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FrankSG

Active Member
Jun 27, 2019
1,615
21,504
Singapore
I actually just bought a few $650s expiring this week, right before it broke through $620.


Sold 3/7th of this position for an ~2.5x gain. Using it to cover tuition fees and living expenses for next year.

I'm letting the remaining 4/7 ride for now. IBKR gave me an extension on liquidating this position (that is too large for me to exercise on margin) until 15:45.

I'll either have to sell or roll-over before then, or I might contact the block trade desk to see if I can arrange for them to sell these calls in the final 2 minutes.
 

Davidzhao365

Supporting Member
Supporting Member
Dec 13, 2019
131
943
San Francisco
Sold 3/7th of this position for an ~2.5x gain. Using it to cover tuition fees and living expenses for next year.

I'm letting the remaining 4/7 ride for now. IBKR gave me an extension on liquidating this position (that is too large for me to exercise on margin) until 15:45.

I'll either have to sell or roll-over before then, or I might contact the block trade desk to see if I can arrange for them to sell these calls in the final 2 minutes.

can the block trade desk respond so quickly? I never called them so curious to know how it works . When I call customer service, Sometimes it takes a while for someone to pick up. So I guess it is not the normal phone number to call?
 

FrankSG

Active Member
Jun 27, 2019
1,615
21,504
Singapore
can the block trade desk respond so quickly? I never called them so curious to know how it works . When I call customer service, Sometimes it takes a while for someone to pick up. So I guess it is not the normal phone number to call?

I'm not sure. It's my first time calling. But I plan to call them in ~20 minutes, about 90 minutes before the trades need to happen.

No, I received the number from the regular trading desk.
 

FrankSG

Active Member
Jun 27, 2019
1,615
21,504
Singapore
Sold 3/7th of this position for an ~2.5x gain. Using it to cover tuition fees and living expenses for next year.

I'm letting the remaining 4/7 ride for now. IBKR gave me an extension on liquidating this position (that is too large for me to exercise on margin) until 15:45.

I'll either have to sell or roll-over before then, or I might contact the block trade desk to see if I can arrange for them to sell these calls in the final 2 minutes.

Sold the final 4/7th for ~2x return before the drop to $650. IBKR wouldn't let me hold onto them past 3:45PM, and it felt it too bothersome to roll them over to next week, so I just bought stock.
 
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Ocelot

Member
Jul 2, 2012
879
1,044
Canada
That was crazy. Doorbell rang with roofer needing to ask questions at 12.52.

Ha. I sold nearly all my calls at 12.45- 12.49, locking in some smallish gains, as stock (by recall in the 640's) then literally as I sell the last one..the stock starts shooting upwards.

i totally panicked. ha.
 
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EV forever

Supporting Member
Supporting Member
Apr 23, 2016
737
5,482
Irvine, CA
Question about options ending in the money
I had 670 strikes that were not in the money till that last crazy minute. Now, they ended in the money although Fidelity website still shows them to be worth pennies. What happens now? Will fidelity exercise these and close them out? I don’t have enough cash to cover, but have sufficient overall assets. This is not a margin account being an IRA.
 

MikeC

Supporting Member
Supporting Member
Jul 9, 2012
2,919
5,711
Los Angeles
Question about options ending in the money
I had 670 strikes that were not in the money till that last crazy minute. Now, they ended in the money although Fidelity website still shows them to be worth pennies. What happens now? Will fidelity exercise these and close them out? I don’t have enough cash to cover, but have sufficient overall assets. This is not a margin account being an IRA.

I believe even without margin they would put the shares in your account and you would owe a lot of cash on Monday. So you have some risk that the price could drop
a lot Monday premarket before you can sell your shares to pay off your balance.
 

Davidzhao365

Supporting Member
Supporting Member
Dec 13, 2019
131
943
San Francisco
I sold all my 20% Jan21 $500 call and rolled into shares and Jun22 $600 call.

About 50% gain overall since the announcement, which is the same as my Jun22 leap. :)

Now I don’t know why I did this short term play and stared at the SP everyday. :)

overall I am 50% shares and 50% leaps now.

Shall I covert leaps to shares? I don’t know why I increased my leap position since we all know IV will crush next week. Am I stupid or something? :)
 

vikings123

Supporting Member
Supporting Member
May 27, 2019
1,130
8,487
MN
Sold the final 4/7th for ~2x return before the drop to $650. IBKR wouldn't let me hold onto them past 3:45PM, and it felt it too bothersome to roll them over to next week, so I just bought stock.

Wow nice work Frank. I was thinking about your plans while the stock was taking a nose dive. Pretty amazing how they can cause a huge swing like that.

I was not impacted but I can imagine retail got hosed on that move down to 630. I actually took advantage of the dip when I saw the imbalance and the indicative price for the crossing. What a day!

Next week should be interesting too.
 
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Criscmt

Member
Feb 18, 2020
517
1,711
San Francisco
Wow nice work Frank. I was thinking about your plans while the stock was taking a nose dive. Pretty amazing how they can cause a huge swing like that.

I was not impacted but I can imagine retail got hosed on that move down to 630. I actually took advantage of the dip when I saw the imbalance and the indicative price for the crossing. What a day!

Next week should be interesting too.

It appears your view is that as of now there's a buy side imbalance. Can you share the reasoning?
Did you take into account current holdings of TSLA in funds like VOO?

@FrankSG Given where we are, is there any change in your model's prediction for the peak being ahead (in the next 1-2 weeks) than already passing?
What's your take on the imbalance as of now? Do you see indexers needing significant number of shares still, to reach the weighting?
What's your view on price action in the coming week?
 

Chenkers

Supporting Member
Supporting Member
Apr 28, 2019
506
5,684
Melbourne, AU
I was closely following @FrankSG dealing with IBKR as I was in a very similar position. I spent around 3 hours on hold waiting to talk to someone at IB yesterday without getting a satisfactory response. I had a few Dec18 calls (550,600,650,700) in cash or lower margin accounts that ended up getting closed out automatically. This usually happens at 3.45pm but thankfully they delayed till nearly 3.55pm, which allowed the stock price to recover. I had to sell a couple of others in the last minute with some sales not going through, so I now have 300 extra shares at $650. I'll sell most of these if there's a rise next week to remove the margin or else sell aggressive covered calls if there's a dip.

Depending on the accounts and options I managed a return of between 3.5 to 6.5X on these short term options so I am generally happy with the outcome. A lot less than the 10X some were a week ago but it's all part of the learning experience. I also still have some Dec24 options to close out this week coming, so hopefully we get an early rise before any dip.
 

vikings123

Supporting Member
Supporting Member
May 27, 2019
1,130
8,487
MN
It appears your view is that as of now there's a buy side imbalance. Can you share the reasoning?
Did you take into account current holdings of TSLA in funds like VOO?

It is based on the closing cross imbalance and the potential for benchmark funds to provide support. The other aspect is options trading. So much of Tesla price action seems to revolve around options. And this one was a big one in terms of premiums. They literally just killed thousands of option holders with that pre closing cross drop. It also seemed to have happened on not so great volume,

We will see what happens next week. I could be completely wrong and the stock could tank 10-20%.
 
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EV forever

Supporting Member
Supporting Member
Apr 23, 2016
737
5,482
Irvine, CA
I believe even without margin they would put the shares in your account and you would owe a lot of cash on Monday. So you have some risk that the price could drop
a lot Monday premarket before you can sell your shares to pay off your balance.
Well, that is exactly what happened. Now I have shiny new shares in my account with a huge negative balance. So let’s hope Monday open is not a crash

Now the problem is that I am already feeling attached to these new shares and trying to figure out ways to keep them.
 

Davidzhao365

Supporting Member
Supporting Member
Dec 13, 2019
131
943
San Francisco
Well, that is exactly what happened. Now I have shiny new shares in my account with a huge negative balance. So let’s hope Monday open is not a crash

Now the problem is that I am already feeling attached to these new shares and trying to figure out ways to keep them.

When is the wedding? (Kidding, wedding for you and your shares :) )

So true, I bought some shares using short term fall profit in the last hour and felt like a steal. I never sold any shares except the Covid crash when I converted some shares to calls.
 

strago13

Member
Feb 9, 2018
191
959
Washington dc
Well, that is exactly what happened. Now I have shiny new shares in my account with a huge negative balance. So let’s hope Monday open is not a crash

Now the problem is that I am already feeling attached to these new shares and trying to figure out ways to keep them.

I have this exact same problem except its upcoming in January -- I have JAN 15 570's I would like to keep. My thought was to take margin on them and then sell covered calls to pay that margin down over time. Besides the possibility they get called away, paying interest on the loan, and or TSLA dropping significantly where I get margin called (and have to force sell some shares) can someone tell me why this a stupid idea?
 

vikings123

Supporting Member
Supporting Member
May 27, 2019
1,130
8,487
MN
It is based on the closing cross imbalance and the potential for benchmark funds to provide support. The other aspect is options trading. So much of Tesla price action seems to revolve around options. And this one was a big one in terms of premiums. They literally just killed thousands of option holders with that pre closing cross drop. It also seemed to have happened on not so great volume,

We will see what happens next week. I could be completely wrong and the stock could tank 10-20%.

Oh and one thing I forgot to add. ARK did not sell any TSLA.
 
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EV forever

Supporting Member
Supporting Member
Apr 23, 2016
737
5,482
Irvine, CA
I have this exact same problem except its upcoming in January -- I have JAN 15 570's I would like to keep. My thought was to take margin on them and then sell covered calls to pay that margin down over time. Besides the possibility they get called away, paying interest on the loan, and or TSLA dropping significantly where I get margin called (and have to force sell some shares) can someone tell me why this a stupid idea?

It is not a stupid idea- I am planning to do something similar in my investment account. In my case, it is because they are all short term gains, and my tax bracket with Federal and State combined would be close to 50%. If I wait till long term, taxes would be 33%, but it is possible TSLA stock gives up some of its current gains reducing the profits. The calls are Jan 2022 252's which were bought pre-split. They are so deep ITM that there is almost no time value left. I was thinking of purchasing 60% of them on margin and then selling covered calls against them to reduce margin debit. I can sell the remaining after they become long term to pay-off the remaining margin. The CCs I am thinking would be deep OTM to minimize risk of being called away.

Can anyone tell us if there is a fatal flaw in this plan?
 

EV forever

Supporting Member
Supporting Member
Apr 23, 2016
737
5,482
Irvine, CA
I believe even without margin they would put the shares in your account and you would owe a lot of cash on Monday. So you have some risk that the price could drop
a lot Monday premarket before you can sell your shares to pay off your balance.

Those of you familiar with this type of situation - any idea how long Fidelity will give me to liquidate these and pay off the negative balance? I realize this is broker specific as well as account value dependent, but trying to get a ballpark estimate. The negative balance is about 10% the value of that particular account - which is mostly all TSLA.
 

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