trading

[FrankSG]

Has anyone lightened up on their calls that they purchased to play the S&P inclusion? I'm thinking I'll hold till the 21st but man...watching my profits go poof this week has been gut churning.

I actually just bought a few $650s expiring this week, right before it broke through $620.

TSLA had moved up a few dollars 3-4 times in spite of flat/declining macros during the move-ups. Looked kinda bullish how it was pushing $620, and I already thought the price on those was cheap earlier in the day.

If volume picks up and we see any sort of run-up today, tomorrow, or Friday (which at this point is a bit of an if), these could have a very nice pay-off imo. If any sort of buying shows up before close on Friday, imo it should go to $700 with ease.

Risky, but I think the chance of $650+ is high enough, so I picked up just a few.

 

[Bet TSLA]

The anemic volume has persuaded me to exit the December positions I had. I did well enough on the early options (day after announcement) to offset the more recent losses. I'm not seeing the increasing volume (and share price) that I would associate with the index funds getting started. That doesn't mean it won't appear, but the options expiring this week and next are melting too quickly for me to ride them out and see what happens.


I still have my January calls that I'm aiming to close in early Jan which provides me leveraged exposure to the evolving inclusion event.

And I wrote 10 more puts for Friday. 610's to be safe. For ~$17, so break even is ~$593. My 12/31 expiry 690 calls are red though.

 

[EV forever]

I almost want to buy some weeklies for the first time in like 10 months. $750s for <$10 and $670s for ~$5 look pretty juicy from a risk-reward standpoint actually.

Don't think I will though. Already got enough options. But I feel like those are underpriced considering what week it is.

Well I did pick up some - what can I say except I need Teslalcoholics Anonymous
$670s for $5 each - just for the kicks.

 

[adiggs]

And I wrote 10 more puts for Friday. 610's to be safe. For ~$17, so break even is ~$593. My 12/31 expiry 690 calls are red though.

I did sell some 565 puts for 12/18. Feeling very gun-shy right now

 

[dl003]

I did sell some 565 puts for 12/18. Feeling very gun-shy right now

I strongly recommend getting a portfolio margin account to sell weekly puts. I sold a bunch (12) of 460-520 puts for $200 - 250 each, only using about $40k of margin. It's been stress free so far (knock on wood). Already sold $430 puts for next week for $250 each. "Free money", my TA tells me.

 

[adiggs]

I strongly recommend getting a portfolio margin account to sell weekly puts. I sold a bunch of 460-520 puts for $200 - 250 each, only using about $40k of margin. It's been stress free so far (knock on wood). Already sold $430 puts for next week for $250 each. "Free money", my TA tells me.

Have you been also ending up with a margin loan / position, and paying interest as a result? Or do those puts rely on the portfolio margin as their backing, and you only take on the actual margin loan if/when you get assigned?

 

[dl003]

Have you been also ending up with a margin loan / position, and paying interest as a result? Or do those puts rely on the portfolio margin as their backing, and you only take on the actual margin loan if/when you get assigned?

It's just an increase in my margin maintenance requirement. I get charged a small exposure fee if I hold an oversized position over the weekend, but it's negligible.

 

[adiggs]

Another question around margin - I have a Cash position (cash secured put) that I'd like to move over to a Margin position. I'm at Fidelity if that matters. Anybody know if that is something that can be reconfigured on the fly? Do other brokers allow that kind of change?

I've got no margin requirement right now, and I wouldn't have by moving this position over to Margin. But it WOULD create some extra flexibility that I'd like to have.

 

[adiggs]

I strongly recommend getting a portfolio margin account to sell weekly puts. I sold a bunch (12) of 460-520 puts for $200 - 250 each, only using about $40k of margin. It's been stress free so far (knock on wood). Already sold $430 puts for next week for $250 each. "Free money", my TA tells me.

I'm curious about those low premium puts you're selling - do you let them go to expiration to get every last penny, or are you closing them early when a profit level is reached? Well mostly - I realize that there's unlikely to be a 100% answer.

 

[dl003]

Another question around margin - I have a Cash position (cash secured put) that I'd like to move over to a Margin position. I'm at Fidelity if that matters. Anybody know if that is something that can be reconfigured on the fly? Do other brokers allow that kind of change?

I've got no margin requirement right now, and I wouldn't have by moving this position over to Margin. But it WOULD create some extra flexibility that I'd like to have.

I don't think you can. Brokers will always exhaust your cash balance before touching margin. Can you provide a scenario in which doing so would be beneficial?

 

[dl003]

I'm curious about those low premium puts you're selling - do you let them go to expiration to get every last penny, or are you closing them early when a profit level is reached? Well mostly - I realize that there's unlikely to be a 100% answer.

I mostly go by feels. However, if the SP gets within 10% of my highest puts (uptick rule not providing adequate protection), I will roll that down. Anything costing $5-10 to close I'll just close it.

 

[adiggs]

I don't think you can. Brokers will always exhaust your cash balance before touching margin. Can you provide a scenario in which doing so would be beneficial?

It would change the level of backing needed for those existing short puts, and enable additional sales of puts. Whether I actually do the incremental sales \or not.

Then again, just using margin as backing for new positions instead of cash will probably do everything I need. I'll need to experiment.

 

[ammulder]

I strongly recommend getting a portfolio margin account to sell weekly puts. I sold a bunch (12) of 460-520 puts for $200 - 250 each, only using about $40k of margin. It's been stress free so far (knock on wood). Already sold $430 puts for next week for $250 each. "Free money", my TA tells me.

Can you clarify the math for me? If you sold 12 puts at about $500 strike, doesn’t that mean you’re potentially on the hook to buy 1200 shares @ around $500 each or a potential outlay of $600k? Why does that only use $40k of margin?

 

[Davidzhao365]

If I am an indexer, and I need to negotiate a price for Friday closing cross with brokers and proxies (hedge fund and others), I would hope the stock price is stabilized for us to execute such a large size cross.

Assume we know the brokers and proxies have accumulated 70% to 110% of the 120m shares needed, now it is more important to keep a stable environment to transfer the shares already secured safely and peacefully, than to make sure we secure all the 120m shares. If indexers fall short, they can always buy more next week. And when the SP is stable during the a few days before the cross, a seller won't feel they could get more profit if they hold, and they dont know if they have overshoot collectively, and thus it makes the negotiation for indexers easier. (Since indexers face a deadline)

If we look at the inclusion month as a whole, the last a few trading day is like a consolidation phase to reach a final price for the Friday cross. The Friday cross includes shares accumulated across many trading days, let us say it is 20 days. Thus it is kind of reasonable to take a few days to reach a final price for that 20-day worth of effort, instead of finding a balance within the last 10 min of the trading hours on Friday.

So in short, I guess indexers want to take over whatever brokers have got at a stable price, and then buy the rest (0% to 30%) next week.

 

[chuyoujia]

If I am an indexer, and I need to negotiate a price for Friday closing cross with brokers and proxies (hedge fund and others), I would hope the stock price is stabilized for us to execute such a large size cross.

Assume we know the brokers and proxies have accumulated 70% to 110% of the 120m shares needed, now it is more important to keep a stable environment to transfer the shares already secured safely and peacefully, than to make sure we secure all the 120m shares. If indexers fall short, they can always buy more next week. And when the SP is stable during the a few days before the cross, a seller won't feel they could get more profit if they hold, and they dont know if they have overshoot collectively, and thus it makes the negotiation for indexers easier. (Since indexers face a deadline)

If we look at the inclusion month as a whole, the last a few trading day is like a consolidation phase to reach a final price for the Friday cross. The Friday cross includes shares accumulated across many trading days, let us say it is 20 days. Thus it is kind of reasonable to take a few days to reach a final price for that 20-day worth of effort, instead of finding a balance within the last 10 min of the trading hours on Friday.

So in short, I guess indexers want to take over whatever brokers have got at a stable price, and then buy the rest (0% to 30%) next week.

Why is Yahoo different? On the last day before inclusion, the stock price of Yahoo have an explosive surge of 23.93%. Its stock price is not stable on that day.

Thanks!

 

[Davidzhao365]

Why is Yahoo different? On the last day before inclusion, the stock price of Yahoo have an explosive surge of 23.93%. Its stock price is not stable on that day.

Thanks!

I don’t know.
It does feel that index funds need to follow certain rule or practice that the industry or S&P DJI put out and they can’t do whatever they want. I would imagine some people leading this effort want to have a stable and peaceful take over, instead of leaving it 100% to the market. But maybe they can fail due to some reason.

 

[Davidzhao365]

Why is Yahoo different? On the last day before inclusion, the stock price of Yahoo have an explosive surge of 23.93%. Its stock price is not stable on that day.

Thanks!

found this Twitter about Yahoo
https://twitter.com/garyblack00/status/1338145456925368324?s=21

 

[Davidzhao365]

I actually just bought a few $650s expiring this week, right before it broke through $620.

TSLA had moved up a few dollars 3-4 times in spite of flat/declining macros during the move-ups. Looked kinda bullish how it was pushing $620, and I already thought the price on those was cheap earlier in the day.

If volume picks up and we see any sort of run-up today, tomorrow, or Friday (which at this point is a bit of an if), these could have a very nice pay-off imo. If any sort of buying shows up before close on Friday, imo it should go to $700 with ease.

Risky, but I think the chance of $650+ is high enough, so I picked up just a few.

You gave me some hope Frank!

 

[FrankSG]

You gave me some hope Frank!

It's obviously looking more likely that buyers won't show up in big numbers before Friday's closing cross, and that it stays flat, drops to $600, or gets stuck below $650 on low volume. One would think that if a lot of buying still had to be done, volume would be picking up by now.

However, if buyers do show up in decent numbers, I do think it'll run-up very easily. I'd hate to be a MM this week. Pin-risk this week would keep me up all night every night as we get closer and closer to Friday's close.

The question is will buyers show up or not. I think that the data from my prediction model is still the most reliable data I have, so that's what I continue to believe in for the most part.

I wonder if there's any way that buyers do have to buy a lot of shares, but have basically decided that doing so extremely carefully for most of this week is the best way to go about it. If I had to buy a lot of TSLA, and I was the only one that had to do so, I wouldn't just start buying a ton on Monday. I would do pretty much exactly what is currently happening. Buy tiny amounts here and there, let the stock drift down slightly, hope some people panic sell to me, scoop up some shares from MMs reducing their delta inventory, etc. I can always start buying in bigger volume at the very end of the week. People who won't sell until $700 won't until $700 regardless of whether it happens on Monday or Friday, but speculators and options holders might get scared and cash out during the week if it's quiet, whereas otherwise more and more might pile on.

The big problem with this theory is that there's almost certainly not just 1 buyer. So it'd require all the buyers to be cooperating, or at least that they all understand the same thing: that it wouldn't help them to drive the price up early.

So on one hand there's my prediction model, which I think is still the most reliable information, but on the other hand the low volume this week sort of points to there somehow some way not being any real buyers right now, and perhaps not until Friday's cross and next week, or perhaps even not at all.

 

[Jo-]

It's obviously looking more likely that buyers won't show up in big numbers before Friday's closing cross, and that it stays flat, drops to $600, or gets stuck below $650 on low volume. One would think that if a lot of buying still had to be done, volume would be picking up by now.

However, if buyers do show up in decent numbers, I do think it'll run-up very easily. I'd hate to be a MM this week. Pin-risk this week would keep me up all night every night as we get closer and closer to Friday's close.

The question is will buyers show up or not. I think that the data from my prediction model is still the most reliable data I have, so that's what I continue to believe in for the most part.

I wonder if there's any way that buyers do have to buy a lot of shares, but have basically decided that doing so extremely carefully for most of this week is the best way to go about it. If I had to buy a lot of TSLA, and I was the only one that had to do so, I wouldn't just start buying a ton on Monday. I would do pretty much exactly what is currently happening. Buy tiny amounts here and there, let the stock drift down slightly, hope some people panic sell to me, scoop up some shares from MMs reducing their delta inventory, etc. I can always start buying in bigger volume at the very end of the week. People who won't sell until $700 won't until $700 regardless of whether it happens on Monday or Friday, but speculators and options holders might get scared and cash out during the week if it's quiet, whereas otherwise more and more might pile on.

The big problem with this theory is that there's almost certainly not just 1 buyer. So it'd require all the buyers to be cooperating, or at least that they all understand the same thing: that it wouldn't help them to drive the price up early.

So on one hand there's my prediction model, which I think is still the most reliable information, but on the other hand the low volume this week sort of points to there somehow some way not being any real buyers right now, and perhaps not until Friday's cross and next week, or perhaps even not at all.

Do explain: “not even at all”? How could buyers not show up? TSLA IS being added, they DO have to buy at some point...we should see this in the volume no matter what happens with the price, yes?