Wiki Selling TSLA Options - Be the House

[Max Plaid]

This has to be an organised shorty-bear attack - what with the uptick rule no longer active. The fact that $TSLA was up 3% most of pre-market, then dumps against the indexes on no news, not natural at all

For my side I BTC 5x 5/6 -c950's I sold yesterday for 70% profits, plus STO 10x 5/6 -p700 close to the bottom - will roll these down and out if I have to, but I'm also not opposed to the idea of getting 1000 $TSLA shares @$700

I'm thinking if $AMZN and $AAPL come with good earnings then this could be very interesting tomorrow

So, Elon sold, I'm not impressed with him at all. No doubt the downside was amplified by the bears to exacerbate the dump, hopefully with that pressure removed it now recovers - imagine how much potential upside we missed yesterday

$AMZN has unbelievably terrible earnings. $AAPL and $INTC were good, but both with poor outlook

Will it drop, will it pop, will it meander sideways until FOMC next week

 

[MP3Mike]

Need to think about this some more, but since they are a max loss, you just need to reduce the margin requirement. Iron condor has the same requirement as a BPS. You can flip roll some to a Bear Call Spread and make an IC. Other option is roll out and up and see if you can reduce the spread width without changing the number of contracts (maybe for a reasonable debit that lowers your margin overall). Definitely don't throw in the towel. Those have a good chance of ending up OTM. Or, Instead of flip rolling open the same number of BCS to increase cash without changing margin requirement?

I'm just not seeing any good options.

• I don't really get the flip/roll concept. Converting half of the 1000/1100 BPS to 1150/1250 BCS would cost ~$9,000/contract while reducing margin by $10,000. So a net $1k gain from full loss? That seems pretty much like locking half of the loss in now, and increasing the risk of full loss.
• Rolling up/out doesn't seem to work well, going to a Jan '23 1375/1450 would cost ~$2,200/contract while reducing margin by $2,500/contract. So a net gain of ~$300/contract. (Not to mention I don't feel like >$1450 by January is very likely.)
• Turning it into an IC: 5/20 1000/1100/1125/1225 would only net me ~$245/contract, hardly seems worth the effort and extra risk should things take off.

Do those options sound like what you were thinking about, or am I looking at things wrong?

It seems like the best options are either to just let things go, or try to save them as-is. I can't lose more by dumping cash in, to clear the margin call can I? (Actually I guess I can, if the TSLA price keeps going down I have to sell more shares to cover the same loss. Dumping cash in and selling shares to 100% cover the loss in cash is an option but then if TSLA takes, like it should, I don't get the gains.)

On the plus side futures have improved some...

 

[Criscmt]

Well it looks like I'm out. E*TRADE upped my margin maintenance requirements. They haven't issued the margin call yet, so I don't know if they will give me a few days to clear it, or if I will have to clear it tomorrow. If I have to resolve it tomorrow I will probably have to close out almost all of my open positions and after all is said and done my taxable account will pretty much be wiped out. (After holding back enough to pay the taxes on all of the liquidations.) The winners will be the MM and the Tax Man.

If we get a big rebound tomorrow, because Elon is done selling, it could leave me a little, but I'm not expecting it.

While I've lost a lot of paper gains I hadn't put in a huge amount of money myself, average share price of ~$60, but there will be no way to replicate that going forward. I had gotten in at the right time, did very well, and then screwed up big time. My once in a lifetime opportunity is now gone.

I am very sorry to hear this.
I would say, there's a strong chance this experience by itself will put you on the path to recovery, money and mental strength wise.
I (and am sure many others here) would be happy to help with any information that can be helpful.

 

[Chenkers]

Well it looks like I'm out. E*TRADE upped my margin maintenance requirements. They haven't issued the margin call yet, so I don't know if they will give me a few days to clear it, or if I will have to clear it tomorrow. If I have to resolve it tomorrow I will probably have to close out almost all of my open positions and after all is said and done my taxable account will pretty much be wiped out. (After holding back enough to pay the taxes on all of the liquidations.) The winners will be the MM and the Tax Man.

I'm also very sorry to hear this Mike. I've suffered some very sizable losses since Elon's 10% sale and while I have something left to work with, it's still precarious. I'm just doing whatever I need to do to get through this period. All the best working through the possibilities and I hope you can salvage as much as possible.

Edit: I've just opened my accounts for today and the margin that jumped up yesterday has now returned to more normal levels. So hopefully this signals that brokerages may pull back on increasing margin. With Elon concluding selling a lot of the recent uncertainty driving volatility in TSLA is largely resolved.

 

[Drezil]

Well it looks like I'm out. E*TRADE upped my margin maintenance requirements. They haven't issued the margin call yet, so I don't know if they will give me a few days to clear it, or if I will have to clear it tomorrow. If I have to resolve it tomorrow I will probably have to close out almost all of my open positions and after all is said and done my taxable account will pretty much be wiped out. (After holding back enough to pay the taxes on all of the liquidations.) The winners will be the MM and the Tax Man.

If we get a big rebound tomorrow, because Elon is done selling, it could leave me a little, but I'm not expecting it.

While I've lost a lot of paper gains I hadn't put in a huge amount of money myself, average share price of ~$60, but there will be no way to replicate that going forward. I had gotten in at the right time, did very well, and then screwed up big time. My once in a lifetime opportunity is now gone.

Same for me. Looks like I have to fold things if we don't rebound heavily (think like 1050 until next Friday). Have a meeting today to discuss the details and implications of bankruptcy..

 

[FS_FRA]

Same for me. Looks like I have to fold things if we don't rebound heavily (think like 1050 until next Friday). Have a meeting today to discuss the details and implications of bankruptcy..

Really sorry to hear that.

 

[vikings123]

Man I hope you guys can recover. Perhaps we as a group should talk about future black swan mitigation strategies.

One of the things I have been pondering about since last week is setting stop losses for BPS and margin covered puts. I think there are many strategies that can be deployed where you setup the conditions including an option to set the stop based on share price. I’m still researching but anybody use.stops?

 

[jeewee3000]

I do have enough cash available that I could probably save myself from this margin call, but I'm not sure it is worth it. The majority of the positions that I have left are 5/20 1000/1100 BPSs and I'm not sure that we would be at least to $1050 by then such that I could roll it and save it. Assuming of course, that they aren't assigned early, though there is more interest in these strikes so it should be less likely. (And it would mean giving up some spending/purchases that we had planned and want to continue with.) I've also got 5/6 975 CCs on the shares that will have to be gotten rid of so I can sell shares, so it hurts on the way up and down...

What are people's not-advice; do you think that is there a reasonable possibility that we get to $1050 by 5/20? Looking at the option interest it looks possible, but that will likely be different when we get updated data tomorrow. And who knows what will happen between now and then.

Sorry to hear you're in trouble.

This post is not an attempt to provide advice, but I made the mental gymnastics of "what would I do?".

Personally (and this is based on my personal bullish beliefs) I would attempt something like this:
The 5/20 -1100p/+1000p BPS'es could be rolled to for example:
* JUN2024 -1500p/+1400p for a cost of $6.65 per contract. Extra margin requirement in my case (depends on broker) +/-$2k per contract.
* JUN2024 -1300p/+1200p for a cost of $11.3 per contract. Added margin +/-$2.5k per contract.

Both will IMO expire OTM, but of course the latter is much safer. So I'll use that to continue my example.

The added cost of the roll and of the margin could be offset by rolling the calls.

For example if the 5/6 975cc's were rolled to JUN2024 $1300cc's you would receive $207.75 per contract. Since you have about 3 times the BPS this won't help you (unless you add some cash), but this way it would be a "one side expires worthless either way"-deal. The other side can be managed.

In my broker even cc's require cash margin (yes, even if they are backed by shares) to the amount of the price of the call option. Therefore this is quite difficult for me in margin. But if cc's are backed enough by shares you could just roll to a comfortable strike to pay for the roll.

What are the risks? Early assignment of either your sold calls or short puts. This would mean a total wipeout. Not a good position to be in, indeed. But odds are not that high this far from expiration (JUN2024).


Not advice. And good luck to all.

 

[jeewee3000]

Same for me. Looks like I have to fold things if we don't rebound heavily (think like 1050 until next Friday). Have a meeting today to discuss the details and implications of bankruptcy..

Sorry to hear this. Best of luck.

 

[ZsoZso]

Yesterday I bought some 1045C exp-Apr22 lottery tickets, that I managed to sell for good profit this morning (>300%).
But now, after all this drop from the morning high, I could not help myself and spent all my "winnings" on new 1045C tickets exp.May.13
I hope I can sell these with similar profits...

Thanks to Elon, the free-speech-crusader, who dumped 3.6 million shares a day, those options are now worthless.
Adding to it the margin-call triggering losses I got from the BPSs I had, in total I lost about 100K in options this week.

 

[juanmedina]

Well it looks like I'm out. E*TRADE upped my margin maintenance requirements. They haven't issued the margin call yet, so I don't know if they will give me a few days to clear it, or if I will have to clear it tomorrow. If I have to resolve it tomorrow I will probably have to close out almost all of my open positions and after all is said and done my taxable account will pretty much be wiped out. (After holding back enough to pay the taxes on all of the liquidations.) The winners will be the MM and the Tax Man.

If we get a big rebound tomorrow, because Elon is done selling, it could leave me a little, but I'm not expecting it.

While I've lost a lot of paper gains I hadn't put in a huge amount of money myself, average share price of ~$60, but there will be no way to replicate that going forward. I had gotten in at the right time, did very well, and then screwed up big time. My once in a lifetime opportunity is now gone.

I am sorry. What is your new margin requirement?

E-Trade called me yesterday asking if I was ok because the have been watching how Tesla has been dropping lately and they know Tesla is my only position. They asked me if I was interested in their Morgan Stanley products... I said no thanks I am good and I am buying more Tesla. That was kind of a rude call.

Oh wow @Drezil and @ZsoZso sorry about your situation. BCS and BPS are the devil. This year has been really difficult to trade with this insane volatility and is really hard to recover with the extreme SP swings. I had my share of losses with BCS. @Max Plaid had it right by staying away from spreads.

 

[OrthoSurg]

Well it looks like I'm out. E*TRADE upped my margin maintenance requirements. They haven't issued the margin call yet, so I don't know if they will give me a few days to clear it, or if I will have to clear it tomorrow. If I have to resolve it tomorrow I will probably have to close out almost all of my open positions and after all is said and done my taxable account will pretty much be wiped out. (After holding back enough to pay the taxes on all of the liquidations.) The winners will be the MM and the Tax Man.

If we get a big rebound tomorrow, because Elon is done selling, it could leave me a little, but I'm not expecting it.

While I've lost a lot of paper gains I hadn't put in a huge amount of money myself, average share price of ~$60, but there will be no way to replicate that going forward. I had gotten in at the right time, did very well, and then screwed up big time. My once in a lifetime opportunity is now gone.

sorry to hear this, I would be in the same situation as you if I had opened BPS instead of naked puts when the Ukraine war started. Had to close positions at the worst moment ever because of margin call when my portfolio was -60%. With BPS, my account would have been wiped out. I started building back with 1/4 of the contracts I had. But starting from 0 is going to be hard. Good luck

 

[OrthoSurg]

Thanks to Elon, the free-speech-crusader, who dumped 3.6 million shares a day, those options are now worthless.
Adding to it the margin-call triggering losses I got from the BPSs I had, in total I lost about 100K in options this week.

Yes, these -12%intraday induced drops are options trading portfolio nukes

 

[OrthoSurg]

I do have enough cash available that I could probably save myself from this margin call, but I'm not sure it is worth it. The majority of the positions that I have left are 5/20 1000/1100 BPSs and I'm not sure that we would be at least to $1050 by then such that I could roll it and save it. Assuming of course, that they aren't assigned early, though there is more interest in these strikes so it should be less likely. (And it would mean giving up some spending/purchases that we had planned and want to continue with.) I've also got 5/6 975 CCs on the shares that will have to be gotten rid of so I can sell shares, so it hurts on the way up and down...

What are people's not-advice; do you think that is there a reasonable possibility that we get to $1050 by 5/20? Looking at the option interest it looks possible, but that will likely be different when we get updated data tomorrow. And who knows what will happen between now and then.

I had bought 5x 20/5 1200 calls 6 months ago. Had to close them from margin call on the start of the Ukraine war but I am still 50% sure the stock price will raise over 1200 on 20/5 just to piss me off from closing that position. Deeply wish it for you.

 

[BornToFly]

I'm just not seeing any good options.

• I don't really get the flip/roll concept. Converting half of the 1000/1100 BPS to 1150/1250 BCS would cost ~$9,000/contract while reducing margin by $10,000. So a net $1k gain from full loss? That seems pretty much like locking half of the loss in now, and increasing the risk of full loss.
• Rolling up/out doesn't seem to work well, going to a Jan '23 1375/1450 would cost ~$2,200/contract while reducing margin by $2,500/contract. So a net gain of ~$300/contract. (Not to mention I don't feel like >$1450 by January is very likely.)
• Turning it into an IC: 5/20 1000/1100/1125/1225 would only net me ~$245/contract, hardly seems worth the effort and extra risk should things take off.

Do those options sound like what you were thinking about, or am I looking at things wrong?

It seems like the best options are either to just let things go, or try to save them as-is. I can't lose more by dumping cash in, to clear the margin call can I? (Actually I guess I can, if the TSLA price keeps going down I have to sell more shares to cover the same loss. Dumping cash in and selling shares to 100% cover the loss in cash is an option but then if TSLA takes, like it should, I don't get the gains.)

On the plus side futures have improved some...

Best plan might be sell some shares (and buy back the CC on those shares), and use some of the money to buy just the short leg of the Put spread. The remaining long leg gives you margin by backing the shares you still own. You should only need to do a few.

In February I had to roll a bunch of spreads to December, and eat the loss on the rest to avoid a margin call and risk of total loss on my February spreads.


(I looked at some rolls last night for you, and nothing was great. All required a debit (that I could see). The danger of adding BCS is if the SP recovers you can now take a full loss on the up side, but of course if a full loss is guaranteed on the low end, then the risk can be worth it. My brother had to sell a bunch of shares in February to increase his margin, but that only works if you buy back the covered calls on those shares. (Fidelity has a Margin Calculator for hypothetical trades, and I couldn't figure out why my margin wasn't going up when I simulated selling shares until I realized I still had the CC on those shares).

 

[MP3Mike]

I am sorry. What is your new margin requirement?

They upped the maintenance requirement from 40% to 55%.

 

[BornToFly]

They upped the maintenance requirement from 40% to 55%.

HOW IS THAT LEGAL?!?
You plan based on the requirement you have. To raise it on customers after the fact and force them to sell at a loss seems criminal to me.

 

[juanmedina]

They upped the maintenance requirement from 40% to 55%.

Wow if they do that to me I think I will be in trouble as well. That is insane.

 

[BornToFly]

They upped the maintenance requirement from 40% to 55%.

Definitely call them on the phone and argue your case. See if they can bring it back down. Can't hurt to try.

 

[mrmtb]

sorry to hear this, I would be in the same situation as you if I had opened BPS instead of naked puts when the Ukraine war started. Had to close positions at the worst moment ever because of margin call when my portfolio was -60%. With BPS, my account would have been wiped out. I started building back with 1/4 of the contracts I had. But starting from 0 is going to be hard. Good luck

Why would the spreads be worse?