Not OTOH.
I use Thinkorswim's thinkDesktop software (- Futures Trading System - Trading Software - Option Trading System) as my trading platform. It will show you the intrinsic and extrinsic value of any option at any strike.
Advanced TSLA Options Trading
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I use Thinkorswim's thinkDesktop software (- Futures Trading System - Trading Software - Option Trading System) as my trading platform. It will show you the intrinsic and extrinsic value of any option at any strike.
jkliu47
Member
Try ivolatility.com
Most online options trading platforms (I use Tradestation.com) also have access to the option thetas.
Most online options trading platforms (I use Tradestation.com) also have access to the option thetas.
Anybody here been holding all options and leaps and no stocks, but plan to convert to a bunch of stock later?
Just curious as I'm reconsidering my long-term TSLA investment strategy. I've been holding stock since last year and then bought options and leaps in May. Just thinking if I would have bought all leaps last year and kept rolling into leaps after a year (for long term capital gains), kept doing that and then in 3-4 years convert everything to stock... just thinking I would end up with a lot more shares than just holding stock. Sure the risk is higher than just holding stocks, but I'm interested enough to consider the risk.
Wondering if anyone is doing something along similar lines.
Just curious as I'm reconsidering my long-term TSLA investment strategy. I've been holding stock since last year and then bought options and leaps in May. Just thinking if I would have bought all leaps last year and kept rolling into leaps after a year (for long term capital gains), kept doing that and then in 3-4 years convert everything to stock... just thinking I would end up with a lot more shares than just holding stock. Sure the risk is higher than just holding stocks, but I'm interested enough to consider the risk.
Wondering if anyone is doing something along similar lines.
ggr
Expert in Dunning-Kruger Effect!
I've only been doing it for a short while, but I've been selling stock for long term capital gains and replacing the holding with exercised options. So my actual long holding remains approximately constant, while I'm reaping the benefit of the options in a lower basis price. I won't get to do it again until September though.
kenliles
Active Member
- Jun 7, 2012
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Yes close but not identical. Over next years I will (and have to date) invest in TSLA using long dated options (I will hold a core set of shares but for other margin reasons). In a growth stock like (former)AAPL or (future)TSLA you'll make (at higher risk) more money owning Calls than stock (in general). This assumes you leverage properly by using OTM calls that move to ITM (DITM calls can work as stock replacement strategy at lower risk traded for lower return, but still more than only stock generally). Your swings with the underlying TSLA will be MUCH greater and so will require surgical modification of a certain jewel pair, although a David Guetta remix of Titanium played loud and proud during sleep can substitute for the bionic surgery procedure. I've done this before with great success. Would recommend a submarine for periodic breaks from all connection to the human race or if not affordable, a set of matresses to pad-line garage walls. Other than that, it's a beautiful strategy to endure. I'm told by loved ones that I can now count 10% of my gains before severe twitching requires trusting others to relay what it totals. For some reason, they all encourage me to do it again with TSLA, shouted from pool side (which I'm not allowed to approach without my wheelchair, but I'm told contains my former therapeutic submarine)
All the best
fellow LEAPer
I plan to exercise my options in jan 14 and jan 15. I do have stock and cannot compare the return from options in jan 14 strike 40 that cost me 2 dollars to the stock. It was worth the risk then BUT I am spoiled by the price i paid then to the high cost of options now. Would feel safer to have stock. I believe the stock will continue to appreciate but why risk 35 fold return by using options to "double down". It was hard to stay the course back then. I owned the majority of jan 14 strike 50 calls then. I couldn't figure out how I could be so wrong then that no one else could see this coming. There are other large winners out there but I suspect they, like me, will be smart enough to know when to push away from the table
I'm currently 70% in stock, 20% in Jan 15 LEAPS, 10% in shorter term options (from Sept 13 to Jan 14), and using no margin. Stock was purchased in 2nd half of 2012 and most LEAPS/options were purchased in May.
The shorter term options have gone up a lot but I need to pay income tax on the gains. I'm considering using margin to exercise my short-term options right before they expire to avoid income tax on those gains and then paying off the margin (perhaps) in a few to several months by selling previous stock (and pay long-term capital gains).
For my current LEAPS, I'm thinking of holding them and rolling them out after I've held them for at least a year. I might exercise some as well.
For future, I'm confused. I want to add more risk to just holding 100% stock in return for the possibility of owning double the shares in 5 years than if I would have just held 100% stock. I'm thinking of the following ongoing strategies:
Strategy #1: When stock price dips significantly (ie., 20% from highs), I will use margin to buy LEAPS. Then if/when the stock price recovers and reaches new heights (maybe a few weeks to a few months later), I'll sell some stock I've held for over a year to pay off a portion of the margin balance (and pay LT capital gains tax). I will hold the LEAPS I purchased for at least a year before selling and buying LEAPS further out (and maybe exercising some). For each significant stock price dip, I'll repeat this strategy.
Strategy #2: When stock price dips significantly (ie., 20% from highs), I will use margin to buy short-term options (about 3-6 months out). If/When stock price recovers and reaches new highs, I will sell options and wait for next dip. In this scenario, I'll pay income tax on all my gains using this approach. I'm hesitant because I'm already at a high income tax bracket, so the % of profit given to taxes will be quite high. I'm not sure if this strategy is worth it. It's higher risk (and stress), but perhaps higher reward.
Do you guys have any thoughts or advice?
ggr
Expert in Dunning-Kruger Effect!
Yes; don't let the tax tail wag the profit dog. Tax might change your tactics, but you shouldn't let it drive your strategy.
Nice consolidation day albeit on really low volumes. My short Jul 87.5 Puts are nicely way OTM. At the time of that trade the strike was 13% OTM which seemed pretty safe. Now I’m thinking about Shorting some Aug 95 Puts. That strike is 22.3% OTM. Even if a Sell on expected earnings hits I don’t think she'd sell off by more than 22.3%. I'm giving myself more cushion this time around because of the volatility that the earnings might create although my only risk at this point is if the earnings come in much worse than expected which seems like a very low probability at this point in the game.
Selling Puts in TSLA ain't what it used to be. That's no surprise, of course.
There are still some possibilities. Here's one:
Dec $110 strike. Gets you about $14.40 each for a under $96 buy price or a more than 29% annual return.
For those thinking about taking some profits, there are some covered call plays as well. Here's one:
Jan $150 strike. Gets you about $12.40 each. That's about a 10% return if TSLA doesn't break $150, and a 62% return if it does. Of course, if TSLA goes beyond $163, you're not profitting any more and you'll be selling your shares at an effective $163.
BTW, for those looking to sell Puts, this is a good explanation with a really good table to calculating which Puts to sell: http://www.fool.com/fool/free-report/1321/intermediate/lesson7-writing-puts-146311.aspx
There are still some possibilities. Here's one:
Dec $110 strike. Gets you about $14.40 each for a under $96 buy price or a more than 29% annual return.
For those thinking about taking some profits, there are some covered call plays as well. Here's one:
Jan $150 strike. Gets you about $12.40 each. That's about a 10% return if TSLA doesn't break $150, and a 62% return if it does. Of course, if TSLA goes beyond $163, you're not profitting any more and you'll be selling your shares at an effective $163.
BTW, for those looking to sell Puts, this is a good explanation with a really good table to calculating which Puts to sell: http://www.fool.com/fool/free-report/1321/intermediate/lesson7-writing-puts-146311.aspx
Jonathan Hewitt
Active Member
Would you consider this as only a profit taking strategy? I think TSLA will be above $150 come January but I don't want to bet the barn on it, aka buying only calls, which is mostly what I'm doing right now. Instead I can buy some stock, sell the covered calls mentioned above, and still make a pretty decent return (I'm happy if my mutual fund gives a 10% return in a year, much less 6 months) as long as the stock doesn't crash (but even then it's only paper losses until I sell). This way if the stock doesn't go up as much as I thought I lose the calls I bought but at least I keep the premium from selling the covered calls. Basically this would be a bull call spread, which up until now I have thought would be stupid for TSLA but call premiums are so high now...
Thanks for that article/table link ... just sold my first two puts .... did the aug 17 100 puts .... it "put" 400 dollars in my account which sure feels like free money at this point.
Jonathan Hewitt
Active Member
So I've been in a dilemma the last week. I expect TSLA to post a great quarter but I'm not sure how much is already baked into the share price...I expect the stock to go up a lot thanks to not everything being baked in or their being a short squeeze or I expect there to be a moderate drop due to the "sell the news" effect. I thought of a strangle or straddle but IV makes them very expensive. Another thing, I expect TSLA share price to be at least as high as it is now come the end of the year. My first thought was to minimize my position to only JAN15 LEAPS and stock, this way if the stock does go down I don't really lose as long as I hold on. If it goes up I gain, but not as much % wise than if I did short term options.
I scoured websites for a good options strategy to match my thought process but failed, so I came up with one on my own. It's basically a "bull long calendar spread with puts." I sell a put at strike price A with long term expiration and buy a put at strike price A with near term expiration. For illustration let's make strike price A $130, long term is December, short term is August. The closing price for these prices was $129.90
Buy 1 AUG13 Put for $1200, Sell 1 DEC13 Put for $2180. Credit for spread=$980.
Scenario A: Blowout earnings report, TSLA goes to the moon and never turns back. Both puts expire worthless, net profit=$980 per spread. I should've went short term calls but the spread made me easy money and my shares and LEAPS still made me money, too.
Scenario B: Earnings report is good but not good enough, is so-so, or is bad. TSLA goes down or even plummets in stock price on sell the news effect. I then sell the AUG13 Put for some amount more than I paid for it, hopefully somewhere near the bottom of the drop but that would be gravy. Even if the stock doesn't recover by December and I get assigned the shares I have an effective buy price of at worst $96.2 once you take into account the premium from selling the DEC put and reselling the AUG put ($130-$21.8-$12=$96.2) The more TSLA goes down the more I sold the AUG put for and the cheaper the acquisition of the shares. This would be an awesome way to acquire some more shares for cheap.
Scenario C: TSLA goes up after earnings report for reason in Scenario A and my AUG put expires worthless. Some even then occurs that makes TSLA plummet and it ends up <$130 in DEC and I get assigned 100 shares for an effective price of $108.2 a share.
I see Scenario A and B as both very likely, which is why I think this idea is good. Even if Scenario C occurs I wouldn't be devastated as long as I viewed this as a stock acquisition strategy and had the cash or margin to acquire the shares, but I don't see scenario C as very likely. Even if Scenario C happened my strategy would be better than buying JAN14 calls and having them expire worthless or buying shares right now for $130 and having them lose all that value.
The biggest criticism I think is it's probably easier just to sell a DEC13 $100 put for $845, similar to the net credit for creating the spread. This also would be a better move if Scenario C were to occur ($91.5 acquisition price vs $108.2 acquisition. Where my scenario really beats just selling the DEC13 put is in scenario B. The more TSLA goes down after the earnings report the better off I end up. If in scenario B I instead had bought a DEC13 put, once I go south of $91.5 ($100-premium) the Dec13 put really stinks while my strategy makes you money.
Any thoughts on this? (I haven't been trading options for that long so appreciate any advice)
I scoured websites for a good options strategy to match my thought process but failed, so I came up with one on my own. It's basically a "bull long calendar spread with puts." I sell a put at strike price A with long term expiration and buy a put at strike price A with near term expiration. For illustration let's make strike price A $130, long term is December, short term is August. The closing price for these prices was $129.90
Buy 1 AUG13 Put for $1200, Sell 1 DEC13 Put for $2180. Credit for spread=$980.
Scenario A: Blowout earnings report, TSLA goes to the moon and never turns back. Both puts expire worthless, net profit=$980 per spread. I should've went short term calls but the spread made me easy money and my shares and LEAPS still made me money, too.
Scenario B: Earnings report is good but not good enough, is so-so, or is bad. TSLA goes down or even plummets in stock price on sell the news effect. I then sell the AUG13 Put for some amount more than I paid for it, hopefully somewhere near the bottom of the drop but that would be gravy. Even if the stock doesn't recover by December and I get assigned the shares I have an effective buy price of at worst $96.2 once you take into account the premium from selling the DEC put and reselling the AUG put ($130-$21.8-$12=$96.2) The more TSLA goes down the more I sold the AUG put for and the cheaper the acquisition of the shares. This would be an awesome way to acquire some more shares for cheap.
Scenario C: TSLA goes up after earnings report for reason in Scenario A and my AUG put expires worthless. Some even then occurs that makes TSLA plummet and it ends up <$130 in DEC and I get assigned 100 shares for an effective price of $108.2 a share.
I see Scenario A and B as both very likely, which is why I think this idea is good. Even if Scenario C occurs I wouldn't be devastated as long as I viewed this as a stock acquisition strategy and had the cash or margin to acquire the shares, but I don't see scenario C as very likely. Even if Scenario C happened my strategy would be better than buying JAN14 calls and having them expire worthless or buying shares right now for $130 and having them lose all that value.
The biggest criticism I think is it's probably easier just to sell a DEC13 $100 put for $845, similar to the net credit for creating the spread. This also would be a better move if Scenario C were to occur ($91.5 acquisition price vs $108.2 acquisition. Where my scenario really beats just selling the DEC13 put is in scenario B. The more TSLA goes down after the earnings report the better off I end up. If in scenario B I instead had bought a DEC13 put, once I go south of $91.5 ($100-premium) the Dec13 put really stinks while my strategy makes you money.
Any thoughts on this? (I haven't been trading options for that long so appreciate any advice)
Acmykguy
Member
Be careful selling puts that near and that high strike. If the market turns on the stock you have potential to either have to buy 200 shares which is not the end of the world if you want more stock, OR buy the puts to cover at a much higher price. I sold puts as well in August 95 but did it when tsla was at 97 so got 1300 per contract. Cover the puts on Friday.
With Put premiums down, Call premiums up, and with the stock still having great potential but yet at all time highs, I'm thinking that something along the lines of a Bull Call Spread is the way to go today.
What is a Bull Call Spread? It's when you sell a high-strike Call to help pay for a current-strike Call that you buy. You will still end up spending more on the bought Call than you get on the sold call, though. The bought Call will increase in value as the stock rises, while the sold Calls become worthless as the stock rises. The maximum profit is the difference between the strike prices minus the cost of the spread.
Advantages:
1) Cheaper than outright stock buying
2) Less risk than outright stock buying (loss limited to the premium differential)
3) You make money if the stock continues to rise.
Disadvantages:
1) If the stock takes off, you don't make as much money as just buying the Call
So, this seems about right to me. I could just buy Calls, but they're pretty pricey now. I could buy stock, but that exposes me to risk if the stock takes a big drop. The BCS limits my downside risk a lot while limiting my upside profit just a bit, if I choose the right strikes and time.
Do you agree? If so, what strikes and expirations would you consider?
What is a Bull Call Spread? It's when you sell a high-strike Call to help pay for a current-strike Call that you buy. You will still end up spending more on the bought Call than you get on the sold call, though. The bought Call will increase in value as the stock rises, while the sold Calls become worthless as the stock rises. The maximum profit is the difference between the strike prices minus the cost of the spread.
Advantages:
1) Cheaper than outright stock buying
2) Less risk than outright stock buying (loss limited to the premium differential)
3) You make money if the stock continues to rise.
Disadvantages:
1) If the stock takes off, you don't make as much money as just buying the Call
So, this seems about right to me. I could just buy Calls, but they're pretty pricey now. I could buy stock, but that exposes me to risk if the stock takes a big drop. The BCS limits my downside risk a lot while limiting my upside profit just a bit, if I choose the right strikes and time.
Do you agree? If so, what strikes and expirations would you consider?
Jonathan Hewitt
Active Member
I had the same thought this weekend. I didn't see any short term spreads that I am comfortable with, though. I saw a couple potential spreads in the Dec and Jan area that might be good? I just am not sure if any are worth it. I think I'd rather just buy JAN15 LEAPS, but maybe I'm off.
What I liked better was a bull calendar spread. Buy a slightly ITM long term call and sell a short term OTM call. This way there is still the possibility for unlimited upside potential if the short term strike expires worthless before TSLA continues to go up. If it goes up above the short term call's strike price before expiration you should be able to close out the entire position for a nice profit as the long term call should appreciate in value faster as TSLA goes up as long as both don't go DITM?
As compared to Bull Call Spread
Advantage: possibility for unlimited upside potential
Disadvantage: not as much premium received as straight bull call spread, so more risk
Acmykguy
Member
consider a calendar call spread. Buy aug strike say 135 or something and sell the sept 145 call. You collect higher premium and gain a larger % increase on the aug due to the iv.
Jonathan Hewitt
Active Member
Buy the near term and sell the further out one? I may have to think about that one, it doesn't make sense to me at first glance (only been doing options since april).
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