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Thinking of selling some of my shares, undecided

mongo

Well-Known Member
May 3, 2017
13,812
44,352
Michigan
Another option is to sell covered calls against your shares. If the stock drops, you still keep the premium which partly offsets the decline. If it goes up enough to execute, your get the premium and the SP increase up to the strike.
 

electricar

Member
Jul 31, 2018
270
338
NotCal
As you get older Daniel one flaw in paradise you might find is that the only hospital on the island is in Wailuku. That is not too bad for you or people upcountry but not good for people on the west side. The Minit Clinic is good but more is needed; maybe there is something that you could do help with the establishment of some sort of limited capacity hospital.
 

adiggs

Well-Known Member
Supporting Member
Sep 25, 2012
5,240
16,936
Portland, OR
Another option is to sell covered calls against your shares. If the stock drops, you still keep the premium which partly offsets the decline. If it goes up enough to execute, your get the premium and the SP increase up to the strike.

This is a particularly easy way to sell shares at a price you like, as long as you're not in a rush to get the shares sold.

So if you want to get $1700 for your shares, sell the $1700 call (1 call per 100 shares you want to sell). You'll be paid some premium which you get to keep regardless. At expiration, if the share price is above $1700, then your shares are sold for $1700 and you get that $1700 you wanted in the first place (along with the premium; you can be paid to sell stuff you want to sell anyway, at the price you want to sell at).

The only additional choice to make is to pick an expiration date. Options expire on Fridays, so you might choose next Friday (July 31st) over this Friday, as the 31st premium is probably significantly higher than this Friday's premium.


You'll need a minimal option authority on your account, but covered calls are where many get started and are as safe as can be (the primary risk being that the share price takes off far beyond your strike; that's not an issue when you've got a price you'd like to get - whether you get it now or in a week, it's the price you want).
 

daniel

Well-Known Member
May 7, 2009
5,190
4,449
Kihei, HI
As you get older Daniel one flaw in paradise you might find is that the only hospital on the island is in Wailuku. That is not too bad for you or people upcountry but not good for people on the west side. The Minit Clinic is good but more is needed; maybe there is something that you could do help with the establishment of some sort of limited capacity hospital.

I actually considered this seriously before moving here. In the end, both my sister (whose opinion only counts because she's my sister) and my doctor gave similar advice: The risks involved in having reduced access to medical care are justified by the expected improvements in health from the fresh air and the daily outdoor exercise and the emotional benefits of living here. If your health is actually affected by your emotional state, then this is the healthiest place I could possibly live. I'm writing this at 12:20 p.m. and I'm already looking forward to tomorrow morning's planned four-hour paddle with a buddy on my OC2 (two-man outrigger canoe).

My clinic here and my cardiologist's office here are pathetic compared to what I had in Spokane. But in Spokane I did cardio in my basement.

I'm not rich enough to make an endowment towards a new hospital.

This is a particularly easy way to sell shares at a price you like, as long as you're not in a rush to get the shares sold.

So if you want to get $1700 for your shares, sell the $1700 call (1 call per 100 shares you want to sell). You'll be paid some premium which you get to keep regardless. At expiration, if the share price is above $1700, then your shares are sold for $1700 and you get that $1700 you wanted in the first place (along with the premium; you can be paid to sell stuff you want to sell anyway, at the price you want to sell at).

The only additional choice to make is to pick an expiration date. Options expire on Fridays, so you might choose next Friday (July 31st) over this Friday, as the 31st premium is probably significantly higher than this Friday's premium.

You'll need a minimal option authority on your account, but covered calls are where many get started and are as safe as can be (the primary risk being that the share price takes off far beyond your strike; that's not an issue when you've got a price you'd like to get - whether you get it now or in a week, it's the price you want).

So how much of a premium would I get on a covered call to sell 100 shares at $3,000 expiring at the end of this year? I'm joking. Like I said, I ain't touching options with a ten-foot pole. Limits and stops are as fancy as I get. Buy or sell when it gets up to or down to X.

Just don't look. Three days from now you will wish you had waited. "Live the day and be done with it."

Yep. Another way of saying "Water under the bridge." If it goes back up I'll probably sell some more.
 

daniel

Well-Known Member
May 7, 2009
5,190
4,449
Kihei, HI
An OC2 of the same make and model as mine. The one in this picture has a nicer paint job than mine. It's amazingly seaworthy and it's fast. It's a Tempest from OZone (Outrigger Zone) and I bought it used.

VXXNisj.jpg
 

adiggs

Well-Known Member
Supporting Member
Sep 25, 2012
5,240
16,936
Portland, OR
So how much of a premium would I get on a covered call to sell 100 shares at $3,000 expiring at the end of this year? I'm joking. Like I said, I ain't touching options with a ten-foot pole. Limits and stops are as fancy as I get. Buy or sell when it gets up to or down to X.

Since you asked though :)

The Dec 18th, 2020 3000 strike calls are selling for about $90 (I say about because they're in the $89 - $96 range in the same way that there is a bid/ask spread on the share price).

That contract covers 100 shares, so you'd be committing to sell your 100 shares for $300k on that date if the stock price is above that strike.


And for your troubles, you get ~$9000 today for a REALLY nice dinner out ($90 * 100 shares). Or at least in my world, a really nice donation to a cause you find worthy. Or ....


The better choice though is, as you said, don't touch options with a 10' pole. They're not evil, but they're more complex than straight stock, and that leads to a need to learn about them. You can't successfully and safely trade them without some education.

Order of magnitude - I figure there's about 30 hours of education (I can point you to what I like) to get the basics on options. That's the basics so you can start doing something, not the end of the education / experience.
 

electricar

Member
Jul 31, 2018
270
338
NotCal
I actually considered this seriously before moving here. In the end, both my sister (whose opinion only counts because she's my sister) and my doctor gave similar advice: The risks involved in having reduced access to medical care are justified by the expected improvements in health from the fresh air and the daily outdoor exercise and the emotional benefits of living here. If your health is actually affected by your emotional state, then this is the healthiest place I could possibly live. I'm writing this at 12:20 p.m. and I'm already looking forward to tomorrow morning's planned four-hour paddle with a buddy on my OC2 (two-man outrigger canoe).

My clinic here and my cardiologist's office here are pathetic compared to what I had in Spokane. But in Spokane I did cardio in my basement.

I'm not rich enough to make an endowment towards a new hospital.

I couldn’t agree more. The things that you mentioned plus people being less angry due to the empathetic and intelligent governance is the reason why Hawaii has the longest life expectancy of any state. I know I always feel worlds better when I’m there.
 
Last edited:

mmanner

Member
Feb 28, 2017
299
778
Nashville
I don't invest in individual stock issues, and I don't "trade." My investments are in mutual funds which I hold for the long term, and some diversified bond holdings for income. But when I really like what a company is doing I sometimes put a little bit of money in it so that I can feel like I'm a part of the company. This is what happened when I bought my Roadster in 2011. It was such an amazing car, and Tesla had just come along with this idea to say NO to gasoline (I hate gasoline) so I put a little bit of money into TSLA when it was around $30 to $35. I also bought some SCTY because I wanted to be a part of the solar revolution, and when Tesla bought Solar City my SCTY shares became a few more shares of TSLA.

Since I don't "trade," and since I bought my shares to "be a part of" the company I didn't look at the stock price. I never had any intention of selling my shares unless the company's philosophy changed or its management disappointed me. Imagine my surprise to see that it's now $1,500, something like 40 times what I paid! Suddenly my position in TSLA is nearly my biggest holding and I'm conflicted:

Maybe it will keep going up and up and up, or maybe the market will decide it's overvalued and it will go down to half. My financial advisor recommends selling some of the shares. Her angle is as an investor: take your profits and move on. I'll feel really bad if I hold and it collapses, but I'll also feel really bad if I sell and it skyrockets. I've never been in this position before because with mutual funds I just ride the market knowing that in the long run they'll give me income. But with an individual company there's risk and I've never been comfortable with risk.

I am experiencing very illogical sentiments: I would never put as much into an individual stock issue as I now have in TSLA, but I don't want to let go of a stock that has performed so well. Maybe the logical thing would be to sell half, and if it goes down, buy back in. But I would not buy back in because that's too big an investment for my very conservative style. I'm not asking an internet forum for advice. Just sharing a personal dilemma. Obviously a very good dilemma to have, but still one I seem unable to resolve.

Thanks for listening. All comments welcome. :)

Diversify. If you don't you'll lose if you live long enough :)
 

daniel

Well-Known Member
May 7, 2009
5,190
4,449
Kihei, HI
Since you asked though :)

The Dec 18th, 2020 3000 strike calls are selling for about $90 (I say about because they're in the $89 - $96 range in the same way that there is a bid/ask spread on the share price).

That contract covers 100 shares, so you'd be committing to sell your 100 shares for $300k on that date if the stock price is above that strike.

And for your troubles, you get ~$9000 today for a REALLY nice dinner out ($90 * 100 shares). Or at least in my world, a really nice donation to a cause you find worthy. Or ....

The better choice though is, as you said, don't touch options with a 10' pole. They're not evil, but they're more complex than straight stock, and that leads to a need to learn about them. You can't successfully and safely trade them without some education.

Order of magnitude - I figure there's about 30 hours of education (I can point you to what I like) to get the basics on options. That's the basics so you can start doing something, not the end of the education / experience.

Wow! I didn't actually expect a real answer, or if there was one I thought it would be pennies, or a dollar at most. So there are people willing to pay me $90 today for the option of (at their discretion) buying one share of TSLA at $3,000 in five months from now. (All multiplied by 100 for the contract.) I get $90 (times 100) now; and in five months I either get $3,000 (times 100) for 100 shares, or I keep my shares. And all I have to do is hold onto my shares for five months or until they exercise their option.

If the stock goes down I've given up the right to cash out until the contract expires or is exercised. if it goes up I get what seems now like a very attractive price, though I'll be disappointed that I didn't get the higher price myself. What all this seems to say to me is that there are people who think there's such a good chance of the stock breaking $3,000 that they're willing to risk $90 today to profit by however much the stock exceeds $3,090 by then.

But if there are people who think the chances are that good, then selling that option might not be such a great idea after all.

TBH, I picked $3,000 because I thought that was so high that nobody would pay more than a few pennies for the option.

I couldn’t agree more. The things that you mentioned plus people being less angry due to the empathetic and intelligent governance is the reason why Hawaii has the longest life expectancy of any state. I know I always feel worlds better when I’m there.

The aloha spirit is real here, and makes a huge difference.

Diversify. If you don't you'll lose if you live long enough :)

Yep. Which is where this whole thread came from: My position in TSLA had grown so big, so unexpectedly, that suddenly it was unbalancing my portfolio. Something that was an insignificant percentage of my portfolio and never expected to be worth enough to ever think of selling had suddenly become a pretty big chunk of it.
 

mongo

Well-Known Member
May 3, 2017
13,812
44,352
Michigan
If the stock goes down I've given up the right to cash out until the contract expires or is exercised. .

You can also buy the option back at any time. If the stock has gone down or not gone up fast enough vs the time that has passed, you still make a profit.
 

daniel

Well-Known Member
May 7, 2009
5,190
4,449
Kihei, HI
You can also buy the option back at any time. If the stock has gone down or not gone up fast enough vs the time that has passed, you still make a profit.

Yeah, then we're getting to that 30 hours of study just to get the basics, and watching the stock continuously to catch the right moment to buy or sell the options.

If you're in seat #3 it looks like you're the one best taking care of his health (weight) :)

The men in seats 4 and 6 are stronger and healthier than I am. Seat 4 has more fat than I have, but also more muscle, and seat six is as thin as I am and a lot stronger. I'm actually the weakest (and the oldest!) paddler in the boat. The great thing about recreational paddling (as opposed to racing) is that it does not matter how strong you are and everybody is welcome. The only disqualifier is being disrespectful. Lack of respect for the other paddlers is not tolerated. Seats one and two are both Hawaiians, and being overweight is common, though not universal, among Hawaiians. I don't know if it's genetic or cultural. Both of those guys are so much stronger than I am that it's ridiculous. And yet I was warmly welcomed into the crew.

The picture is from the 2019 Paddle for Life, to raise money for the Pacific Cancer Foundation. We paddled from Lahaina, on Maui, to the harbor on Lana'i, 18 miles, and then we paddled back the next day. We had two crews and a support boat. About every 45 minutes the support boat would drop one crew into the water ahead of the canoe. The canoe would pull up and the crew on the canoe would jump into the water and the crew in the water would climb into the canoe. The other crew would get back in the support boat, and we'd continue on. So each paddler paddled about half the total. I was just about dead by the end of the first day, and still tired at the start of the second day. Some of these people do much longer voyages than this, but Maui to Lana'i with water changes is the longest channel crossing I'd ever attempt.

Racers do their water changes without stopping. It's impressive. There are some videos of it on line.
 

adiggs

Well-Known Member
Supporting Member
Sep 25, 2012
5,240
16,936
Portland, OR
Wow! I didn't actually expect a real answer, or if there was one I thought it would be pennies, or a dollar at most. So there are people willing to pay me $90 today for the option of (at their discretion) buying one share of TSLA at $3,000 in five months from now. (All multiplied by 100 for the contract.) I get $90 (times 100) now; and in five months I either get $3,000 (times 100) for 100 shares, or I keep my shares. And all I have to do is hold onto my shares for five months or until they exercise their option.

If the stock goes down I've given up the right to cash out until the contract expires or is exercised. if it goes up I get what seems now like a very attractive price, though I'll be disappointed that I didn't get the higher price myself. What all this seems to say to me is that there are people who think there's such a good chance of the stock breaking $3,000 that they're willing to risk $90 today to profit by however much the stock exceeds $3,090 by then.

But if there are people who think the chances are that good, then selling that option might not be such a great idea after all.

TBH, I picked $3,000 because I thought that was so high that nobody would pay more than a few pennies for the option.

Yes.

You've described the covered call trade with the important details I would include. The only thing missing is that once you've sold that call, you don't actually have to wait for expiration to find out how the trade resolves. If 2 months from now the share price and stuff has moved in such a way that the $90 option is now trading for $40, then you can buy it back / close the position and keep the $50 difference while relieving yourself of the commitment to have the shares available at the option expiration.


At least for me, the critical idea that makes this go and work well, is you have to pick strike prices (such as the $3000 you mentioned) that you would genuinely be happy selling at (in this instance of a covered call). The hard part from what I've seen, is being genuinely happy today with selling at $3000, and then still being happy at selling at $3000 in December if the shares are $4000.


I won't take over this thread further - come visit us in that other thread on Applying the Option Strategy the Wheel thread if you'd like to learn more.


And if it helps, there are also $3500 strikes available. The premium won't be as good, but heck - it's even easier to commit today to selling at $3500, eh? :)
 

daniel

Well-Known Member
May 7, 2009
5,190
4,449
Kihei, HI
... The hard part from what I've seen, is being genuinely happy today with selling at $3000, and then still being happy at selling at $3000 in December if the shares are $4000. ...

That's the rub!

Rather than sell any covered calls, I will just take it as a good sign that the premium on December TSLA at $3,000 is so high. I'll probably still sell a few more shares and then go back to religiously avoiding market news. Never mind that options contracts are for 100 shares. Now we're talking rich people money. I think in terms of ten or fifteen.

I suspect that I may be talking to people who have a lot more shares than I do. :D
 

adiggs

Well-Known Member
Supporting Member
Sep 25, 2012
5,240
16,936
Portland, OR
That's the rub!

Rather than sell any covered calls, I will just take it as a good sign that the premium on December TSLA at $3,000 is so high. I'll probably still sell a few more shares and then go back to religiously avoiding market news. Never mind that options contracts are for 100 shares. Now we're talking rich people money. I think in terms of ten or fifteen.

I suspect that I may be talking to people who have a lot more shares than I do. :D

Something I've learned hanging around with Tesla owners since 2012 - no matter how rich you are (or think you are), there's somebody else that is richer.

Or as I first started thinking about it - all of us have some price level below which it's just noise. For some of us, that's $1. For some of us, that's more like $100 or $1000. You know for yourself about where that level is.

The thing I've learned about hanging around Tesla owners is that for some of us (not me), $150,000 for a performance Model S (back when that was the price) was noise. See, want, get - that was the sum total of the thinking involved. I have a hard time wrapping my brain around that kind of money and "noise level", but they are there.


The other interesting thing about Tesla owners is just how many of them / us stretched to be "in the club". We weren't joining a club - we wanted to drive the best damn car around, and be environmentally responsible about it. Or maybe that was being environmentally responsible about our personal transport, and the fact that it was also the best damn car was a nice side benefit.

The point is that for many Tesla owners, these aren't just the most expensive cars they (we) have ever owned, for some they also represent a stretch that might not be all that financially wise. So there's a nice mix found here, and I for one like that.
 

Oveeus

Member
Jun 4, 2019
243
1,605
Vancouver, BC
Whether you buy or sell it's a very personal question assuming you are not in for the money and you'd have made a handsome return regardless.

What you could do though, is to have a plan... and it's VERY important to have one.

Set a specific time/target (whether it's yours or a milestone from Tesla) that you'd just get out without thinking much about it again.

For example, my target is to sell everything when TSLA hits 1T mkt cap or if Elon Musk stops being the CEO, whichever comes first. It's just some guidelines that I see Tesla achieving/not achieving its visions.
 

daniel

Well-Known Member
May 7, 2009
5,190
4,449
Kihei, HI
Whether you buy or sell it's a very personal question assuming you are not in for the money and you'd have made a handsome return regardless.

What you could do though, is to have a plan... and it's VERY important to have one.

Set a specific time/target (whether it's yours or a milestone from Tesla) that you'd just get out without thinking much about it again.

For example, my target is to sell everything when TSLA hits 1T mkt cap or if Elon Musk stops being the CEO, whichever comes first. It's just some guidelines that I see Tesla achieving/not achieving its visions.

Good advice. Sadly, making a plan is hard. My original plan was to hold my shares forever. That plan no longer feels right to me. Selling half while it was high seemed like a good revised plan, but I may have missed my chance.

I mostly have conservative mutual funds because I'm a lousy investor. The unexpected rise in TSLA has upset the balance of my portfolio. If I was smart I'd just sell half tomorrow morning. But I won't. I'll wait for it to go back up as it slides down. At some point it will go down enough that I will no longer have too big a position and I'll go back to ignoring the price. :)
 

TMThree

Active Member
Mar 28, 2019
1,118
1,781
USA
Wow! I didn't actually expect a real answer, or if there was one I thought it would be pennies, or a dollar at most. So there are people willing to pay me $90 today for the option of (at their discretion) buying one share of TSLA at $3,000 in five months from now. (All multiplied by 100 for the contract.) I get $90 (times 100) now; and in five months I either get $3,000 (times 100) for 100 shares, or I keep my shares. And all I have to do is hold onto my shares for five months or until they exercise their option.

Always factor in the value of the shares now, and what that would get you invested into another financial instrument. A lot of times, these lengthy options pay about what you'd get on interest. Not sure now since rates are so low.
 

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