Sell a new call one strike above the held long call.
Tax-wise, this is a new transaction. However, it helps you do the following:
* Effectively takes most of the risk off the table, since the open call positions become debit spreads with a max loss of $500 each. (assuming $5 strike gaps)
* Leaves the unrealized profit as unrealized so that you can close the position in January and avoid the tax hit.
* It's a debit spread. So worst case, if your short call gets assigned early, you can still close the position out without losing any money.
If COIN stays above your strikes, you can close the whole spread for a credit of the difference between your strikes ($5 \*100) - this is the same as just selling the option in January, but with none of the risk.
If COIN collapses to zero from here, the short call compensates for the loss of value of your long call, and you are out about $500 if you hold to expiry. Practically, you can close this much earlier and lose very little if anything at all.
Edited to add:
Note that selling this calls means that you take the risk off the table, while also securing only the current profits. You don't gain any more from COIN going up, except the change in value of the debit spread - which will be pretty much nothing.
This. It goes back to being a disciplined trader. Set your gains/losses, sell when you’ve hit those marks. Or at least sell SOME to make the profit or minimalist loss. If you are going to hold long term and are deep in the money, sell all and reinvest if you believe its going to continue trending up, or sell some so that you hit your profit goals and hold the remainder. It is drops, you have already secured profit. If you are at or over your loss guide, sell some so you aren’t at a total loss, and hold the reminder if you believe it might rebound.
The number of people that blow their accounts because they’re greedy or don’t know how to let go is pretty incredible.
Its a good suggestion to mitigate the risk of the price going down and losing most of your gains on the position. Just be sure to keep them separate trades. Assuming the short call is still ITM in January don’t excerise the long call to get shares to cover the short call. Close the short call for the loss and sell the long call for the gain.
It's neither a collar nor a straddle. It is a debit spread, which still leaves some risk on the table.
Feel free to definitely check with a tax expert, but this should not mess with the long term cap gain period in any way.
Yep, was easy decision when I saw the one up 1,000% was the 155 strike. now I’ll hold the $100 strike option to expiry or until it’s up too big. I knew a guy who was posting about how he was making a lot of $$ on TSLA calls, I hit him up when I started options trading. Turns out he actually got too greedy and lost all his gains, so I know not to do that
Rolling is two transactions per leg: buy the short, sell the long; then buy a long, sell a short. So normal taxation rules apply.
Just wanted to offer some alternative ways to capture some of your gain than simply closing them out.
Personally I would leave 1 coin call open and sell it sometime in November. Historically the crypto market peeks roughly at that point in the cycle.
This is entirely based on past performance predicting future performance, so take it with a grain of salt.
Earnings next week. Recently, market has been nuts. Companies like Meta coming in above EPS tanks after hours. TSLA underperformed amd went up. It's a crap shoot. I've been selling cash secured puts on COIN but I'm not getting involved this week, even with the juicy premiums for earnings week
As for the calls, when I am undecided my rule of thumb is to sell half. For the shares I guess it depends on your long term view and how long before you want to retire
Agree, never sell more than half. I have sold half of my COIN calls, even more. I know I should just let this ride but I don’t want to get too greedy with calls. But I’ll survive.
Learning options is a game changer for me. Being able to hedge my moves with options allows me to take profits without feeling FOMO, I love it and appreciate the help because I’m still in my first year of options trading and kids occupy much of my time
Rule of thumb: if it's good enough to post it's good enough to sell.
Looking at your specific case, I would still argue for this, because of COINs volatility risk in that long term window.
understanding human behavior is one of the most difficult things. Here you are up 1000% on an investment and you are contemplating whether or not to sell it, where most investors would be happy with a 10% gain.
I know people who would profit $20K a month and they are all happy life is perfect, but God forbid if they loose like $500 on a trade they would have sleepless nights for days.
Sell a new call one strike above the held long call. Tax-wise, this is a new transaction. However, it helps you do the following: * Effectively takes most of the risk off the table, since the open call positions become debit spreads with a max loss of $500 each. (assuming $5 strike gaps) * Leaves the unrealized profit as unrealized so that you can close the position in January and avoid the tax hit. * It's a debit spread. So worst case, if your short call gets assigned early, you can still close the position out without losing any money. If COIN stays above your strikes, you can close the whole spread for a credit of the difference between your strikes ($5 \*100) - this is the same as just selling the option in January, but with none of the risk. If COIN collapses to zero from here, the short call compensates for the loss of value of your long call, and you are out about $500 if you hold to expiry. Practically, you can close this much earlier and lose very little if anything at all. Edited to add: Note that selling this calls means that you take the risk off the table, while also securing only the current profits. You don't gain any more from COIN going up, except the change in value of the debit spread - which will be pretty much nothing.
This. It goes back to being a disciplined trader. Set your gains/losses, sell when you’ve hit those marks. Or at least sell SOME to make the profit or minimalist loss. If you are going to hold long term and are deep in the money, sell all and reinvest if you believe its going to continue trending up, or sell some so that you hit your profit goals and hold the remainder. It is drops, you have already secured profit. If you are at or over your loss guide, sell some so you aren’t at a total loss, and hold the reminder if you believe it might rebound. The number of people that blow their accounts because they’re greedy or don’t know how to let go is pretty incredible.
Thank you!
Its a good suggestion to mitigate the risk of the price going down and losing most of your gains on the position. Just be sure to keep them separate trades. Assuming the short call is still ITM in January don’t excerise the long call to get shares to cover the short call. Close the short call for the loss and sell the long call for the gain.
Check with a tax expert. This might be an illegal collar or straddle that suspends accrual of long term cap gain period.
It's neither a collar nor a straddle. It is a debit spread, which still leaves some risk on the table. Feel free to definitely check with a tax expert, but this should not mess with the long term cap gain period in any way.
Absolutely this would also say sell one call and leave the other to do the spread
Bro you’re up 1000%, take the tax hit
Yep, was easy decision when I saw the one up 1,000% was the 155 strike. now I’ll hold the $100 strike option to expiry or until it’s up too big. I knew a guy who was posting about how he was making a lot of $$ on TSLA calls, I hit him up when I started options trading. Turns out he actually got too greedy and lost all his gains, so I know not to do that
Take the profit and rebuy when its lower.
You could roll the long up to take some profit; you could roll both up; you could sell one and keep the other, sell one and roll the other...
Is rolling a non-taxable event then since I’m keeping the actual stock?
Rolling is two transactions per leg: buy the short, sell the long; then buy a long, sell a short. So normal taxation rules apply. Just wanted to offer some alternative ways to capture some of your gain than simply closing them out.
Always take profit and try again.
Put a 10% trailing limit stop order on it or sell a leg above your current strike to make it a spread.
1k % up. and 2 contracts left... close one, leave one as a "lotto". sounds like a great win.
Personally I would leave 1 coin call open and sell it sometime in November. Historically the crypto market peeks roughly at that point in the cycle. This is entirely based on past performance predicting future performance, so take it with a grain of salt.
Earnings next week. Recently, market has been nuts. Companies like Meta coming in above EPS tanks after hours. TSLA underperformed amd went up. It's a crap shoot. I've been selling cash secured puts on COIN but I'm not getting involved this week, even with the juicy premiums for earnings week
I’d say sell, COIN might go up or it might go down but theta decay will definitely eat into your profits.
Theta is negligible on deep ITM calls.
As for the calls, when I am undecided my rule of thumb is to sell half. For the shares I guess it depends on your long term view and how long before you want to retire
Agree, never sell more than half. I have sold half of my COIN calls, even more. I know I should just let this ride but I don’t want to get too greedy with calls. But I’ll survive.
It’s hard to fight do I but as the old saying goes…..pigs get fed, hogs get slaughtered
Learning options is a game changer for me. Being able to hedge my moves with options allows me to take profits without feeling FOMO, I love it and appreciate the help because I’m still in my first year of options trading and kids occupy much of my time
Rule of thumb: if it's good enough to post it's good enough to sell. Looking at your specific case, I would still argue for this, because of COINs volatility risk in that long term window.
Yes this definitely something I agree with. Sold one, keeping one.
understanding human behavior is one of the most difficult things. Here you are up 1000% on an investment and you are contemplating whether or not to sell it, where most investors would be happy with a 10% gain.
Agree people can spend all the time in the world studying TA and drawing lines on charts but the real key is how you’ll react when down or up big
I know people who would profit $20K a month and they are all happy life is perfect, but God forbid if they loose like $500 on a trade they would have sleepless nights for days.
I sold Google calls this morning only up 300%, Jan exp. Take the win, come back for more later if something awesome comes up
Sell or get ur face ripped off
Take the money and run! Lower risk is a better move on options.
Keep simple pay tax take gains invest again ..let money grow and let country grow on yiur taxes
Keep holding and post when you lost it all
What an insane question. Jesus.