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Short-Term TSLA Price Movements - 2013
- Thread starter Robert.Boston
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That's because you probably have a lot of money.
For those that don't have a lot of savings, but are young and are going to start making good money over the next few years, margin is a great tool to get ahead of the game.
It all depends on your financial situation. If I was a fresh college grad with a good job lined up, I would put all of my money into a brokerage and max out on margin. And wouldn't really care if I lost it all.
If you already have a big portfolio then margin is not worth the risk, unless you want to borrow like 10% to buy TSLA if there was a huge unwarranted dip.
Mario Kadastik
Active Member
I think there's a bit of a miscommunication. Any shorting of options (i.e. selling puts) requires a maintenance margin. That has to be matched by my net liquidation so it's only running on cash and assets. There is the catastrophic risk in case the huge crapper happens during off hours (i.e. overnight/weekend), but otherwise no. And as the margin is far above the actual loss I think it's mostly covered. Right now my margin is $20.5k on the three puts. The puts themselves have a paper loss of $1.8k. So there's a 10x higher margin requirement to maintain. I'd assume I'd get a margin call if TSLA fell below ~$155. But the loss at the time would probably be around ~$5-6k so it wouldn't kill my portfolio altogether.
Or do you guys really never sell uncovered puts? Or do it only with the cash to back up the actual share purchase?
Or do you guys really never sell uncovered puts? Or do it only with the cash to back up the actual share purchase?
I once sold uncovered puts, but they tie up way too much capital.
So now I only buy calls.
I will start selling puts again when I have way too much money in my account.
borat99
Member
Honestly, I'm liking this steady climb back instead of wild swings we had the past few days.
Mario Kadastik
Active Member
borat99
Member
Mario Kadastik
Active Member
That is a valid point, it does tie up a lot of capital, then again I can keep buying options as much as I want as long as their market value doesn't dramatically drop. The margin takes into account current value therefore there's almost nothing tied up. It just means that I'm sensitive to volatile markets and an unbalanced portfolio (like right now I have a strong delta for TSLA) does create uncomfortable moments with net liquidation coming down and maintenance margin going up
My plan right now is wait until the puts drop around to the price I bought them for and reduce the position to possibly just one put. I'm close to 100% sure that TSLA will be above $195 in december barring global catastrophy so would still keep some. It's also a great way to still gain from options when IV is high (the higher the better actually) so I prefer to use all the available tools in my toolkit depending on what the market is like. The puts I sold just after Tesla had been running around volatile so I could get some premium from the higher IV. Didn't quite expect the market IV to go up generally due to the shutdown etc. Should have taken it more seriously and closed it before the drops happened when it was certain that the resolution wasn't a quick deal...
Tell me about it
Looks like the market is tanking. *sigh*
borat - you are way too emotional of an investor. Your comment quite frankly freaked me out. Then I looked at the market and nothing is "tanking".
I would recommend that you buy shares today and not look at your brokerage account for the next year. You will probably do a lot better, since i noticed that you tend to buy high and then want to sell low the next day.
Just some friendly advice, buy and hold and don't worry about the very short term fluctuations.
kevin99
Member
That is a valid point, it does tie up a lot of capital, then again I can keep buying options as much as I want as long as their market value doesn't dramatically drop. The margin takes into account current value therefore there's almost nothing tied up. It just means that I'm sensitive to volatile markets and an unbalanced portfolio (like right now I have a strong delta for TSLA) does create uncomfortable moments with net liquidation coming down and maintenance margin going up
Selling put is my #1 bread and butter play. It requires the same amount of maintenance capital s buying shares.
With tsla you might have better percentage of winning by buying call, that is an exception rather than the rule.
borat99
Member
Thanks, Sleepy. I may sound emotional at times, but I was certainly kidding in my previous comment. Anyway, I totally get that there is a lot of volatility because all the uncertainties going on right now.
My portfolio margin account drives me nuts.
Could anyone with an IB portfolio margin (NOT RegT-margin) account please check what their margin requirement for buy to open 100 or 1000 TSLA 180 today’s weekly contracts would be? Mine is more than 50x the value of the option (for BUYING the option) while in an RegT-Account it seems to be 1x and I’m trying to understand the logic of that. Thx.
Could anyone with an IB portfolio margin (NOT RegT-margin) account please check what their margin requirement for buy to open 100 or 1000 TSLA 180 today’s weekly contracts would be? Mine is more than 50x the value of the option (for BUYING the option) while in an RegT-Account it seems to be 1x and I’m trying to understand the logic of that. Thx.
"TSLA Investor Discussions" (and any other investment sub-forums) are probably overdue for a wiki for terminology.
For example, IMO unless 10-25% (or higher) drop is involved then words like "tanking" shouldn't even be near the discussion.
CyberDutchie
Active Member
Amen. I made that mistake once and sold my SCTY Oct 19 '13 $20 call options at a loss (bought for 14 sold at 9) when SCTY seemed to be on a never ending decline, just a few weeks ago. Cost me $2,000, while I could have gained $8,000 as of today
Could have...would have...
For people like me who are only in the stock, I welcome price volatility to the downside for a week or two at a time as it gives us time to accumulate more. At the end of the day I am sure everyone has a goal of accumulating X number of shares of TSLA before its full potential is more or less realized. IMO the minimum market potential for TSLA is approximately $80 billion market cap ($660 per share). I honestly could not come up with an upper end which is hard to do for any company as it is too far out in the future. The minimum is still a 4 bagger from here and in my opinion will happen in the "medium term". I am completely focused towards that goal of accumulation at least to that $660/share number unless bad news develops in Tesla's business itself.
kevin99
Member
$176.5. The mojo is back! Let's keep our cool head. I should change my nick to coolhead, since we already have a sleepyhead.
CyberDutchie
Active Member
Thumper
Active Member
I also have started selling puts to get capital to buy calls. But in order to protect myself from any dramatic drop I sold Jan and Dec puts around 190. If I'm confident we'll be over that around earnings time then that will be a good time to buy them back or even better let them expire worthless. There is a margin maintenance but since I don't use margin it doesn't really matter for me. I normally wouldn't do this, but the dips were just too good a buying opportunity to miss out on
On the other hand, selling short term uncovered puts or calls can really hurt. I once sold some weekly call on Thursday expecting it to expire worthless on Friday but then we got a DB upgrade and I had to take a loss and buy back those calls at a big loss.
On the other hand, selling short term uncovered puts or calls can really hurt. I once sold some weekly call on Thursday expecting it to expire worthless on Friday but then we got a DB upgrade and I had to take a loss and buy back those calls at a big loss.
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