Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Fact Checking]

It is generally a good idea to have several brokerages. It increases the insurance amount of both your cash and stocks and also decreases their leverage on you if they exercise any kind bullshit power to halt your withdrawal.

This is an underappreciated aspect, SIPC federal insurance only covers $500k of equities:

SIPC - What SIPC Protects​

If you are using a US brokerage and have more than ~650 Tesla shares or more than $250k in cash, either get registered as a shareholder in your name, i.e. get a shareholder certificate (and make sure your broker contract cannot leave you on the hook for their losses), or use one of the 2-3 biggest brokerages in the US that the ruling party won't allow to wipe out trillions of dollars of assets of millions of Americans.

 

[wipster]

Yeah so guys, maybe I'm the only noob here who has never sold anything for a meaningful capital gain before (my usual strategy has always been buy-and-hold but these are exceptional circumstances), but I've been reading this post:

So you're rich. Now what? : teslainvestorsclub

And now I've heard of something called Estimated Taxes. Apparently in the US, I'm supposed to pay taxes as I go. If I manage to yeet my way into substantial and meaningful capital gains which I will be taxed for, I need to pay some estimated amount of the taxes I will owe (at least 90%) or I will face a penalty when I file my yearly taxes because I haven't been paying as I get gains. This is something new to me, who has only ever drawn a paycheck and had taxes automatically withheld from said paycheck.

If there is anyone else who is in the same situation I am in, well, now you know what I know. Good thing I happened across this post otherwise I would probably have gotten reamed by the IRS next April.

Not on a federal basis at least. You only owe capital gains taxes when you sell your shares. If you buy and hold, you don't owe any capital gains taxes, nor do you have to report any gains (or losses) to the IRS.

 

[UnknownSoldier]

Incidentally, pursuant to the post I just made above, I just realized that I could have avoided paying taxes on my options trades had I simply exercised the contract for the 100 shares. The problem here is of course I would need the actual cash to pay for the said 100 shares at the strike price. I don't think there's any way I can avoid paying these taxes from trading options at this point.

Not on a federal basis at least. You only owe capital gains taxes when you sell your shares. If you buy and hold, you don't owe any capital gains taxes.

Correct. My share holdings are going to stay there because they are my retirement. However I've been yeeting these options and those are things I've been buying and selling, and I owe capital gains taxes on those. This is all very new and interesting to me, exciting sure because I'm paying taxes because I have gains and gains are good, but also a little bit overwhelming because I should try and do a good job with giving the IRS money so they don't penalize me when I file my income taxes formally next year.

 

[dakh]

Yeah so guys, maybe I'm the only noob here who has never sold anything for a meaningful capital gain before (my usual strategy has always been buy-and-hold but these are exceptional circumstances), but I've been reading this post:

So you're rich. Now what? : teslainvestorsclub

And now I've heard of something called Estimated Taxes. Apparently in the US, I'm supposed to pay taxes as I go. If I manage to yeet my way into substantial and meaningful capital gains which I will be taxed for, I need to pay some estimated amount of the taxes I will owe (at least 90%) or I will face a penalty when I file my yearly taxes because I haven't been paying as I get gains. This is something new to me, who has only ever drawn a paycheck and had taxes automatically withheld from said paycheck.

If there is anyone else who is in the same situation I am in, well, now you know what I know. Good thing I happened across this post otherwise I would probably have gotten reamed by the IRS next April.

Thanks a ton for this, gotta bump paycheck tax withdrawal up or else..

 

[dakh]

Incidentally, pursuant to the post I just made above, I just realized that I could have avoided paying taxes on my options trades had I simply exercised the contract for the 100 shares. The problem here is of course I would need the actual cash to pay for the said 100 shares at the strike price. I don't think there's any way I can avoid paying these taxes from trading options at this point.

Yea it's a weird kinda math to do, what's worse: pay taxes or forego time value if you're exercising early.

 

[Tslynk67]

Did you really buy those contracts for $1? If so, $10,000 invested in those would have equaled $21.9M.

Yes I did and yes I know! At the time I could have bought 35, but I was "being sensible".

Sometimes hindsight's a bitch...

 

[Sancho]

Tesla and Elon Musk are shaping up to be the defining story of our generation. We are fortunate to be witnessing it — and participating in it — in real time.

And while anything can happen, it is likely that the story is only just getting started. Musk is still young and full of grit and determination. Global warming is a vast and looming threat. Innovation is accelerating worldwide.

This is an epic, epic story, much bigger than how much any of us profit off of our latest call spread, as enjoyable as that may be in the moment.

Thanks to everyone on this forum who have been providing a play-by-play as this story unfolds. Your insights heighten the thrill of living through a historical series of events.

Here’s to us, in the front row, whatever tomorrow brings.

 

[dakh]

It is generally a good idea to have several brokerages. It increases the insurance amount of both your cash and stocks and also decreases their leverage on you if they exercise any kind bullshit power to halt your withdrawal.

Heh, nice to have new problems in life.. I wanted to open an IB account for a while, now I got a reason to take some holdings from Fidelity. Thank you!

 

[SageBrush]

Yes I did and yes I know!

I hear positions are opening up if you would like to be a hedge fund manager.

 

[dakh]

I see TSLA as a Soft Bank type of company, like a incubator for the future...they will disrupt the auto sector, energy storage, AI integration, rise sharing/robotaxi's with FSD, battery/platform provider, etc.

It's better -- all the different startups are integrated and also you're investing in a global company that will soon be fairly immune to any one part of the world going into crisis.

 

[wipster]

Incidentally, pursuant to the post I just made above, I just realized that I could have avoided paying taxes on my options trades had I simply exercised the contract for the 100 shares. The problem here is of course I would need the actual cash to pay for the said 100 shares at the strike price. I don't think there's any way I can avoid paying these taxes from trading options at this point.


Correct. My share holdings are going to stay there because they are my retirement. However I've been yeeting these options and those are things I've been buying and selling, and I owe capital gains taxes on those. This is all very new and interesting to me, exciting sure because I'm paying taxes because I have gains and gains are good, but also a little bit overwhelming because I should try and do a good job with giving the IRS money so they don't penalize me when I file my income taxes formally next year.

Here is a very good article on capital gains taxes:When Does Capital Gains Tax Apply? - TaxAct Blog
I don't know which broker you use, but I use eTrade in conjunction with TurboTax and it's very helpful in importing all my investment information and determining just how much taxes I may owe. Because I'm retired and living primarily on SS and my investments, I've been amazed at how little, if any capital gains taxes I owe! Now I have no idea of what tax bracket you are in, but the best advice is to just keep track of the gains you have realized and what tax bracket it may put you in.

 

[Kuhz]

Yeah so guys, maybe I'm the only noob here who has never sold anything for a meaningful capital gain before (my usual strategy has always been buy-and-hold but these are exceptional circumstances), but I've been reading this post:

So you're rich. Now what? : teslainvestorsclub

And now I've heard of something called Estimated Taxes. Apparently in the US, I'm supposed to pay taxes as I go. If I manage to yeet my way into substantial and meaningful capital gains which I will be taxed for, I need to pay some estimated amount of the taxes I will owe (at least 90%) or I will face a penalty when I file my yearly taxes because I haven't been paying as I get gains. This is something new to me, who has only ever drawn a paycheck and had taxes automatically withheld from said paycheck.

If there is anyone else who is in the same situation I am in, well, now you know what I know. Good thing I happened across this post otherwise I would probably have gotten reamed by the IRS next April.

The way it works (at least in my situation) is if I owe, let’s say, 8k in federal taxes this year, then IRS assumes I will owe that much next year. So they take that 8k and break it into 4, so I have to pay 2k each quarter towards next year. If I end up paying over at the end of year, great, I get a refund and no quarterly payments for following years taxes. If not enough, then pay up some more and that balance again gets broken into 4. This becomes an alternating game year after year. Weird, but it’s to make sure that the IRA gets their share, simply based on estimates and the fact that you won’t get stuck with a large tax bill, and be hesitant to pay up.

 

[Tslynk67]

Okay, so many of us are "like Elon" in that we have some serious assets in TSLA. (AND, not to be a pill, but don't forget: what goes up might come down again . . . even if the long-term trend is upward.)

Question: how does one turn that into cash flow without actually selling any shares? I guess there's always covered calls, but are there any other avenues by which one can monetize a large portfolio without actually selling any of the shares?

We're decades-long holders of TSLA, but sometimes some cash flow is a good thing. There will likely never be dividends from TSLA as investing in new GF's (and mines!) is a far better way for Tesla to put any excess cash to work.

Thanks for any insights on this "problem."

I'm not the Sharpest tool in this box, but I'll tell you my strategy.

Like many here I have a core account of shares that I HOLD. Then I have my play account where I can trade. Also like many others, I bought some calls at the right moment and made silly money from nothing. I sold these calls yesterday. Yes I didn't sell them at their peak and maybe they'll be worth more today, but this baby could retract a bit, who knows, so I'm really comfortable with what I got.

So now I find myself with enough cash in my trading account to buy 200 shares or load up on 2022 LEAPS, but instead I've decided to start selling options. Yesterday I sold my first ever put - $760 for this Friday = $3150 premium, thank you very much. $25-35 seems to be the going premium for these options. That's $150k-$200k per year if every call were to expire, plus the original capital is untouched.

Scenarios:
- if the put expires, I'll sell another put for next Friday, around the ITM/OTM border
- if the put exercises then I'll get 100 shares for $760 and I'll then sell a call for Friday (or the Friday after), around the ITM/OTM border

The only risk is the SP moves dramatically down or up beyond the strike of my put/call, if this happens then I'll sell the next call/put for a strike equal to the exercise price, so in theory I'll just keep collecting premiums (although they would be lower) and either have 100 shares or the cash value no less than where I started.

I realise I could cover these puts/calls and cap potential losses with a spread, but I don't see the point of giving money away for that.

Also, if I can gain just a bit more capital then I could play both sides and write a put and a call weekly.

I'm not recommending this to anyone, it's not an advice, it's all my own idea, I'll report back how it goes.

 

[dww12]

Heh, nice to have new problems in life.. I wanted to open an IB account for a while, now I got a reason to take some holdings from Fidelity. Thank you!

Is there a list of “climate friendly” investment banks? My current bank’s CEOs comments as well as their rating on TSLA is not aligned with mine.

 

[Green Pete]

Is there a list of “climate friendly” investment banks? My current bank’s CEOs comments as well as their rating on TSLA is not aligned with mine.

Maybe Tesla should start an investment banking arm that invests in climate friendly stuff for all their sharholders

 

[Mike Smith]

816 in Germany.

 

[T@oo]

816 in Germany.

I can only see 736 €. Would be about 800 $.

 

[Favguy]

736 Euro = $810

 

[Fact Checking]

Scenarios:
- if the put expires, I'll sell another put for next Friday, around the ITM/OTM border
- if the put exercises then I'll get 100 shares for $760 and I'll then sell a call for Friday (or the Friday after), around the ITM/OTM border

The only risk is the SP moves dramatically down or up beyond the strike of my put/call, if this happens then I'll sell the next call/put for a strike equal to the exercise price, so in theory I'll just keep collecting premiums (although they would be lower) and either have 100 shares or the cash value no less than where I started.

Yes, this is the covered puts and covered calls options writing strategy - you are selling volatility.

There's two main risks:

• Missing the gains from a big breakout like yesterday's. As long as you didn't think of those 100 shares as appreciating assets, but as capital for your fixed income scheme, you'll be fine. Also, in practice such breakouts are very rare.
• Being assigned the shares across a big drop. This materially reduces both income and capital (your shares will be worth less) - but here your long term bullish thesis should make it easier. I.e. when writing a put contract for $30 with a strike of $760, make it mentally clear to yourself that you just bought TSLA for $730, and be comfortable with that.

There's four tweaks I'd suggest to your covered options writing fixed income scheme:

• Investors who do this often use monthly expiry, not weekly. A weekly option will only earn you 4 days of theta if you buy on Monday and sell on Friday. A monthly option will harvest 25 days of theta - and will do it in the final ~60 days of the option, when theta income is the juiciest. A bi-weekly frequency alone would reduce the theta loss from -43% to -21%, a 4-week schedule to -10%.
• Be super aware of key earnings and delivery report days. Be super aware of the "big" macro events like Fed rates decisions or monthly NFP figures.
• Don't hesitate to buy back the option if the price moves in your favor and you have realized 50%+ or 75%+ of your maximum gains. You'll "re-load" your capital that way and you could write another option at a different expiry, for more income. This is similar to a discretionary "bullish roll-up" in @KarenRei's options spread stochastic investment method. Note that you can even scratch the day trading itch that way (if any): options will frequently appreciate more premiums on bigger breakouts or crashes than modeled by options formulas: if you use limit orders you can even "harvest" your options without following the price.
• Don't hesitate to skip a day or a weekend if unsure, or go for a shorter expiry. One day or weekend of theta lost can be considered an investment into increasing the chance to get the direction/sentiment right.

Finally, a warning: never ever give in to the easy temptation of writing naked options in either direction - it will go fine 9 times out of 10, but you can go bankrupt overnight, owing more money than you had in your account. (Unfortunately brokerages make this too easy, and you can even write naked options accidentally, so always double check your positions.)

 

[MikeAtkinson]

Hey, a lot of you guys made some real money lately. I see lots of you regulars are not Supporting Members to TMC! Come on guys, step up to the plate already!

Done.