I spend most of the trading session on 16 April 24 trying to fix my liquidity situation, which is dropping further after Tesla’s continual drop in share price.
As I own 710 Tesla shares, every USD1 decline in share price means my excess liquidity takes a hit of UD710. If Tesla drops by USD10, then my excess liquidity drops by USD7.1k. Also, I also hold SELL PUT contracts on Tesla and the increased unrealised losses in the PUT contracts when the share price drops create a further decline in liquidity.
This is one area that I need to watch very closely because when excess liquidity drops to zero, the brokerage will liquidate my share positions. I had around 26k worth of excess liquidity left when the market started on 16 April 26. That meant that I would hit zero excess liquidity if Tesla dropped by a further USD27 to USD130.
Here’s sharing some of the trades that I made on 16 April 24 to fix the liquidity issue.
[Trade 1] Bought 1 x Tesla PUT
I made this trade to improve my liquidity by another 5k, to neutralize the drop in liquidity caused by Tesla’s share price drop. As I had another position that is already profitable, that provides a margin of safety for these 2 positions just in case the price rebounds.
Details here: [16 April] Bought 1 x Tesla PUT
[Trade 2] Convert Tesla SELL PUT into SELL CALL
I sold a SP USD200 PUT on Tesla when it was trading at USD257 back in Sep 23. Tesla’s share price has since plunged and this position also eats up liquidity when Tesla’s share price drops further, as SELL PUT is a bullish strategy, so a bearish trend will increase the unrealized loss in that position.
I converted the current SELL PUT contract into a SELL CALL Contract, which becomes a Covered CALL position, against the shares that I owned. This fix will help in my current and future liquidity balance if Tesla continues to drop.
Details here: [16 April 24] Convert Tesla SELL PUT to SELL CALL
[Trade 3] Taking Profit (USD1.115k) by Closing My Covered CALL Positions
I took profit on 2 Covered CALL positions on Tesla, one was initiated recently while the other was initiated since Jan 23 where I was stuck after selling 5 Covered CALL contracts on existing Tesla shares when they were about to bottom out.
Details here:
[16 April 24] +USD755 Profits, Closed Tesla Covered CALL Position
[16 April 24] +USD360 Profit, Close Tesla Covered CALL
[Trade 4] Bought MicroStrategy Shares
I added another small amount on this stock as it is my indirect exposure to Bitcoin/ Cryptocurrency. I didn’t want to buy Bitcoin ETF directly or Bitcoin ETF. Bitcoin price has been dropping recently and so has MicroStrategy which has a direct correlation.
Details here: [16 April 24] Bought MicroStrategy Shares
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