Discussion ***Official*** 2020 Stock Market Thread

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FelixDeCat

Lifer
Aug 4, 2000
29,307
2,099
126
^I think your friend is right, but the bottom line is you always have to make the call and be happy with the price you agree to deliver shares.

It hurts to have to buy back calls when the shares rocket past your strike, so maybe a ladder approach might work (some at one price, some higher, some under no contract).

But again, it's your call.
 

dasherHampton

Platinum Member
Jan 19, 2018
2,543
488
96
Yeah, it stings to buy back options but you have to learn to do it. I had to buy back 10 1/15 17/5 IQ puts at an $800 loss today. I can't take on those shares right now.

Whoever was holding my STX 1/15 calls did me a huge favor and exercised them today. Now I don't have to sit there and look at them anymore.
 

ponyo

Lifer
Feb 14, 2002
19,689
2,811
126
Q for all the options experts here, now that options for ABNB have started trading (https://seekingalpha.com/news/3644494-options-trading-to-start-on-airbnb), whats the best way for me to generate income from these given:
  • Large short interest
  • Small float
  • High volatility
  • I don't plan to sell at all
Options newbie here. Is there a primer or maybe a r/WSB post I should read?

Here's what my friend advised. Thoughts?
Good advice from your friend. You can google "covered calls" but your friend basically covered it. The thing that's going to make it difficult for you is your plan not to sell at all. That's going to limit you to mainly selling really far OTM calls and those of course have lower premium since the chance of it hitting are very low. What sucks about those is all it takes is one crazy price surge to wipe out month or two of solid gains from selling weekly or monthly calls. And since you don't want to sell your shares, you will have to either roll out the calls or buy it back at higher prices. I've been caught in crazy price surge with TSLA couple of times this year. It's not fun and sometimes it can be downright scary. Back in July, I lost over $100k from TSLA covered calls while trying to make $4k. lol. I thought that was free money until TSLA moved like $450 points in span of 2 days. I could've let them take my shares but I didn't want to pay short term taxes on my shares. The smarter play was to roll it out the option but I panicked. First time you experience the crazy price surge, you'll understand the term picking up pennies front of steamroller. That said, picking up pennies can be pretty lucrative. I made couple hundred thousand dollars extra income from selling options this year. That's lot of pennies I picked up even though I got run over couple of times. And I wasn't even that aggressive with my option selling. Option is also why I don't chase dividend stocks. I can make way more selling weekly or monthly options than holding any dividend stock. Option is the new dividend.

Any options you short is considered short term. Even leaps you short. So any profit you generate will be taxed at your income rate. So take that into consideration.
 

ultimatebob

Lifer
Jul 1, 2001
25,135
2,445
126
Yeah, I've been looking on Zillow and house prices in Austin are not cheap. And $9k in property tax sounds about right for $500k house. But $9k is absolute bargain compared to the state taxes some of us pay. I would trade and pay $9k in property tax in heartbeat if it meant I didn't have to pay state income tax. You have no idea what some of us pay in state income taxes.

Austin is insanely hot during summer. Like, unbearably hot.
 

FelixDeCat

Lifer
Aug 4, 2000
29,307
2,099
126
Austin is insanely hot during summer. Like, unbearably hot.

I've lived in DFW forever. Our heat keeps the population in check (or at least it used to). I remember the good old days when the total population of the metroplex was reasonable. People have been moving here for a long time.

However some did not count on an annual tradition we enjoy in Texas, besides the erratic weather, tornadoes and billion dollar hail storms that keep our home/auto insurance rates among the highest in the nation ....and that is between 30 to 90 days (or more, sometimes consecutive days) of temps over 100F with high humidity. Your skin starts to burn the minute you step outside during the worst of it.
 
Last edited:

echo4747

Golden Member
Jun 22, 2005
1,978
156
106
How exactly must the S&P index funds purchase Tesla stock? I know Dec 21 will shortly be here. Must it all be purchased on that day or can it be purchased in bits and pieces days or weeks before? Is there some type of penalty if the funds add the stock after Dec21?
 

FelixDeCat

Lifer
Aug 4, 2000
29,307
2,099
126
Bought 400 shares BLNK. Controversial but seems to keep growing. Options are beyond absurd due to extreme intraday volatility.

Didn't think it would keep going up so fast. Took the money and ran.

People are attracted to and buy growth, but the shorts arguments are good.
 

dasherHampton

Platinum Member
Jan 19, 2018
2,543
488
96
VEON has been interesting. I bought 1000 shares at $1.49 mostly out of curiosity.

It gyrated wildly between $1.47 and $1.50 for a while, never breaking either level. I was starting to think "Is this a high frequency trading based money laundering scam?"

But since it's broken higher, getting into the $1.60-$1.70 range. The real question is: Will they actually pay out 20% like they promise? If they do I might slowly add some more.
 

ponyo

Lifer
Feb 14, 2002
19,689
2,811
126
Tomorrow is the D-Day for Tesla. At the end of trading day tomorrow, TSLA officially joins the S&P 500 club. I dreamed about TSLA S&P 500 inclusion for over a year now. I can't believe it's finally happening tomorrow. I'm excited, nervous, and scared at the same time. So far, it's following Yahoo S&P 500 inclusion pattern from 1999. YHOO was added to the S&P 500 on Dec 7, 1999.

 

ultimatebob

Lifer
Jul 1, 2001
25,135
2,445
126
Tomorrow is the D-Day for Tesla. At the end of trading day tomorrow, TSLA officially joins the S&P 500 club. I dreamed about TSLA S&P 500 inclusion for over a year now. I can't believe it's finally happening tomorrow. I'm excited, nervous, and scared at the same time. So far, it's following Yahoo S&P 500 inclusion pattern from 1999. YHOO was added to the S&P 500 on Dec 7, 1999.


It's funny that you used Yahoo as an example, a company that got eaten alive by the .com bust of 2000, NEVER fully recovered, and then got bought by Verizon for pennies on the dollar.

Does this mean that you think that Tesla is going to peak in a year and then go bust?
 

ponyo

Lifer
Feb 14, 2002
19,689
2,811
126
It's funny that you used Yahoo as an example, a company that got eaten alive by the .com bust of 2000, NEVER fully recovered, and then got bought by Verizon for pennies on the dollar.

Does this mean that you think that Tesla is going to peak in a year and then go bust?
Just think how much money you would have if you weren't so negative all the time.
 
Reactions: zinfamous

FelixDeCat

Lifer
Aug 4, 2000
29,307
2,099
126
The cool thing about requiring all brokers to have an S&P stock in inventory is they will all have ample supply for shorting. This is really great if you want to short 100 to 1000+ shares INTRADAY, make a quick buck and GTFO.

None of this bullchit "borrow fees", higher margin requirements, etc. Even a 12 year old will be able to short TSLA after Friday and nobody will give a chip. And there will be no special requirements or costs either.

What pisses me off is lots of brokers only allow you to short S&P stocks liberally with no extra costs or restrictions.

You want to short that hot bubble stock that is up a billion percent in 48 hours? How about something more reasonable like an old company in new trouble. Guess what? NO!!

Want to short Google, NFLX, Amazon or Apple? SURE!! Go right ahead!! We got bazillions of shares free to borrow as long as you want them.
 

FelixDeCat

Lifer
Aug 4, 2000
29,307
2,099
126
If you are old enough to remember what it was like trading prior to about 2010, you could short about any stock you wanted intraday. You could short sell whatever the hell you wanted, from the most obscure thinly traded stock to the biggest names. There were no extra costs or restrictions (for stocks under $5 you needed $5 per share in cash per share shorted).

The reason why things were so liberal back then was they were not strictly enforcing the rules requiring brokers to locate shares prior to allowing the short sale. So basically the broker would create a marker and sell them naked.

Then came Overstock.com and the CEO's war on naked shorting. Thanks to him and many others, the SEC began a crackdown and changed the rules requiring the broker to have the stock in actual inventory or have a source to borrow PRIOR to allowing the short sale.

It was a lot easier to daytrade back then. I remember trading Fremont Financial back around 2007 during the beginning of the Financial Crises. I would borrow and short 10,000 shares of Fremont at $8, the stock would fall to $7.65 intraday, I would put in a bid a few cents higher and walk away with a few grand. Easy.

Today the only way to short is to buy puts - and they are not cheap. The best names are expensive as cluck as the puts for sale gobble up most of the profit. If you are lucky you make a nickel, and you have to risk lots and lots of money.

The game was rigged in favor of market makers, since they are the only ones allowed to naked short to make "a bonafide market". They can do pretty much whatever the cluck they want. Create phantom shares, sell more than 100% of the float (yes there is lots of proof of this), etc.
 

dasherHampton

Platinum Member
Jan 19, 2018
2,543
488
96
I still trade SRNE, Felix. lol I'm not going to let you forget it.

I sold another 10 $3 puts for July for like $600 a few days ago. It's the gift that keeps on giving.
 
Reactions: FelixDeCat

ponyo

Lifer
Feb 14, 2002
19,689
2,811
126
Today is going to be super wild day. Today is quadruple witching and TSLA S&P 500 inclusion day. So prepare for super volatile day and weird price swings and price closings. Like I said, I had this date circled and been looking forward to today for very long time. I've gone through in my head so many different scenarios and what I should do. The most likely scenario is I will likely sell all my TSLA shares and options at the close of today. I could change my mind depending on how TSLA trades and closes but we should see peak volume and prices in the last 5 minutes before the close today when all the S&P funds start buying TSLA at the close. That's when I will attempt to sell and close out all my TSLA shares and options.

I will pay my 37% federal and 6% state taxes on the gains since most of it is short term which is taxed at my normal income tax rate. Taxes are why I struggled so much with this decision. Smart play is not to sell for tax reason but I don't trust myself I can hold until these become long term gain. And I think the easy meat and easy money from TSLA will have been made from this S&P 500 inclusion. I expect short term price dip on TSLA starting Monday morning but I expect the dip to be temporary and last couple days at most. I could see TSLA falling 10-20% very quickly before rebounding and possibly heading to new highs at the end of this year or early next year. I will attempt to trade and play this dip and bounce to offset some of the money I'm losing to taxes. I still firmly believe TSLA will achieve multi trillion dollar market cap valuation in the next 10-20 years. But I have to think about my family and our short term needs. I will have FU money and complete financial independence if I cash in all my TSLA shares and options. So while I could make more just by holding TSLA until the company fulfills its mission, the safer and maybe smarter play is to cash in my chips and take my winnings now. My plan even a year ago was to sell everything on the S&P 500 inclusion day.

There's not a company I believe in more than Tesla. I think they have the best future and will become the most expensive company in the world surpassing Apple in the next decade. So I will always be involved with Tesla stock and options in some form or another. But I will be more of a trader than investor in TSLA. I went all in on TSLA when the company had also bet everything and went all in on the Model 3. But just as Tesla no longer needs to all in anymore on future projects, I no longer need to be all in on volatile stock like TSLA. There will be plenty of chances and swings in TSLA for smart and lucky traders to make big money still. But it's just time for me to switch to capital preservation mode vs YOLO mode. As they say, you only need to become rich once. I owe it all to Elon Musk and Tesla for giving my family our dream of financial independence and getting us out of the rat race. Thanks for everything Elon! I'll see you on Mars.
 
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ponyo

Lifer
Feb 14, 2002
19,689
2,811
126
Trimmed 20% of my TSLA Jan 15 $400, $500, and $700 calls into this price surge this morning.
 

ponyo

Lifer
Feb 14, 2002
19,689
2,811
126
Holy! That TSLA finish was insane! I got screwed on my remaining Jan 15 $400, $500, $700 calls waiting to sell at the end of the day. I still made money on them but not as much as if I had sold them all during the day. MM really did great job screwing speculative call option holders like myself by dropping TSLA price really low into the finish. People who held stock were fine because after the market closed, TSLA price shot back up to $680. But options stop trading at 4pm and there's no afterhour trading for options. But because I bought all those options strictly for the S&P trade, discipline required me to close out the options at the end of the day regardless of the price. Extremely smart move by the MM. Something I will remember for the future and good lesson to close out stuff early when I can on my terms. Not when I have to.

And I forgot I had some Jan 15 $500 calls on one of my other account. So those didn't get sold. Oh well. I was trying to juggle and close stuff on 4 different brokerage accounts and forgot about that account.

I didn't sell everything. I kept 1,000 shares of TSLA and 5 of the TSLA Jan 15 $60 calls. I decided at 3 pm today I was going to keep 1,000 shares of TSLA no matter what. I felt like I owe Elon at least that.
 

Artorias

Platinum Member
Feb 8, 2014
2,134
1,411
136
^^^ATOT Baller Lol.

Here I am contemplating whether I should buy 10 shares of Tesla.
 

FelixDeCat

Lifer
Aug 4, 2000
29,307
2,099
126
On 2/20/2020 I posted this......

TSLA could be $3500 this year. A cult stock can be any price. No reason to sell now.


..I actually had no idea TSLA would be $3,500 by YEAR END!! (split adjusted).

On 2/20/20, the price of TSLA was $895 (split adjusted), dipped to $361 during the depths of the panic COVID selloffs, and recovered to unthinkable highs, all in one year.

Incredible.
 
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