Advanced TSLA Options Trading

[uselesslogin]

And I respectfully disagree with your opinion. I have been selling dozens of calls against my TSLA positions from when it crossed $140 in December and I have enhanced my returns because of it.

The secret is choosing the correct expiration date and strike price. I have had some issues with a couple of calls going deep ITM, but those can be rolled forward until the stock eventually corrects.

It is a lot easier to make money selling calls than buying them.

Rolling forward is something I hadn't even thought of. Do you have any general explanation of your choice of expiration/strike price? I had sold long term calls back in August and that helped me hold on to my TSLA stock in November. But maybe it would have made more sense to roll forward monthly during the run up.

 

[sleepyhead]

Rolling forward is something I hadn't even thought of. Do you have any general explanation of your choice of expiration/strike price? I had sold long term calls back in August and that helped me hold on to my TSLA stock in November. But maybe it would have made more sense to roll forward monthly during the run up.

If you wait for a nice run up, start selling 10% OTM weekly calls when things are looking very rosy and IV is high. Chances are that they will expire worthless and you will keep the hefty high IV premium. You can also sell 20%-30% OTM 1-2 month out options, or 50% OTM options 3 months out. You will not make a ton of money, but you participate in all of the upside 99% of the time and will most likely outperform the person who rides naked stock or options.

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I had extensive training when I worked on Wall St. and one guy (used be a traded for a big French Investment bank) who was training us showed charts that he backtested to prove the covered call strategies (on indexes) outperform a simple uncovered long index strategy:

He showed that the covered call strategy does about exactly the same on the upside, but significantly outperforms on the downside (obviously). In the long run, you will significantly outperform doing a perpetual cover called strategy with a lot less portfolio volatility as well.

Sleep better at night and make more money.

 

[ckessel]

If you wait for a nice run up, start selling 10% OTM weekly calls when things are looking very rosy and IV is high. Chances are that they will expire worthless and you will keep the hefty high IV premium. You can also sell 20%-30% OTM 1-2 month out options, or 50% OTM options 3 months out. You will not make a ton of money, but you participate in all of the upside 99% of the time and will most likely outperform the person who rides naked stock or options.

Thanks, I'd been looking at selling calls, but needed a starting point for figuring out which call to sell.

Given the unknowns going into the Q4 ER call, would you still be selling TSLA calls at this particular point in time? Tesla deferred in Q3, not wanting to talk about 2014 guidance or the giga factory until the Q4 call, so I'm reticent to sell a call into that level of unknown.

 

[Mario Kadastik]

I am planning to go to ER with mostly naked calls. If there is a runup and IV spikes I might sell some covered calls far OTM, but not against the full options portfolio I have. I would expect really good results from Tesla this ER as most of the uncertainty is out of it (Q4 deliveries), but it will depend on what TSLA does pre-ER. If it remains at about current levels I won't sell calls. If it drops I will buy more calls and if it goes up over 185 I might hedge some calls with OTM calls.

 

[sleepyhead]

I am planning to go to ER with mostly naked calls. If there is a runup and IV spikes I might sell some covered calls far OTM, but not against the full options portfolio I have. I would expect really good results from Tesla this ER as most of the uncertainty is out of it (Q4 deliveries), but it will depend on what TSLA does pre-ER. If it remains at about current levels I won't sell calls. If it drops I will buy more calls and if it goes up over 185 I might hedge some calls with OTM calls.

Pretty much this.

I will wait till ER week and if the stock price is really high I might sell some OTM calls. But if the price is low, I will be buying instead.

 

[kenliles]

Pretty much this.

I will wait till ER week and if the stock price is really high I might sell some OTM calls. But if the price is low, I will be buying instead.

great tips guys - thanks so much;

I've never played the sell of covered calls (just been long on LEAPS and an occasional ER call or put hedge). nubee ?- does a LEAP generally qualify to cover the call-sell or does it have to be stock?

 

[sleepyhead]

great tips guys - thanks so much;

I've never played the sell of covered calls (just been long on LEAPS and an occasional ER call or put hedge). nubee ?- does a LEAP generally qualify to cover the call-sell or does it have to be stock?

I have never done a covered call on stock. I do them on options exclusively.

 

[kenliles]

I have never done a covered call on stock. I do them on options exclusively.

prefect thanks sleepy- think I'll give it a try on or after ER run-up- I'll go small at first to get the feel of ;
thanks for the tips - you as well mario

 

[smorgasbord]

I have never done a covered call on stock. I do them on options exclusively.

The phrase "covered call" is typically used to mean covering stock ownership with sold calls. And, what you're doing is playing the game of riding a volatile stock up and down. It's not for everyone, it's not even for most.


OK, folks, answer real fast: Today Tesla is up almost $9 to $178. Did/do you sell covered calls, and if so, what strike and expiration. Let's get this down right away so we can see how it plays out long term.

 

[sleepyhead]

The phrase "covered call" is typically used to mean covering stock ownership with sold calls. And, what you're doing is playing the game of riding a volatile stock up and down. It's not for everyone, it's not even for most.


OK, folks, answer real fast: Today Tesla is up almost $9 to $178. Did/do you sell covered calls, and if so, what strike and expiration. Let's get this down right away so we can see how it plays out long term.

You can write "covered calls" against stock, futures, LEAPS, or even options if you should so desire. Writing calls against LEAPs is not necessarily risky, in fact it doesn't really differ much from writing calls against stock; but it can have its advantages:

Using LEAPS In A Covered Call Write

And I did write some covered calls at the end of the day. I wrote a bunch of Feb. 28's $225 for $1.83.

 

[Johann Koeber]

The phrase "covered call" is typically used to mean covering stock ownership with sold calls. And, what you're doing is playing the game of riding a volatile stock up and down. It's not for everyone, it's not even for most.


OK, folks, answer real fast: Today Tesla is up almost $9 to $178. Did/do you sell covered calls, and if so, what strike and expiration. Let's get this down right away so we can see how it plays out long term.

OK here we go:

I sold March21 calls at strikes 200 and 210, for about 1/3 of my long position

Normally I don't talk about trades, but now I am accountable. My plan it to

a) let them expire

or (preferably)

b) buy them back some time when IV is down or time value is down

 

[InTheShadows]

I didn't sell any yet, I have only ever done the delayed bull construct spread.

I was looking after hours if we open where we close at feb 14 195 for $1.50. That would be the 10% and a little over one week. Would anyone else consider selling those? Since I have never done anything like this I would just do 1 contract.

 

[sleepyhead]

I also sold some weekly $185 and $182.5.

 

[ckessel]

I also sold some weekly $185 and $182.5.

Did you sell those before or after today's runup? Curious whether you were selling something relatively near the money at the end of the day or if those were from earlier when the mid 180's was farther away.

 

[Norse]

I also sold some weekly $185 and $182.5.

Man, I bought those!

 

[772]

Man, I bought those!

Me too... I bought these on 1/27! :tongue:

 

[smorgasbord]

You can write "covered calls" against stock, futures, LEAPS, or even options if you should so desire.

That's just another Bull Call Spread variant, not a Covered Call.

 

[Mario Kadastik]

Well it's likely we'll gap up today so those who sold too close strikes might get to roll them or buy them back at a loss. Rolling right now might not be a good idea as earnings is coming up. Johann, aren't you worried that Tesla will be above $200 post-earnings or is that 1/3 your hedge against a bad result? Because you know I actually bought those over the past few days as an earnings play

 

[kenliles]

That's just another Bull Call Spread variant, not a Covered Call.

smorg, if a covered call is written on a margin account that is fully invested in LEAPS, does the write use the LEAP position to collateral the call-sell? Or would it not be allowed without margin use (or equivalent margin able stock position?).
Seems like that answer (which I admittly don't know) would categorize the play terminology. Otherwise guess you're right, just another bull hedge spread. If I remember, You prefer writing DITM put positions for stocks like TSLA to augment long positions right? I know you've really expressed a dislike for the risk of covered calls. I'm interested in the merits of each for augmenting long hold of LEAPS and stock. The only thing I've really done succesfully is an occasional put to hedge on downturn balancing some of the long loss

 

[Mario Kadastik]

If I have a $180 LEAP and I sell a $180 (or above) call closer in time as a covered call, then there is no margin requirement. It's covered by the LEAP or any other call option that is at least as long out and at or lower strike. And while it might technically be considered call spread or calendar spread or what not you ARE selling a covered call (i.e. it has some backing and doesn't require margin hence the term covered).

Writing DITM puts requires margin and has nothing covered about it making it relatively expensive to augment the position as you need to fork up a lot of the money to open that position. A covered call is a "free" instrument that at worst will limit your upside partially (remember, LEAP at the same strike has a bigger delta so you only really limit your upside partially).