Seeking Help from the TSLA Options and Tax planning Veterans
Dear all, I find myself in a fortunate dilemma and could appreciate some advise from ya'll [Summoning my self-declared mentors
@ggr @DaveT @FrankSG @Papafox for their blessed guidance, I have learnt a huge deal from you over the years!]
Problem statement:
=> Investment style/Premise: I have core TSLA position accrued over the years, and prefer to HOLDDDD for a long long time on retirement/post-tax/IRAs. I do not need the money and want it to grow as long as sensible. I am OK with a highly concentrated portfolio % on TSLA, I understand the risks.
=> Picked few Sept 2020 $800 strikes
in my post-tax brokerage, had bought these as way-OTM calls at paltry premiums which have now gone into orbit with our astronauts!
[How I wish I did these in Roth IRA/401k but that's another story for later]
=> Given this unique About-to-be-hit-by-the-TAX-train situation what would you gentlemen/ladies advise?
Please assume this year will be record taxable gains like never ever before due to other winning trades [blame AMZN OTM calls], any probably never in the future [since I hope to plan better hereafter]
Options:
- Sell ALL/100% of these Sep 2020 $800 contracts for lofty profits
- Short term federal and state [CA] Cap-gain tax on entire profits, curl up and cry writing the tax check
- Sell few of these Sep 2020 $800 contracts, use that money towards exercising the remaining contracts for N x100 TSLA shares and sail into the sunset for years.
- Short term Cap-gain-tax on sold options. What about the ones I exercise to buy [I have never really exercised options, and does it matter when I exercise them - now vs closer to expiry, its all the same I suppose since premium is lost]
- Exercise ALL of these Sep 2020 $800 contracts [I can arrange for the capital] but this would mean my TSLA position becomes TOO concentrated [I am comfortable with that] but I do also have $350 Jun 2022 and Sep 2021 $1000 strikes which also fall in the problem statement.
- Roll over to OTM? Would still be taxed, perhaps a preferable approach? Please shed some light on this.
Many many thanks for your insights/pointers!
