Wiki Selling TSLA Options - Be the House

[Jim Holder]

Can’t believe

He told me I could sell my TSLA shares and buy call options to avoir the wash sale rule. Didn’t seem to be an issue if the call is >30 days out.

My problem was staying out of the stock completely for 30 days when I expect a sharp recovery in the near term before going to retest the lows again

Be careful and triple-check. I’ve been messed up by acting on info received from brokerage reps that turned out to be wrong. From my research ANY purchase of the same equity OR option contract counts as a strike so check with your accountant before potentially making things worse.

I learnt this the hard way just last week, I am deep red on my TSLA position (down over a million) and yet my brokerage still shows (accurately) around $100k gains for 2022.

I was going to harvest equivalent of $100k loss on December 28 so I don’t have to pay taxes on them and the brokerage rep insisted that it’ll work, but then after I dug some more to triple check with the cost-basis team I learnt that because I bought a stupid single TSLA call option on 12/3 it ruined it for me (it’s within the 30 days lookback) and I can’t take the loss (so I didn’t sell to harvest the loss) and I’ll have to pay $20k-$25k taxes on invisible gains for 2022.

 

[JSML]

Started buying shares again today. This could be the bottom and I don't want to miss out on low priced shares. Currently deploying 90% of my capital and no margin yet on the long side.

The only way to gain back this year's losses is to be aggressive at the right time when the stock is going back up. Maybe it's impossible to time it but I am going to try.

I still have Jan 25 BPS +p195/-p220. 65 contracts at a 88 percent loss. After reviewing my options decided it’s the best to wait for June 2025 options to be available and roll at that time. Other options would immediately incur the loss and open another spread that would increase potential losses.

Yesterday, I continue to rolled down part of my Jan 2025 LEAPS. This time from +c90 and +c80 to +c60 and +c30. This time paid about 61% of the spread.

 

[OrthoSurg]

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?

My plan was to convert back to shares in 30 days because I am worried any unexpected event triggers a 50% sell off 1 month before my contracts expiring date. It must be stressful when getting close to expiry date if there is a downtrend

 

[intelligator]

Yesterday's gamma exposure charts painted a bleak picture but also one where there had to eventually be upside... nil call gamma exposure. Today's closing gamma and open interest looks more typical and is near even in terms of put or call weighting. Gamma flip yesterday and today is 113... we closed just a few dimes below. The morning pre-market action, mid-day buy/sell and after hours trading falls in the middle of the the put and call gamma exposure bars. I'm feeling a turning point. If we hit 120 Thursday, I may go for some 1/6 -c140 as a cash raising sell to help close out a few more BPS contracts. It's going to take a while; praying the value in this beast is recognized!

This little break from the mental and financial drain is so welcoming. Like others in this thread, I'm exhausted. This morning I had to again back margin which I could have probably avoided had I waited an hour after market open. Turns out what I liquidated didn't do well the rest of day, so at least I sold at a local high. If we continue up, I may be able to walk away a day or two and clear my mind of what just happened these past two weeks. GLTA!

 

[mongo]

Be careful and triple-check. I’ve been messed up by acting on info received from brokerage reps that turned out to be wrong. From my research ANY purchase of the same equity OR option contract counts as a strike so check with your accountant before potentially making things worse.

I learnt this the hard way just last week, I am deep red on my TSLA position (down over a million) and yet my brokerage still shows (accurately) around $100k gains for 2022.

I was going to harvest equivalent of $100k loss on December 28 so I don’t have to pay taxes on them and the brokerage rep insisted that it’ll work, but then after I dug some more to triple check with the cost-basis team I learnt that because I bought a stupid single TSLA call option on 12/3 it ruined it for me (it’s within the 30 days lookback) and I can’t take the loss (so I didn’t sell to harvest the loss) and I’ll have to pay $20k-$25k taxes on invisible gains for 2022.

Is it worth selling that call?

The last day to sell long stock and option positions for tax year 2022 will be Friday, December 30th.

If it is only one contract, it should only impact 100 shares at the most.
(I think)

 

[Yoona]

Yesterday's gamma exposure charts painted a bleak picture but also one where there had to eventually be upside... nil call gamma exposure. Today's closing gamma and open interest looks more typical and is near even in terms of put or call weighting. Gamma flip yesterday and today is 113... we closed just a few dimes below. The morning pre-market action, mid-day buy/sell and after hours trading falls in the middle of the the put and call gamma exposure bars. I'm feeling a turning point. If we hit 120 Thursday, I may go for some 1/6 -c140 as a cash raising sell to help close out a few more BPS contracts. It's going to take a while; praying the value in this beast is recognized!

This little break from the mental and financial drain is so welcoming. Like others in this thread, I'm exhausted. This morning I had to again back margin which I could have probably avoided had I waited an hour after market open. Turns out what I liquidated didn't do well the rest of day, so at least I sold at a local high. If we continue up, I may be able to walk away a day or two and clear my mind of what just happened these past two weeks. GLTA!

View attachment 889832 View attachment 889833

i was literally just checking out the p/c walls + volume to see if 12/30 BPS +p90/-p95 is safe; i might go for it tom plus a DITM B/W

one thing i have decided recently is to continue with weekly, but STO 1-2 DTE

i'm not touching 1/6 until after P&D is out, then go with the direction of sp

edit: today i bought temp shares then STO 12/30 -c109 ITM B/W, credit 4.40

 

[Jim Holder]

Is it worth selling that call?

For me, 1,000% not. Selling that call was the stupidest thing I did all year in the market (other than not going to cash when TSLA was at 314 ). It was 1x -C 12/30 200 that was bringing in a few nickels. Not even worthwhile. But it threw off my ability to tax harvest and save over $20k in taxes for gains I don’t even see yet (until hopefully recovery sometime soon in 2023) because it was opened within 30 days lookback of my intended share sale for a loss.

 

[mickle]

My guess for the near future stock price: P&D numbers are good but doesn't help the stock much because everyone thinks future demand is dropping. Then not much till earnings, which are probably great, but the future guidance might be lowered due to recession. Might help the stock a bit. Big item will be the fed meeting Feb 1, if they stop hiking rates then we get a big rally, otherwise just have to keep waiting for a fed pivot. I should be out of the penalty box by then.

I watch the Maverick of Wall St on youtube and he's been pretty accurate about general market conditions. Months ago he said the last stocks to fall would be APPL followed by TSLA, and when the economy turns around TSLA will be the first to rally.

 

[intelligator]

i was literally just checking out the p/c walls + volume to see if 12/30 BPS +p90/-p95 is safe; i might go for it tom plus a DITM B/W

one thing i have decided recently is to continue with weekly, but STO 1-2 DTE

i'm not touching 1/6 until after P&D is out, then go with the direction of sp

I'd been sticking to 3-4DTE until a few weeks ago. The target BPS looks good if I had the funds to back or margin available. I'll have to resort to CC for a while. Point well taken regarding P&D, how quickly I forget. Thx!

 

[EVNow]

Sold -125/+130 call spreads today. Just 20 to 30 cents.

Still, I think it is too oversold to risk wider spreads to get more premium.

Will be off market for next week, waiting on P&D (unless forced to roll the call spread !).

 

[vikings123]

For me, 1,000% not. Selling that call was the stupidest thing I did all year in the market (other than not going to cash when TSLA was at 314 ). It was 1x -C 12/30 200 that was bringing in a few nickels. Not even worthwhile. But it threw off my ability to tax harvest and save over $20k in taxes for gains I don’t even see yet (until hopefully recovery sometime soon in 2023) because it was opened within 30 days lookback of my intended share sale for a loss.

I think @mongo is asking if you can close that position which should help with reversing the wash sale hit.

The only way(AFAIK) to permanently get hit by wash sale without any recourse is if you traded the same position in your non taxable account. So unless you did that you should technically still be able to get out of that problem if you close all remaining positions and not do anything until January 31st 2023.

 

[SebastienBonny]

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

If my theory is right, I can get out of margin by converting half of my shares to a leap.

Say I convert 100 shares to a 100 jan 25 PUT.
That gives me 6000 cash at SP of 110 (5000 for the PUT contract).
Say at expiry the SP is 200, then the contract should be worth 100.
If I sell it, then I get 10 000, adding 6 000 cash is 16 000.
If I want the 100 shares back by then, I need to add 4 000, so that is a losing position.
If I execute the contract, I will have to add 4 000 as well to get the shares back at 100 (strike price of the contract).

My question: how do I win from this position?
1) By selling the contract earlier when SP moons before jan 25? Because more extrinsic then?
2) Obviously by selling CC against the leaps, but I can also do this against the shares? Reaching that 4000 shouldn’t be to difficult as only 40/week.
3) If SP goes down further, I can get the shares back cheaper as well. So SP of 60 would give me opportunity to buy back shares for the cash position of 6000.

You could say it’s not worth to convert, BUT, you’re not as prone to stock price tanking because you converted half to cash/leaps.
Is this about right?

Another thing to add: let’s see what SP does first before doing unnecessary things. I don’t have tax consequences so that’s a good thing.

 

[SebastienBonny]

My plan was to convert back to shares in 30 days because I am worried any unexpected event triggers a 50% sell off 1 month before my contracts expiring date. It must be stressful when getting close to expiry date if there is a downtrend

If that’s the case, can’t you buy back shares at that cheaper price and roll your bought put way out to anticipate recovery?

 

[OrthoSurg]

Recovery is here boys n girls
Sad I had to liquidate all my shares
Happy that my order to buy the LEAPS went through yesterday st 3:40PM after I called since it was initially declined because of insufficient buying power from the automatic calculation from the brockerage. I’d be pretty pissed now if I had zero position in TSLA after sustaining the massive drop

 

[OrthoSurg]

If that’s the case, can’t you buy back shares at that cheaper price and roll your bought put way out to anticipate recovery?

I still don't understand the way to roll LEAPS out when approaching expiration if they are OTM and lost significant value?
if the original purchase price was $44.50 per contract then you arrive 18 months out and its worth now $10 because the stock price had a -65% downturn, what are the options? To buy then back at a loss then buy again OTM LEAPS further out? In my situation instead of buying $110 Jan25 calls I would buy $220 Jan27 calls in 2 years when I approach expiration?

 

[mongo]

For me, 1,000% not. Selling that call was the stupidest thing I did all year in the market (other than not going to cash when TSLA was at 314 ). It was 1x -C 12/30 200 that was bringing in a few nickels. Not even worthwhile. But it threw off my ability to tax harvest and save over $20k in taxes for gains I don’t even see yet (until hopefully recovery sometime soon in 2023) because it was opened within 30 days lookback of my intended share sale for a loss.

There is some confusion, I was not trying to critique your past decisions. You had written that you bought a call.

I learnt that because I bought a stupid single TSLA call option on 12/3 it ruined it for me

Buying a call can trigger wash treatment (if the call is equivalent to stock), but selling a call on it's own should not. If it was assigned, those 100 shares would count as a sale at time of assignment.
Again, not an expert, but something doesn't sound right.

 

[Jim Holder]

There is some confusion, I was not trying to critique your past decisions. You had written that you bought a call.



Buying a call can trigger wash treatment (if the call is equivalent to stock), but selling a call on it's own should not. If it was assigned, those 100 shares would count as a sale at time of assignment.
Again, not an expert, but something doesn't sound right.

Oops, you’re right. It was a bought TSLA call that did it in. Though the cost-basis team at TDAmeritrade said ANY transaction—buy or sell equity or options contract—is counted in the lookback. Dunno who’s right anymore.

 

[mongo]

Oops, you’re right. It was a bought TSLA call that did it in. Though the cost-basis team at TDAmeritrade said ANY transaction—buy or sell equity or options contract—is counted in the lookback. Dunno who’s right anymore.

It depends on how they match it. Your unrealized gains tab under account/positions may show the cost basis with wash rolled in.
Worst case, a single call can only give you a wash on 100 shares and you could theoretically still sell the call now and sit on your hands for 30 days.

The last day to sell long stock and option positions for tax year 2022 will be Friday, December 30th.

 

[Jim Holder]

It depends on how they match it. Your unrealized gains tab under account/positions may show the cost basis with wash rolled in.
Worst case, a single call can only give you a wash on 100 shares and you could theoretically still sell the call now and sit on your hands for 30 days.

The cost-basis rep insisted that there is no correlation between the quantity of options contracts vs. deductibility of equity sale loss. Even a single contract disqualifies any shares sales for loses if it take place within 30 days of opening the contract.

 

[UltradoomY]

Something to consider for next week is that the "Street" is expecting around 420k - 430k deliveries.
The sad truth is that if we hit 431k we will probably dump. (IMO)

We will need to be on the plus side of 440k delivered to start a real rally going into earnings. I do think earnings are going to be great with what ever number over 400k delivered but the Street wants it's number.

I am out for next for the P&D - unless I decide Friday to do a small straddle position

GLTA, just trying to get my thoughts on it out there - finished converting shares to January 2025 leaps yesterday - all $200 strike

I'm either going down with the ship or going to the moon, no in between!