Wiki Selling TSLA Options - Be the House

[wooter]

OK, I paid 60 cents for immediate deposit and the money is already available in IBKR. 21 minutes. Not bad.

With this in margin, I can close the naked sold 790 put without margin deficit message.

Closing both as a strategy still gives me a margin deficit error.

I see no problem with closing the -790 first , since after the -790p is closed, I still own the +900p and can sell it for about 97% of it's value (but I assume this will drop on monday). That ~6K will go back to my cash, and I will have no sold or bought options left, only cash and stock.

New monday, new situation.

TSLA is up in premarket so my margin increased, the -790p is OTM so about 40% green, and the +900p is close to ATM so lost a limited amount of value.

But I’m going to close both, too close for my comfort.

 

[JustMe]

Are you saying close half (50) the positions, with a possible max loss of $1M (50X$200)?

Then, there are two months to possibly save the 4/14 1000/600 if the stock price recovers >$1000 or by getting a better roll if SP is greater than the midpoint ($800).

I guess that is realizing a possible $1M loss on the close, plus risking another $2M loss (50x $400 spread) if the SP goes under $600 ?

Also, where does the 2/4 = $171 Friday close and the 4/14 = $179 numbers come from, I assume they are the current costs of the spreads ?

Yes, that’s what I was thinking. Those prices were as of Friday close

 

[InTheShadows]

Well, last week was stressful for me too. I had about 8 BPS positions open, most 200 pt spreads and 10 or 20 contracts, for 1/28 and 2/4. I've been generally trying to stay 15-20% OTM when opening these, and using less than 50% margin. But I spent the whole week staring at my screen and rolling things down anytime there was a stock drop to near my short positions. A few times I accidentally rolled some positions twice in the same day and got those day-trader warnings. Luckily, I was able to roll everything either down and out from 1 to 6 weeks for at least a small credit. I wasn't thinking much except trying to keep from losing anything, but at the end of the week I added up my roll credits and was surprised I made $46K! But overall not a fun week and I'm going to try to re-adjust strategies to avoid something like this in the future.

But now I've got a few positions for 3/18, highest a 650/900, and I want to keep rolling down. I'd like to keep rolling everything down to a 750 or less level if possible in case we keep dropping the next few weeks. Next Fed meeting is 3/16 when they will probably spook the market again, so I don't think 3/18 is a good date to have something open for. Will probably roll all my 3/18 positions out to 4/14 (about 2 weeks after Q1 P/D numbers come out), especially if there is a SP rebound this week.

You don’t have to worry about daytrader status unless your account falls under $25k for that day. If you maintain a balance over that in a full margin account don’t worry about those messages.

With 10-20x 200 pt spreads, you don’t need to be concerned with the smart trading rules, unless there is nothing else in those accounts.

 

[OrthoSurg]

New monday, new situation.

TSLA is up in premarket so my margin increased, the -790p is OTM so about 40% green, and the +900p is close to ATM so lost a limited amount of value.

But I’m going to close both, too close for my comfort.

New week, I hope for a new situation. Like having to worry for my 1050 Covered calls.

 

[MP3Mike]

You don’t have to worry about daytrader status unless your account falls under $25k for that day. If you maintain a balance over that in a full margin account don’t worry about those messages.

I wouldn't be so cavalier about it. Once you are flagged as a day trader if you day trade more than your allowable day trade amount you will get a really nasty margin call, and my understanding is the only way to meet it is to add new capital/stocks. (It won't go away because of increased value of holdings in the account.)

 

[mongo]

I wouldn't be so cavalier about it. Once you are flag as a day trader if you day trade more than your allowable day trade amount you will get a really nasty margin call, and my understanding is the only way to meet it is to add new capital/stocks. (It won't go away because of increased value of holdings in the account or time.)

The day trade limit (up to 4x) is for open positions that cannot be held overnight. You can do as much back and forth as you like, but you cannot have positions open more than your day trade buying power, at least at Ameritrade. This is likely higher than normal margin buying power, so should not be a constraint.
If in violation, ya need to sell stuff.
Learning Center - Pattern Day Trading
https://www.tdameritrade.com/retail-en_us/resources/pdf/AMTD086.pdf

 

[EVCollies]

Rolled my 2/18 BPS 1000/800 for even money forward a week. Considering the same for my 2/18 980/780. I hope this is the start of a green streak but have very little faith that mainstreet has realized TSLA excellent ER.

For the first time in weeks I have a BPS OTM! 2/18 880/680. Hope to close these out in a few weeks so not rolling...

 

[TheTalkingMule]

Sorry to see Citadel and their "clients" stole so much money from folks here(me included). At least we can enjoy the rebound I guess.

 

[OrthoSurg]

Never been happier to see my CCs turn -10%. All my sold puts are emerging from the abyss.

Godspeed everyone. Mais this week be the greatest recovery of all time.

 

[juanmedina]

Sold 1050cc's for $1.5-1.6. I am kind of regretting my Mar 22 rolls because of the rate hikes that are supposed to happen on that week. I completely forgot about that .

 

[Yoona]

STO 2/4 BPS -p700/+p600, delta=8, Prob OTM=90%

sticking to the master plan of BTC 80% 5 DTE

i closed this at 82% (in one day!) even though no new positions yet and left $ at the table, no regrets

 

[ChefBoyardee]

Sorry to see Citadel and their "clients" stole so much money from folks here(me included). At least we can enjoy the rebound I guess.

If I get out of this with less than a 10% hit, I'd consider that a good price for the lessons learned TBH

 

[scubastevo80]

Lots of moves this morning on the 5% pop. Here's to a $900 floor and slow march upward!

Rolled 940/800 2/4 out to Jan 23 980/830 for $22 credit
Rolled 850/800 2/4 to 2/11 840/790 for $1.75 credit (wanted some strike improvement)
BTC 750/670 which was up about 80%
STO BCS 1050/1150 2/4 for $1.20
STO BCS 1100/1220 2/11 for $2.10

 

[OrthoSurg]

Sorry to see Citadel and their "clients" stole so much money from folks here(me included). At least we can enjoy the rebound I guess.

The fact I got 0.5% away from a margin call is either well thought risk management or beginners luck. Lesson learned. I will be ready for the recession in 10 years.

Looking to close some puts when we reach 910

 

[SebastienBonny]

sticking to the master plan of BTC 80% 5 DTE

i closed this at 82% (in one day!) even though no new positions yet and left $ at the table, no regrets

So you're doing new positions now for this week or wait until the end of the week for next week?

 

[BornToFly]

I've discovered something VERY, VERY, VERY important to know about selling spreads. With a BPS, if it is ITM, and you get a margin call because the stock you are backing the position with losses value, buying back the spread at a loss does NOTHING for your margin. It makes sense, because if full loss is $20k on a 850/1050, you needed $20K of margin when you opened the position, and you need $20k to close it. So nothing changes with your margin when you close a fully ITM position, you are just $20k poorer. If it was half way in the spread, you would close for $10k, and then get a margin improvement of $10k.

So it is definitely "safer" to do BPS with an all cash account because you can't go into a margin call situation. However, if your positions go to full loss, and you were using 90% of your cash to back the positions, you lose 90% of your account for ever. At least if you have shares, you can sell covered calls to generate income to roll positions further out. With a cash account, what you got is what you got.

Personally, I might be done with BPS after this, and go back to regular old naked puts and covered calls.

Edit: This is different from selling naked Puts. If you sell a naked Put, and the SP drops and you get a margin call because the Put is requiring more margin, (and your shares are giving you less margin because the SP has dropped), you can resolve the margin call by buying the naked Put at a loss. As explained above, with a fully in the money BPS, buying back the spread at a loss does not help your margin at all. The only things you can do are: 1)Bring more money into the account. 2) Sell your shares to increase your margin. 3)Sell CC against your shares for income.

 

[Yoona]

So you're doing new positions now for this week or wait until the end of the week for next week?

always 5-7 DTE max, too scared to go far

2/11 BPS i will open this Thu/Fri

 

[bkp_duke]

always 5-7 DTE max, too scared to go far

2/11 BPS i will open this Thu/Fri

Much appreciated that you keep sharing your thoughts and trades. I've got a lot of learning to do (and a lot of account rebuilding).

 

[EnzoXYZ]

I’m very happy for many in here today. Hopefully everyone can make proper adjustments to their under the water BPS. I was lucky last week to be below the share price except couple of -850p with super majority at -830p and -730p.
My “luck” was follow the sell on strength and ~20% below share price.

 

[Yoona]

I've discovered something VERY, VERY, VERY important to know about selling spreads. With a BPS, if it is ITM, and you get a margin call because the stock you are backing the position with losses value, buying back the spread at a loss does NOTHING for your margin. It makes sense, because if full loss is $20k on a 850/1050, you needed $20K of margin when you opened the position, and you need $20k to close it. So nothing changes with your margin when you close a fully ITM position, you are just $20k poorer. If it was half way in the spread, you would close for $10k, and then get a margin improvement of $10k.

So it is definitely "safer" to do BPS with an all cash account because you can't go into a margin call situation. However, if your positions go to full loss, and you were using 90% of your cash to back the positions, you lose 90% of your account for ever. At least if you have shares, you can sell covered calls to generate income to roll positions further out. With a cash account, what you got is what you got.

Personally, I might be done with BPS after this, and go back to regular old naked puts and covered calls.

yes, that is correct for all-cash acct; 20k was reserved already by the broker at STO so total acct value is down by 20k immediately

20k is "returned" to you if position expires worthless

a BTC at full ITM doesn't change the total acct value because "the broker already took the 20k at STO"