Wiki Selling TSLA Options - Be the House

[WattsHappening]

If you’re looking for relatively safe returns, consider buying some TSLA back and selling ATM long dated CCs.

Jan 2025 $110 calls are going for $41. That means you’d break even as long as TSLA is above $70 two years from now. If TSLA is at or below current share price, you make almost 20% per year.

The opposite trade is actually looking pretty good too for anyone with dry powder and risk tolerance.

I watched the Good Soil weekly video yesterday. Matt and Emmet were discussing how crazy expensive puts were. January 2025 P100 going for $28! NFA, but it's hard to see this as a losing play. If I was sitting on a lot of cash and was risk averse, this is how I would be playing things right now.

 

[OrthoSurg]

My broker called me when I just finished skiing, about the 100k margin call he said no stress to cover for all of it, sending him 50k and closing my puts in GOOG and META to recover 20k each on margin was fine with the stock climbing up.

He told me I got assigned 23 puts contracts but don’t stress out and didn’t want me to sell them today and recommended to wait for January, he said rebalancing was pretty wild this year and that’s what caused TSLA to go down 24% and we ended up talking about our ski trips in the Rockies for 10 minutes and about our kids starting to learn to ski.

That was the most relax margin call I have ever experienced (was my first).

So he said he can’t read the future but expecting a pretty big bounce since the funds finished their rebalancing and didn’t want me to get to liquidate 2000 of my 2300 assigned shares at the lowest.

 

[MikeC]

Still holding some 120CC for Friday but pretty scared of a big jump next 2 days from such an oversold level given high volume and delivery numbers coming up this weekend.

I could also see this being a bull trap and sinking to new lows. Weeklies are hard.

 

[OrthoSurg]

Still holding some 120CC for Friday but pretty scared of a big jump next 2 days from such an oversold level given high volume and delivery numbers coming up this weekend.

I could also see this being a bull trap and sinking to new lows. Weeklies are hard.

My broker didn’t want me to sell ATM CCs on my whole position to cover for my margin call because he said I would probably end up DITM.

That gave me back a false sense of confidence in investing

 

[Max Plaid]

My broker called me when I just finished skiing, about the 100k margin call he said no stress to cover for all of it, sending him 50k and closing my puts in GOOG and META to recover 20k each on margin was fine with the stock climbing up.

He told me I got assigned 23 puts contracts but don’t stress out and didn’t want me to sell them today and recommended to wait for January, he said rebalancing was pretty wild this year and that’s what caused TSLA to go down 24% and we ended up talking about our ski trips in the Rockies for 10 minutes and about our kids starting to learn to ski.

That was the most relax margin call I have ever experienced (was my first).

So he said he can’t read the future but expecting a pretty big bounce since the funds finished their rebalancing and didn’t want me to get to liquidate 2000 of my 2300 assigned shares at the lowest.

Wow, nice to see some integrity and personal service in this cut-throat business

 

[OrthoSurg]

He called me back and saw with the multiple assigned puts I didn’t sell the shares right away I will have to pay the taxes on this in 2022 so he suggested I sell my TSLA position for avoid that loss and buy LEAPS to benefit from the recovery if there is one in January and avoid the wash sale rule.

I have never bought LEAPS so what would be a position similar to keeping my shares before I sell my LEAPS back in 30 days and convert back to shares? Buying Jan2025 $110 Calls?

 

[OrthoSurg]

Just Converted my 10000 TSLA to 100x 110 Jan25 Calls to avoid paying a destroying amount of taxes this year. This margin call saved me a lot of taxes headaches.

 

[SebastienBonny]

Just Converted my 10000 TSLA to 100x 110 Jan25 Calls to avoid paying a destroying amount of taxes this year. This margin call saved me a lot of taxes headaches.

So now you hold the same amount of shares in call contracts. Will you sit it out and let those contracts run or sell them soon to buy back shares? If so, why not let the contracts run?

 

[CHGolferJim]

Just Converted my 10000 TSLA to 100x 110 Jan25 Calls to avoid paying a destroying amount of taxes this year. This margin call saved me a lot of taxes headaches.

Good luck! Looks like you can make about 5x as SP returns to ~$250 (contract high).

 

[Max Plaid]

Just Converted my 10000 TSLA to 100x 110 Jan25 Calls to avoid paying a destroying amount of taxes this year. This margin call saved me a lot of taxes headaches.

Keep the LEAPS, sell calls against them, sell safe puts with the left-over cash -> strangles 20% OTM both sides, wouldn't take much effort to recuperate the premiums from option sells

NOT ADVICE!!!

 

[UltradoomY]

Keep the LEAPS, sell calls against them, sell safe puts with the left-over cash -> strangles 20% OTM both sides, wouldn't take much effort to recuperate the premiums from option sells

NOT ADVICE!!!

Leaps provide no margin though.. make sure you have the cash backing for the puts. (no Margin in a Reg-T account)

 

[OrthoSurg]

Keep the LEAPS, sell calls against them, sell safe puts with the left-over cash -> strangles 20% OTM both sides, wouldn't take much effort to recuperate the premiums from option sells

NOT ADVICE!!!

How does the margin work when selling CCs against LEAPS? If I sell CCs 1 week out and forget to roll for a reason and they get assigned. How do I lose the shares if J don’t have them yet?

 

[OrthoSurg]

Leaps provide no margin though.. make sure you have the cash backing for the puts. (no Margin in a Reg-T account)

He told me on the phone LEAPS are “marginable” till 6 months from expiry so he told me to watch and roll them once I get near 6 months expiration

 

[CHGolferJim]

He told me on the phone LEAPS are “marginable” till 6 months from expiry so he told me to watch and roll them once I get near 6 months expiration

Did he say to roll 6 months before expiry at then current ATM?

 

[Max Plaid]

How does the margin work when selling CCs against LEAPS? If I sell CCs 1 week out and forget to roll for a reason and they get assigned. How do I lose the shares if J don’t have them yet?

I've no idea, don't have and never used margin. But when I sell calls against LEAPS, as long as the short strike is the same of higher than the LEAP there's no margin requirement

Obviously for puts you'd need to be careful, there I do have some kind of cash-reserve calculation which means I can sell more puts than I could actually cover, but I never do that, I only sell those I have the cash to buy if assigned

 

[mickle]

I am still trying to get a handle on these wash sale rules with respect to assignment and fear I've lost some deductions already.

Wondering if after you've been assigned and sold off shares, can you then buy calls or sell covered calls for the next 30 days or not? Would that be an issue for either of them? Or is it different if you buy a call for >30 days out?

 

[SebastienBonny]

I've no idea, don't have and never used margin. But when I sell calls against LEAPS, as long as the short strike is the same of higher than the LEAP there's no margin requirement

Obviously for puts you'd need to be careful, there I do have some kind of cash-reserve calculation which means I can sell more puts than I could actually cover, but I never do that, I only sell those I have the cash to buy if assigned

In the event of assignment of the short call, what do you do? Execute the long call?

 

[Max Plaid]

In the event of assignment of the short call, what do you do? Execute the long call?

I guess, never had to do it, but the long will always be worth more than the short

 

[Max Plaid]

I know we don't do BPS here any more, right (right??), but after a little heads-up from the other thread I looked at Jan 2025 puts and a +p30/-p35 spread pays $1, seems like easy money for those with some patience

Not advice, eh?

 

[ZenMan]

In the event of assignment of the short call, what do you do? Execute the long call?

Your broker could be different, but if I were to have Calls exercised at Interactive Brokers and I don't actually have shares, I'd end up short the shares that were exercised. I'd have to buy shares to close out the short.