15 sep
friends, this is a bit longer than multiple tweets so...
Started the day with long 15 leaps ranging from Jan 2022 out to Jun2023, from 650 strike up to 750 strike. to go with those are 13lot short calls 780 Oct 08 strike, one 765 Oct08 and one weekly 755.
Although im comfortable with my long thesis my account balance after adding leap 15 is low enough i cant do much else right now outside of some spreads... Put selling is my top go to trade and i prefer to do the put selling on something im already long. ie Tesla. , point being not enough cash in account to do that.
A smaller part of todays thought process is that if market does turn lower (what that really means for me is Tesla since im super overweight on that stock) , that i dont have anything to put to work. big down days are ideal to add a Leap, do a risk reversal (sell put, buy call) , or just outright Put sales.. i could put a couple weeks together of added short call premium but that doesnt help me now.
An additional item to consider is taxes.. of those 15 Leaps, three of them were purchased in april about when stock was 702 according to my notes. they are the Jan2022 710 strikes.. you might see where im going... me along with many expected tesla to continue an upward move all year and thus come opex time (jan2022) those Leaps are in the money and profitable.. such as stock is at 900-1000. what you are fighting all year is time decay against you just like the time decay works for you on the short calls. so you need that leap to gain in value just enough to offset the time decay.. long story short , at some point im going to have to do something with my Jan2022 Leaps. converting into stock has never been something ive wanted so take that off the table. if i had that much cash to begin with i would just be doing stock buy writes. As of today those Jan 710 leaps still have $6000 of time decay left (against me). Although since purchase my short call premium has been in excess of the Leap time decay im working against my own leap the closer to Jan opex approaches
so it was either best case take profits in Jan or roll out another year or two, maybe have to throw some more cash into it for a roll. Bottom line the Leap is a mark to market loss right now. i can use those losses against my gains for taxes. ive had another pretty good year with tesla so need something to help offset some gains.
so combine all that together... the lack of flexibility to do any other significant trades (short put selling / adding a Leap on a huge down move, etc) and being able to get a tax benefit. Heres what i did:
-the weekly 755 i sold yesterday i bought back today for about $50 loss (that frees up one uncovered Leap)
-the Oct08 765 short call, bought that back at about 30% gain from entry (frees up another leap)
So that leaves the 13lot 780 short calls intact Oct08 opex
-then i sold 2 of the jan2022 710 calls at about $10100 ish each
I did buy writes recently, both were profitable at eventual exit.. so for remainder of week bought 100 shares common and sold 740 short call against at $15ish.. net net if stock is above 740 friday the stock is called away essentially at 755ish for near $400 for sitting on hands.
having that cash on hand if needed on a down move i can buy Leaps for 2023 or do short put selling. doing buy writes is obviously simpler especially if youre not worried about having shares called away and is easier to manage but the money maker is having multiple short calls paying me.
seems like we are overdue for a pullback, either market or tesla specific so i need to be more flexible but still have exposure. next month or two will be doing something similar to the remainder of my Jan2022 leaps.
