trading

[adiggs]

Holding OTM options is just too stressful.

Even though I think I successfully caught the bottom of the market yesterday when clearing out my 12/18 and 12/24 long calls, I immediately felt a weight off my shoulders that I didn't really realize was there. Very happy I did that, even if I'd be making money this morning from those positions.

I still have a reasonably large January long call position that will do really well on a meltup (I like that term), so I still have some leveraged exposure to the inclusion event.


I have some similar concerns about how covered calls might perform until after this inclusion event is done and the share price is settled. Rather than wait though, as it seems like I always have a reason to keep waiting, I sold some Feb 1100 calls. My feeling is that 1100+ at expiration in Feb is a non-starter. We might see a spike that high in the next couple of weeks, but I don't see that as a trading / fundamentals driven share price in the next 2 months. The premium wasn't particularly high, but it was enough to make the trade worthwhile to me.

 

[adiggs]

IV Crush after 12/18?

Should one expect a significant IV drop after the event 12/18?

@FrankSG @adiggs

As with FrankSG, I'm pretty sure there are many with more IV knowledge than I. Acquire big hunk of salt, begin chewing, and ....


My guess is that IV will be flat to down, with a bias to down, after 12/18. My rationale is pretty simple - I see high IV as representing a lack of information in the market, around an event that is expected to be significant. That lack of information leads to positions with at least some conviction on both sides.

Once AH trading begins on 12/18, we'll have an idea of how successful the index funds were at acquiring the shares they need to be fully positions for TSLA trading on Monday open. However it turns out, that information will now be in the market, and the IV can drop as a result (information received / uncertainty resolved). The uncertainty won't be fully resolved, but a big chunk of that uncertainty we have today; we won't have that Friday AH (and maybe even during that 10 minutes of the Cross on Friday late).

 

[juanmedina]

Even though I think I successfully caught the bottom of the market yesterday when clearing out my 12/18 and 12/24 long calls, I immediately felt a weight off my shoulders that I didn't really realize was there. Very happy I did that, even if I'd be making money this morning from those positions.

I still have a reasonably large January long call position that will do really well on a meltup (I like that term), so I still have some leveraged exposure to the inclusion event.


I have some similar concerns about how covered calls might perform until after this inclusion event is done and the share price is settled. Rather than wait though, as it seems like I always have a reason to keep waiting, I sold some Feb 1100 calls. My feeling is that 1100+ at expiration in Feb is a non-starter. We might see a spike that high in the next couple of weeks, but I don't see that as a trading / fundamentals driven share price in the next 2 months. The premium wasn't particularly high, but it was enough to make the trade worthwhile to me.

I agree selling option is so much enjoyable compared to buying options.

OT. I am thinking about moving my accounts from Vanguard to IBKR and I am wondering if I will be able to transfer all my positions seamlessly. I have some call options that I bought and some that I sold and I have 3 accounts a traditional IRA, Roth IRA and a joint brokerage account. I tried contacting them over the phone but it seems that they are really busy lol. If anyone knows please let me know. Thanks.

 

[ggr]

I agree selling option is so much enjoyable compared to buying options.

OT. I am thinking about moving my accounts from Vanguard to IBKR and I am wondering if I will be able to transfer all my positions seamlessly. I have some call options that I bought and some that I sold and I have 3 accounts a traditional IRA, Roth IRA and a joint brokerage account. I tried contacting them over the phone but it seems that they are really busy lol. If anyone knows please let me know. Thanks.

Anecdotally, IBKR has bad customer service on phone calls. I only have a small account with them, and not for long, so I have never had to call them. My feeling is that anything you can do online works well. The other hint I can give you is that all brokerages hate to lose capital invested with them, and often will charge you to move securities out, so it is usually better to ask the receiving broker to "pull". You probably have to open three accounts at IBKR, then do the online forms to pull from Vanguard.

 

[vikings123]

I’m not expecting an orderly exchange of shares on Friday due to the size of the trades. You have to believe there is going to be a lot of volatility in AH Friday and going into next week. There is no way in my mind that this will be a non-event.

So my vote is IV goes up considerably or worst case stays at these levels.

edit: I hope it goes low like pre S&P inclusion announcement so I can load up on LEAPS again.

For those tracking IV increased in the last couple of hours. I would expect IV to increase into tomorrow’s trading. It might be a good spot to sell calls. Not advice

 

[EV forever]

Thanks for putting these together. As I have posted here before, I have converted a portion of my shares to call options immediately after the S&P announcement. The most difficult decision with call options is when is the best time to sell them. Since no one can really predict - the worksheet with the guesses from the group here is probably the best guesstimate for now.

So, in general, it appears that most folks predict that the peak is likely to be week of 12/21. Well, thankfully more than half of my calls are January 15 expiration date. But I do have some with 12/18 and 12/24 dates as well.

I am posting my plans here, hoping that others will post their thoughts as well.

For now, here is what I am planning to do (situation is fluid, may change my plans at any time)

• 12/18 expiration options have a strike price of 840 - seems unlikely to get there by Friday and these calls will lose premium value very fast. Well, I am fine with letting them expire worthless - no point in selling them at a loss now, might as well hope for a squeeze on 12/18. So, hold till expiration.
• For 12/24, I have some at 555 and 600 strike prices, and some at 690 and 750.
  • The ITM 555 and 600 strike options I will keep till 12/21 or 12/22 and then sell. These are unlikely to become worthless unless we suddenly see a crash.
  • The OTM 690 and 750 strike options, I will try to sell half of them week of 12/18 to recover cost. The rest will hold till 12/21 or 12/22
  • I would prefer to have all of these sold by 12/22 - will not wait till expiration
• For the few options I have for 12/31 and 01/08 - the strategy will be same as above. Sell them off by 12/22
• After these, I have a boatload of options for the 01/15 expiration date. Not sure how to handle these - right now my thought is that if we see a crazy run-up over the next 2 weeks, I will sell these off by 12/22 as well since there may be some correction likely afterwards.

All of these are in a IRA, so not concerned about taxes.

Some of the quotes from others in the main thread regarding expected share price are listed below.

Good luck to everyone here for the next few weeks! Whatever happens, this has been a ride beyond anything I could have ever imagined!

Edit: adding a screenshot of my option prices
View attachment 617475

Quick update:

I decided to roll out the 24Dec 750 calls out by a week to 31Dec 750. Sold a small portion for the additional $4/option required to do this. Having an extra week prior to expiration feels safer, just in case there is no run up next week, these will still hold some value then I think.

 

[corduroy]

This has not aged well. My Dec 31st calls went from +150% Monday to -40% now. The Jan 15ths are still holding up OK. Was seriously thinking of selling everything this morning, for a net profit using the Jan 15s to cover the loss on the Dec 31s. But at this point I am just going to ride it out until Friday and see what happens.

What a difference a day makes. Glad I held out, those problem Dec 31s went from -45% yesterday to +5% at the end of today. I happily closed them out right before the bell. I might be giving up gains if we keep going up tomorrow, but I will sleep a lot better tonight.

Now I'm just holding my comfortable Jan 15s for the rest of the S&P inclusion.

 

[adiggs]

What a difference a day makes. Glad I held out, those problem Dec 31s went from -45% yesterday to +5% at the end of today. I happily closed them out right before the bell. I might be giving up gains if we keep going up tomorrow, but I will sleep a lot better tonight.

Now I'm just holding my comfortable Jan 15s for the rest of the S&P inclusion.

Funny how that works; I am exactly the same (minus recovering badly losing positions by waiting an extra day). I missed out on the run today by closing yesterday. And I don't feel dismay at missing out on today's move - I am instead much more comfortable holding the Jan '21s and not bothering with whether the big impact is Friday, first 3 trading days next week, a spike and drop, a swell, or even right back down.

 

[Ocelot]

I do not hold many calls...about 5 per cent of my Tesla. Sold a third of them, at the low this AM . Still up overall.,,but if things go awry tomorrow will def be in the negative.

retrospective analysis. Would of set a goal of 3x and sold all when that happened (last time at 650). Would of bought way more day after inclusion announcement but was spooked by the no price movement action.

 

[TheTalkingMule]

What a difference a day makes. Glad I held out, those problem Dec 31s went from -45% yesterday to +5% at the end of today. I happily closed them out right before the bell. I might be giving up gains if we keep going up tomorrow, but I will sleep a lot better tonight.

Now I'm just holding my comfortable Jan 15s for the rest of the S&P inclusion.

Speaking perhaps a bit candidly......why buy options to lever up on inclusion and then sell them before any real buying even happens? Certainly those Dec31's have a more than decent chance of appreciating quite a by EOD Monday?

I don't even think we'll need a spike for that to be the case. Run up to $685 SP and a big boost in IV will add a lot to options pricing.

 

[ammulder]

Run up to $685 SP and a big boost in IV will add a lot to options pricing.

I’m still holding my calls, but... I used to be pretty sure there would be a big run up in IV and the last few days have solidly disabused me of that. Now I have little confidence in an IV boost. But I’ll sure appreciate one if it comes.

 

[Criscmt]

Moving from options to stock in the coming days: Through Cash Secured Puts Vs Buying the stock now?
I have several LEAPS (expiring 2021, 2022, 2023) and a few Jan-2021 options
Of course, I have gains on these. I would like to move all the money/value into the common stock.

Here's my plan

• Slowly cash out the options (sell the options at same expiry and next/higher strike). I will pick the timing, pace of this "cashing out" based on how next 1-4 weeks turn out. For example, if Price is stable post inclusion through pre P&D, I might wait for P&D and might also wait through Q1 earnings.
• Two parts to the acquisition of stock
  • Exercising my long calls: I would like to exercise the calls which expire in 2021 (June, Sep). I plan to keep some cash to be able to buy back calls I sell against these long calls expiring in 2021. The buyback hopefully when the value on these goes down, might not happen and I might have to buy back at a loss. I plan to exercise the long calls even if it means going into significant margin on the day these expire.
  • For the remaining cash, I considered either
    • (a) Buy stock + Sell way OTM calls: Buy stock right now and sell way OTM calls, perhaps June-2021 C1200. or
    • (b) Cash secured puts: sell cash secured puts in a way with high chance of getting assigned. Perhaps Mar-2021 C700, the premium now is $125. I will effectively loose on this trade if the SP at expiry (Mar-2021) is more than $825 (700+125). Loose as in effectively getting less shares than I would get if I go with 'a', and I also will have tax I will owe on the premium I collect. I don't mind the case of SP being below $575 (700-125) and getting assigned at $700 price.

@FrankSG You were planning to sell way OTM calls. What strikes and expiry are in your consideration at this time?

@ALL,
Thoughts, please?
@adiggs

 

[Bet TSLA]

I sold 40 12/31 690 calls today for a small profit. I bought them on 11/26 with TSLA at 584.50. The erosion in time value is a killer for sure. I still have 20 that I bought on 11/30 with TSLA at 564.50. I'd sure like to see the fat profits that out of the money calls can get, but I've decided to gamble a bit less money.

I still have 50 12/31 590 calls that I bought when TSLA was at 546.50. Breakeven is 625.50, so they'll go red or worthless in any real downdraft.

Fear, greed, fear, greed, ... entertainment!

 

[Criscmt]

Funny how that works; I am exactly the same (minus recovering badly losing positions by waiting an extra day). I missed out on the run today by closing yesterday. And I don't feel dismay at missing out on today's move - I am instead much more comfortable holding the Jan '21s and not bothering with whether the big impact is Friday, first 3 trading days next week, a spike and drop, a swell, or even right back down.

Do you mind sharing the strikes of the Jan-2021 calls you are holding, and the premium you paid?
I have a bunch of Jan-2021 C500 C600 C700. The C700 is at now at no loss no gain. C600 and C500 are up 30-45% profits.

 

[FrankSG]

@FrankSG You were planning to sell way OTM calls. What strikes and expiry are in your consideration at this time?

Stock would have to go to at least $800 before I'll consider, and I don't think I will tomorrow. I think it's more likely than not that the stock will run-up further next week. If it's at least $800, but I'd really prefer something more like $1,000, I'll consider selling $1,600 - $2,000 covered calls expiring Sep'21 on 10-40% of my position. It'll all depend on a large number of factors, not least of which the premium for the calls at that point in time.

If stock is under $800, I'm definitely not selling covered calls. I also personally don't think $700 Mar'21 PUT have a very high chance of being assigned. Even $700 31Dec'20, I think are more likely than not to not get assigned.

 

[FrankSG]

@saniflash

I went to bed around 2:15PM, but I'm very curious if you observed the closing cross today, and what you saw in terms of an imbalance, if any.

 

[ReddyLeaf]

Not that I expect any of this to pass, but just as insurance in case I’m not able to trade tomorrow, I put in GTC sell order at $1188 for odd shares in all of my accounts (to get my holdings to 100 share increments for future CC sales). Looking forward to those orders filling at 15:59 tomorrow. Good luck to all.

 

[Criscmt]

Stock would have to go to at least $800 before I'll consider, and I don't think I will tomorrow. I think it's more likely than not that the stock will run-up further next week. If it's at least $800, but I'd really prefer something more like $1,000, I'll consider selling $1,600 - $2,000 covered calls expiring Sep'21 on 10-40% of my position. It'll all depend on a large number of factors, not least of which the premium for the calls at that point in time.

If stock is under $800, I'm definitely not selling covered calls. I also personally don't think $700 Mar'21 have a very high chance of being assigned. Even $700 31Dec'20, I think are more likely than not to not get assigned.

Thanks @FrankSG
On the SP reaching 800-1000 at peak, do you see the odds the same now as when you composed your blog, part-2? Similarly where do you see the SP settling, still at $600-$800?
If not, can you quantize the changes in your expectations?

Is SP at $800 still the decision point for converting your ITM LEAPS into shares?

Is FSD the reason to have $1600-$2000 by Sep-21 as the target for potential CC sale, consideration?

 

[EV forever]

Speaking perhaps a bit candidly......why buy options to lever up on inclusion and then sell them before any real buying even happens? Certainly those Dec31's have a more than decent chance of appreciating quite a by EOD Monday?

I don't even think we'll need a spike for that to be the case. Run up to $685 SP and a big boost in IV will add a lot to options pricing.

It comes down to a person's comfort level - although I do agree with your statement - since these options were clearly bought as an inclusion play, why sell today? But it that helps the owner sleep better - I guess it is worth it.

In my case, I am quite comfortable holding for some more time. I have 840s for tomorrow, which will likely expire worthless, so it will be a loss of about 15K. These were bought with the expectation that buying would start early this week - that clearly did not happen. I am fine with losing these and will hold till the bitter end tomorrow.

It looks to be that this entire S&P buying thing is also on Elon time - just a little bit later than expected

So I decided to play it safe and rolled out my OTM Dec 24 options to Dec 31 to buy an extra week. The ITM and ATM ones are looking fine at 300% - so those I will keep till next week.

 

[FrankSG]

Thanks @FrankSG
On the SP reaching 800-1000 at peak, do you see the odds the same now as when you composed your blog, part-2? Similarly where do you see the SP settling, still at $600-$800?
If not, can you quantize the changes in your expectations?

Is SP at $800 still the decision point for converting your ITM LEAPS into shares?

Is FSD the reason to have $1600-$2000 by Sep-21 as the target for potential CC sale, consideration?

What I previously stated was that I thought closer to $800 is more likely than closer to $600 (so $700+ more likely than $700-), and that there's a fair possibility of higher spikes, as well as higher settlement.

I think I actually feel more bullish now than when I wrote the post. I think settlement above $700 instead of below it is now not just more likely, but quite a bit more likely. Probably more like 2-to-1 rather than 60/40 or so.

It's hard to say when I'll sell which options. I've been going on a day-by-day basis and constantly adjusting my plan, and I might have to go hour-by-hour, or even minute-by-minute if things get volatile. With regards to my DITM leaps, I think I'll almost certainly convert some before $750, and also almost certainly convert all before $850, perhaps before $800.

This is mostly a factor of them being so deep ITM, and having little upside left. Converting these (which make up a v large % of my portfolio) to shares is also a good way for me to limit downside, and make me a little more comfortable holding onto my short-term options longer. It's very unlikely we'll see a drop so large that my DITM leaps get into real danger (<$400), but I'll still feel a lot better about letting short-term plays run (if I so choose) after those DITM leaps have been converted to shares.