dc_h
Active Member
I had a couple of bad weeks last year and was stuck with losing BPS. I sold very aggressive CC's and BCS's. I felt even if they were max loss, I would have premium rich sales to make up for the lost BPS. The share price didn't recover, but I sold at the money CC and BCS and got about 25% of my losses back. Not advise, and at this point, we may recover all our 2022 stock losses this week, even if our options losses can't be recovered so easily.I want to be sure that people saw the Edit I added to the previous post, because this is SO important.
The margin problem with ITM BPS 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. 4) Turn it into an iron condor (but the call side will generate very little income if the BPS is at full loss).
So if you are selling BPS in a non-cash account (with TSLA shares as your collateral), make sure you leave a lot of Margin available. Don't use much of it.
For this week, I'm still not liking the CC premiums around 1100, which is around where I'm comfortable. Big call walls at 1000, 1050 and 1100. Probably a lot of work to move past 1000 this week.