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Wiki Selling TSLA Options - Be the House

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Quoting from your prior post:

"If I can pull this off and get some experience and confidence, I was hoping to be able to retire on selling calls without touching the principle. This is all in a Roth so I would have to make enough to live on after paying income taxes and the 10% penalty. I still have about ten years before I can pull money out of my Roth without paying taxes."

I'm understanding that to mean you plan to pull your gains out of the Roth and pay the tax and the penalty on them? If so, since Roth money is already post-tax, you'd be getting taxed twice and paying a penalty on top of it. Gains are not ensured here (and losses are probably more likely if you are selling against shares that you aren't willing to let go, because most likely at some point you will have to buy back at a loss or lose your shares) so you'd have to do exceptionally well to compensate for the double tax plus penalty. We've all hoped to derive a dependable, steady income from doing this but I don't think very many have been successful - and that's without double tax + penalty.

I don't know your situation, but if you have enough in contributions to your Roth you can pull them out anytime and buy shares in a taxable account that you can then sell calls against that will be single taxed and no penalty. You will obviously lose the awesome tax advantage of share price appreciation in the Roth - but again, you'll probably lose those shares on a big run if you start selling calls down here anyway.

If you have a tax-deferred IRA, you could do a SEPP to access the money early.
It's no more double taxed than a taxable brokerage account. The only difference is the 10% penalty and (I'm guessing) no long term capitol gains discount. The principle going into your taxable brokerage account has already been taxed too. I don't think Roth's have a SEPP option.
 
It's no more double taxed than a taxable brokerage account. The only difference is the 10% penalty and (I'm guessing) no long term capitol gains discount. The principle going into your taxable brokerage account has already been taxed too. I don't think Roth's have a SEPP option.

Anything in a Roth is after-tax money. You may say the gains haven’t been taxed and that’s true in a way, but if you wait the 10 years those same gains will be 100% tax free. I get that you don’t want to wait, but pulling out money early defeats the purpose of the Roth.

Another way to think about it is your gains will be taxed and penalized but you will get no deductions for your losses. So you’ll have to do a lot better than break-even to actually make any money.

You actually can do a SEPP in a Roth but no one does because it doesn’t make sense to pay the extra tax, even if you do get rid of the 10% penalty with the SEPP.
 
It's the minimum, not the maximum.
However, one has to keep in mind the structure and timing of the retracement is as important as the target. Since the spike up was so impulsive, the retracement should not take place in the form of a crash but rather a zig zag, most likely in correspondence to a market wide correction. This is important because in a crash, there's little premium in selling calls as you wake up one day and it's down 7% and it won't even bother bouncing here and there. On the contrary, in a zig zag correction, there will be a lot of dead cat bounces to sell calls into.
 
It's no more double taxed than a taxable brokerage account. The only difference is the 10% penalty and (I'm guessing) no long term capitol gains discount. The principle going into your taxable brokerage account has already been taxed too. I don't think Roth's have a SEPP option.
Be sure and research this carefully - from what I've read about ROTH accounts, early withdrawals can generate both the 10% penalty IN ADDITION to turning that withdrawal into a taxable event. I could easily be wrong about that - thus the due diligence.
 
Be sure and research this carefully - from what I've read about ROTH accounts, early withdrawals can generate both the 10% penalty IN ADDITION to turning that withdrawal into a taxable event. I could easily be wrong about that - thus the due diligence.
Nice things if 59.5 and trading and investing TSLA in a Roth: tax-free growth and distributions, no need to track profits and losses per transaction (for tax reporting), and no tax consequences to clutter trading decisions. There may be limitations on the types of options that can be traded, but that’s probably a good thing in my case — removes temptation to dabble in things I don’t understand or the need to spend time learning about them.
 
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However, one has to keep in mind the structure and timing of the retracement is as important as the target. Since the spike up was so impulsive, the retracement should not take place in the form of a crash but rather a zig zag, most likely in correspondence to a market wide correction. This is important because in a crash, there's little premium in selling calls as you wake up one day and it's down 7% and it won't even bother bouncing here and there. On the contrary, in a zig zag correction, there will be a lot of dead cat bounces to sell calls into.

If 140’s is the minimum, what’s the max drop?
 
If 140’s is the minimum, what’s the max drop?
I'm rounding these numbers up. Technically can go as low as 102. Remember June? We retraced (210) almost 100% of the initial spike up from the low (207). The normal level is 130. Between 130 and 120 it's considered deep. Below 120 everyone will start prepping for a new low.
 
So, are we rolling calls forward or selling put? We are hovering the day's high from the morning.
I’ve got 3Feb CC to monitor and roll (3x$125 and 10x$160). After monitoring SP and CC values closely the past week, and seeing not a huge difference in roll credit/debit from ”watch and see”, I may wait until Friday to execute in case the SP settles after FOMC today. Might cost a little bit if SP continues up, but it still seems possible the $160s could expire.
 
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