sharing session with the hotline learnt a lot in the 15min. Great service experience!
So I sorted out my margin alert issue - IBKR has yellow alert (10% from danger territory) and red alert (you are now in *sugar* and algo might start to liquidate) - by buying a protective ITM put. This got me out of yellow alert territory, and then luckily the SP started climbing. I will look to roll this, or let it expire if/when required.
That gave me time to think about what I wanted to do with the 2/4 -900/+700. Rolling the whole lot to 2/11 would have been a nice credit, however no relevant margin improvement. Also, I'm not sure we'll be safe >900 by 2/11.
My plan was to roll out and down for maximum margin improvement, while collecting at least a tiny credit. I decided to split the trade in 1/3 lots:
Rolled:
a. 1/3 to 2/11 -900/+700 for $6 credit (paid for the protective put) - This is still in danger territory, but I can manage if required.
b. 1/3 to 4/14 -850/+650 for $2 credit
c. 1/3 to 5/20 - 800/+600 for $2 credit
Assuming the market figures out that TSLA is actually worth a hell of a lot more than 850 in the mean time, I will look to roll them in (and up?) where possible and close them out.
If the world shits their pants in the mean time, well....that is a future me problem and I will just roll out.
Next I need to figure out how I can add some weeklies again for a bit of fair OTM income.
Good luck to all and I hope everyone relax and decompress over the weekend.
I was on the phone to IBKR trying to figure out their Risk Navigator (modeling tool wasn't working) when the SP dropped to 790, which was well below the half-way mark for my 2/4 -900/+700. I was in a screen sharing session with the hotline learnt a lot in the 15min. Great service experience!
So I sorted out my margin alert issue - IBKR has yellow alert (10% from danger territory) and red alert (you are now in *sugar* and algo might start to liquidate) - by buying a protective ITM put. This got me out of yellow alert territory, and then luckily the SP started climbing. I will look to roll this, or let it expire if/when required.
That gave me time to think about what I wanted to do with the 2/4 -900/+700. Rolling the whole lot to 2/11 would have been a nice credit, however no relevant margin improvement. Also, I'm not sure we'll be safe >900 by 2/11.
My plan was to roll out and down for maximum margin improvement, while collecting at least a tiny credit. I decided to split the trade in 1/3 lots:
Rolled:
a. 1/3 to 2/11 -900/+700 for $6 credit (paid for the protective put) - This is still in danger territory, but I can manage if required.
b. 1/3 to 4/14 -850/+650 for $2 credit
c. 1/3 to 5/20 - 800/+600 for $2 credit
Assuming the market figures out that TSLA is actually worth a hell of a lot more than 850 in the mean time, I will look to roll them in (and up?) where possible and close them out.
If the world shits their pants in the mean time, well....that is a future me problem and I will just roll out.
Next I need to figure out how I can add some weeklies again for a bit of fair OTM income.
Good luck to all and I hope everyone relax and decompress over the weekend.
What makes you certain of that?
IBKR assigned me itm short puts 3 days before expiry in december. Happened before market opened too, on wednesday.
Early exercise isn't decided by IBKR. Someone exercised puts, and you were the lucky random winner who got assigned. Options clearing happens after hours, and IBKR would have been notified as such and handled it then. What @DGates was talking about is when you are over leveraged from an assignment standpoint such that on the expiration day if there is risk of ITM and you will not be able to cover assignment, the broker will liquidate the short position during the day. The timing varies from broker to broker, but they all do it. They can't save you from early exercise though.
mickificki
Member
Thank you for sharing. How do you know how many protective puts and how far ITM the puts have to be? Thanks.
I just played around with puts in the IBKR options trader to where the margin impact was greater that what I needed to get out of the oh-*sugar* territory. Started with just-ITM and move out from there. Decided to take a weekly, which I'll roll if required or simply open another put position. It was quite effective.
Glad you successfully navigated that. Margin calls are never pleasant and it's often a bitter pill to swallow to buy puts, but during these times I find they're optimal to reduce downside risk and avoid a margin call.
Last year I bought puts and sold long dated calls and in retrospect I wish I'd stuck with the puts because the sold calls will be a drag on future gains.
With the market volatility we are seeing now I increased the number of puts I have to the point where if we were to go to zero I'd be able to cover what I'm borrowing. This should equate to zero margin call risk and I can watch the volatility without emotion. As we recover I'll look to start selling puts again
Yeah exactly, I don't have the cash in that account to take assignment. Opened these when the stock was around 1150 thinking 950 was pretty safe with great ER coming. Silly me. Now I get a first hand lesson in managing a losing spread.
Thanks, very informative.
So what happens if you're over leveraged and get early assigned?
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