Yes you are right, selling puts on margin against a collapsing a stock in a bear market blew up everything. Should have never done it in hindsight. 2020-2021 was the year to do the strategy I tried. But even owning shares of only one stock could be stressful if it collapses 70% approaching retirement even not leveraged. And that’s the take away I will have from that bear market!
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Yes you are right, selling puts on margin against a collapsing a stock in a bear market blew up everything. Should have never done it in hindsight. 2020-2021 was the year to do the strategy I tried. But even owning shares of only one stock could be stressful if it collapses 70% approaching retirement even not leveraged. And that’s the take away I will have from that bear market!
This looks like a question from a long term investing perspective. Do you see a change in the long term mission, execution, or quality of the company? I personally don't.
I see a company growing 40%+ year over year (in units - we'll find out about revenue and earnings in a few weeks) with a PE under 25. With long term guidance of 50%+ (always acknowledged to mean some years over 50, some years under 50).
This year a significant whack of production was lost due to covid shutdown in Shanghai. That is a meaningful explanation of the 50% down to 40% shortfall.
Here is what I can think of that's going on:
1) The company's long term fundamentals have actually broken down. This will most directly appear under actual demand destruction, rather than the demand destruction people are writing about. What people are writing about is how Tesla's unspeakably ridiculous demand is undergoing "destruction" and is merely ridiculously high. See the recent post in Posts of Merit for more on this. Tesla is doing almost NOTHING that the rest of the car industry does to stimulate demand.
2) Low PE, high and profitable growth - these things don't stay combined for long. "For long" though is a long term investing horizon, not a short term option sales horizon.
I lost half of my taxable account because of margin and my account is almost back to a cash account, but lately I have been feeling like throwing in the towel. How long can this go? It feels like Tesla was just a bubble and we were blinded by greed. I had the HOLD mentality that kept me from taking any decent amount off the table and hoping for more. I wish I could get back the money that I paid in taxes from trading last year because I could buy all my positions back without losing a share. If somehow the stock makes it back to $230 by the end of year I think I am going to cash out and buy index funds and never look back. I will take peace of mind over money any day. I should have sold when Elon sold 
. This was a good lesson for the future and thankfully like others I am in my late 30's and have a job. Another mistake that I made was not to get rid of all my debt when the stock was high but I thought it made more sense to have the money invested since interest rates were so low... what a mistake. Thankfully it is only a little over $100k. I am mentally exhausted after letting the opportunity of a lifetime escape from my hands, millions down the drain, and I have no confidence in Tesla's recovery especially with Elon's behavior even if the company is performing well. My wife told me just to sell positions on margin but hold the shares for the long term but I have to tell you I feel really scared. I have to go back to my old Mr. Money Mustache ways until the stock recovers.
. This was a good lesson for the future and thankfully like others I am in my late 30's and have a job. Another mistake that I made was not to get rid of all my debt when the stock was high but I thought it made more sense to have the money invested since interest rates were so low... what a mistake. Thankfully it is only a little over $100k. I am mentally exhausted after letting the opportunity of a lifetime escape from my hands, millions down the drain, and I have no confidence in Tesla's recovery especially with Elon's behavior even if the company is performing well. My wife told me just to sell positions on margin but hold the shares for the long term but I have to tell you I feel really scared. I have to go back to my old Mr. Money Mustache ways until the stock recovers.
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dc_h
Active Member
Welp: I just sold 5 110 CC's. I closed some 140 CC's I sold last week. Sold some 130 CC's at the open, before the drop. I'm not sure how long I can hold my wife off on not selling it all and regrouping. 15 years of excellent results down the tubes. A lot probably due to the Fed feeding the market since 2007, but a lot of solid researched decisions. I'm confident the stock will bounce back, but it is rough watching 100k disappear day after day. The worst is the wife begged me to sell at 1200. I hope I can live it down, but not looking like we're going to bounce all the way back in 2023, and yes, this was real retirement money. A lot would have gone to charity and good causes, but a lot was intended to never have to worry.
I hear you. They work in moderation, as a hedge, on indexes/ETFs, and maybe short-term high-conviction momentum trades, but not so much as a pure options premium seller/trader. There's too many way they can clean your clock to ever bet the farm.
Alright, it's time. I don't know about all of you but it "seems" like since we changed the name of this thread from "The Wheel" everything has literally gone down to Heck!
Bring back the Wheel!!!!!!!!!!!!
Bring back the Wheel!!!!!!!!!!!!
<RANT>
It all started with that f*cking "should I sell TSLA to pay taxes" poll, without that we were heading to $1400 pre-split, but had been a downward slope since then. We couldn't predict that event, total black swan, unfortunately self-inflicted along with many of the sell-of events since
We have to accept that Tesla, as a company, are amazing and continue to execute really well, which implies great internal management, but the external communication and "fiduciary responsibility" to shareholders is simply non-existent
Do I blame Elon? Not at all, he's always been a loose canon, it's one of the reasons he's been so effective in transforming these "no-chance" ventures into world-class companies
But I do very much point the finger at the Tesla Board of Directors (I use the term loosely). Did not a single one of them not think, at any point in the second half of this year, that maybe 50% growth was out of reach? No, I don't think they did, because they do f*ck all as far as I can tell, other than cashing-in vested shares
Shame on them and their impotence...
Sorry, but I'm quite irritated
</RANT>
In other news closed out all my calls with the SP at $104, this is ridiculous, BTC:
10x 1/6 -c115 @$1.1 (net +$17.18)
10x 1/27 -c125 @$3.3 (net +$7.8)
26x 1/6 -c145 @$0.05 (net +$1)
4x 1/6 -p115 ($8.1) in play still
I lost half of my taxable account because of margin and my account is almost back to a cash account but lately I have been feeling like throwing the towel. How long can this go? It feels like Tesla was just a bubble and we were blinded by greed. I had the HOLD mentality that kept me from taking any decent amount off the table and hoping for more. I wish I could get back the money that I paid in taxes from trading last year because I could buy all my positions back without losing a share. If somehow the stock makes it back to $230 by the end of year I think I am going to cash out and buy index funds and never look back. I take peace of mind over money any day. I should have sold when Elon sold
My wife is working for a big public company and has a sec ure pension fund so she said we don’t even need the money I invested in TSLA because she can take care of all the household expenses. Just going to travel in economy classe and book regular non 5-stars hotels I guess. Which is good for the kids not to be spoiled anyway.
At this point I could blame Jack Dorsey’s mom for giving birth to the founder of Twitter. All the shares dumped on the open market were related directly or indirectly to the Blue Bird. Then nobody at Tesla BOD ever said anything. Just Ross Gerber, Gary Black and Leo trying to voice the retail investors getting destroyed. I guess nobody readjusted the guidance target because some investors had to sell first before we visit the double digits.
Just got a call from my broker account director to cover for 40k margin call for today, he got a call from his credit department to call me to ask me to close positions and free up margin and have till tomorrow 4PM. Tomorrow my margin call will be around 100k. So I need to choose to sell my AAPL, TQQQ, value stocks to free up 30% margin, sell closer ATM CCs against my LEAPS or liquidate the required number of TSLA shares and Calls to free up $100k in margin.
I am tempted to do a bit of everything, I feel like waiting for tomorrow and hoping for a rebound but again it could be worse if the sell off continues.
I think the fundamentals of the company are strong and a 40% YoY delivery growth means the stock should recover to a fair value of 200/250 in the next year however trading in the short term I feel totally blind. And taking decisions based on short term predictions is never going to end up well.
Someone remembers how META traded the following day after the 30% drop on last earnings?
Excellent, this kind of despair signals the bottom for meI lost half of my taxable account because of margin and my account is almost back to a cash account, but lately I have been feeling like throwing in the towel. How long can this go? It feels like Tesla was just a bubble and we were blinded by greed. I had the HOLD mentality that kept me from taking any decent amount off the table and hoping for more. I wish I could get back the money that I paid in taxes from trading last year because I could buy all my positions back without losing a share. If somehow the stock makes it back to $230 by the end of year I think I am going to cash out and buy index funds and never look back. I will take peace of mind over money any day. I should have sold when Elon sold
(sorry/not sorry)
Ok, I got impulsive and rolled down again, sold 1/13 -c100s on all my shares in one of my big accounts. Then rolled down the puts to the same, -p100s, making the straddle at 1:1.5 p/c. I CANNOT BELIEVE THIS. Will be happy to roll and keep the shares, but I’m tired of watching this drop and needed to do something drastic to hedge these losses. My other big account is still at the 110 straddle, again about 1:1.5 ratio, but will roll down if we drop again tomorrow.
At this point, it looks like I will be able to do a ROTH conversion on my entire small account, without paying any taxes.
Not the way I was hoping to avoid the tax man?
Reviewing my trading journal notes and saw that on the first day of trading last year after announcing record Q4 P&D numbers, TSLA closed up 13.5% to 1199 (pre-split). On the first day of trading this year after another record Q4 P&D, TSLA closed down 12.2% to 108. The sentiment seems to have shifted...
Very perceptive, did you consider a career in sell-side financial analysis?
My take is that final months of 2021/beginning 2022 we were in a bubble, stock got way ahead of itself. Of course we were all deep in the story and couldn't see the wood for the trees. Now we have the opposite, totally oversold. I think mid 200's is reasonable, but when we get there is another matter
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The stock price seems to have completely disconnected from fundamentals on the way up and the same thing is happening on the way down. Any small piece of news is now dramatically over amplified and double digits red days are now replacing the double Digits green days of 2021.
corduroy
Active Member
I think we all got too cocky with TSLA. Especially putting aside tried and true investing strategies like diversification and going "all in". You should never set yourself up to be completely wiped out by any single position, even if it goes to 0. I know I was blinded by the love of the mission, my Tesla, and fawning over Elon (never bet against him, right?). I way over allocated to TSLA. Family tried to warn me, and turns out, they were right.
I'm down, but not out. I thankfully still have a pretty good pile of cash. I'm not bullish enough on TSLA in the near term to add anymore - maybe if we hit $50 I'll change my mind.
I'll continue to trade options, more as a hobby that I enjoy - but with no weekly income targets. I feel like options trading is a skill that will serve me well whenever I retire, selling safe ICs and covered calls on my shares probably. Education is expensive though.
I'm down, but not out. I thankfully still have a pretty good pile of cash. I'm not bullish enough on TSLA in the near term to add anymore - maybe if we hit $50 I'll change my mind.
I'll continue to trade options, more as a hobby that I enjoy - but with no weekly income targets. I feel like options trading is a skill that will serve me well whenever I retire, selling safe ICs and covered calls on my shares probably. Education is expensive though.
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