Right method to off-load NFLX stock options

[beerntrading]

After reading more about collar and calling my broker, the following seems to be my best option:

Exercise&Sell enough options to Exercise&hold shares in the multiple of hundreds. And then write coveredCall and buy protective puts (which is what I understand collar is).

No, get level 3 with etrade and do it without the taxable event on the exercise.

Not sure if there's legal prohibitions against it, but with a broker assisted trade, they might allow this position without extending you the higher options trading levels.

 

[beerntrading]

Any thoughts? Good, bad? Any right strike price idea for the call and put side or What do I need to read/listen to come up with that price. Good thing is that my position size and timing is pretty much decided.

And sorry...spamming your thread like crazy. What are you willing to lose (per 100 shares) on this position? You can keep a substantial amount of gain potential while reigning in your risk a lot.

 

[simpleThought]

And one final thought, you'll get good options knowledge here, but this forum isn't an ideal venue to ask tax and long term investing questions. I'd search the likes of motley fool for an off-the-shelf answer on this that will be more directed towards the tax implications. This is not an uncommon situation, and there's a lot of sources for reputable tax and investing advice.

 

[simpleThought]

Thank you, I will check that out as well.

No, get level 3 with etrade and do it without the taxable event on the exercise.

Not sure if there's legal prohibitions against it, but with a broker assisted trade, they might allow this position without extending you the higher options trading levels.

I have level 3. Doing it without the taxable event seems like an attractive option. Let me check with them.

 

[simpleThought]

And sorry...spamming your thread like crazy. What are you willing to lose (per 100 shares) on this position? You can keep a substantial amount of gain potential while reigning in your risk a lot.

I will have to let go of at least 150 options to keep an additional 100 shares. Yes, if I can keep them all, that seems like the best option. I am still reading your reply, some of it is my knowledge gap.

 

[ironchef]

After reading more about collar and calling my broker, the following seems to be my best option:

Exercise&Sell enough options to Exercise&hold shares in the multiple of hundreds. And then write coveredCall and buy protective puts (which is what I understand collar is).

The brokerage that handles your stock options may allow you to sell naked calls and buy a put (collar) using your vested options as collateral. It is worth asking.

 

[simpleThought]

The brokerage that handles your stock options may allow you to sell naked calls and buy a put (collar) using your vested options as collateral. It is worth asking.

That would have been the best method. But they don't allow that. The treatment on employee stock options is that it is coupon to exercise/sell or exercise/hold. Nothing more.

 

[ironchef]

That would have been the best method. But they don't allow that. The treatment on employee stock options is that it is coupon to exercise/sell or exercise/hold. Nothing more.

Can your bank or any financial institution loan you funds using those coupons as collateral? Then you can use the funds to buy the underlying then you can collar those.

 

[simpleThought]

Can your bank or any financial institution loan you funds using those coupons as collateral? Then you can use the funds to buy the underlying then you can collar those.

Good thinking @ironchef . Let me call my banks.

 

[simpleThought]

Just to make it educational for anyone reading this:

I called eTrade and looks like my options on NFLX options are limited. Writing naked calls (which will lock up cash purchasing power and hence a 'no' from me) and exercising and holding by paying for the tax/price are two best options. Not impressive options. I need to play with put spreads and put combinations to protect and find a sweet spot I am comfortable with (to support that liquidity, I may sell some as I am doing this year anyway to a certain extent). I really appreciate all of you guys including @ironchef and @beerntrading explaining the details.

And selling to cover enough to own some shares where I can write collar in another possibility.

And I am exploring loaning from my banks for the 'collar' option Of course, the interest rate might play a role, and may be prohibitive in the end, but I want to make it educational for me as well.