Advanced TSLA Options Trading

[c041v]

if the trend is anything like q1 earnings (so far it's pretty damn accurate) you should be seeing crazy price movements and volume in first first hours of trading. I'll be looking to unload some aug calls that i bought pre-earnings. I am hoping there were a lot of margin calls made tonight which means shorts will be looking to close their position early morning.

I personally want to get rid of my aug calls asap. and the crazy volatility would create a sweet premium.

If there is no crazy volume when the market opens tomorrow morning... i dont know what to say.

Call me crazy, but I'm not sure we're going to see much more similarity to Q1 in the coming days. The short interest is down, the price is up (their is some psychology that comes into play for a share price this high) and their was some extremely bullish sentiment about this quarter. Q1 took most by surprise, I have a tough time believing that history will repeat itself, at least to the degree that we experienced post-Q1.

I'm still holding my calls, but today really brought me back to earth after the Q2 announcement yesterday. As much as I want to believe that we're mirroring the pattern, I just don't see the justification for it. Especially if the basis is "it happened before." This isn't some controlled experiment.

 

[sahanim]

Call me crazy, but I'm not sure we're going to see much more similarity to Q1 in the coming days. The short interest is down, the price is up (their is some psychology that comes into play for a share price this high) and their was some extremely bullish sentiment about this quarter. Q1 took most by surprise, I have a tough time believing that history will repeat itself, at least to the degree that we experienced post-Q1.

I'm still holding my calls, but today really brought me back to earth after the Q2 announcement yesterday. As much as I want to believe that we're mirroring the pattern, I just don't see the justification for it. Especially if the basis is "it happened before." This isn't some controlled experiment.

Im not completely discounting a repeat of q1. I'd put it at 35-40% chance of it happening. As others have stated shorts still have a lot of skin in the game.

Not long before markets open and we find out.

 

[Johan]

Im not completely discounting a repeat of q1. I'd put it at 35-40% chance of it happening. As others have stated shorts still have a lot of skin in the game.

Not long before markets open and we find out.

I too have this gut feel assessment of a perhaps 30% chance of a significant gap-up today, with a squeeze progression during the day. That why I took all my lower strike calls off the table yesterday morning (got a bit lucky with my limits and looking back actually sold not very far from the peak in option premiums, looking back could have in theory gotten perhaps 20% more but we all know it's impossible to hit the peak) but keeping all my further out strikes in the game for today and next week. Of course if the stock just stabilizes here and then perhaps slowly falls back in to the 140's all those will soon be worthless, but it's absolutely something I am prepared for.

 

[DonPedro]

If volatility collapses post-earnings, maybe a straddle? I think that this stock will keep surprising with its volatility. I mean, nobody knows if the right market cap is $5bn or $50bn, so it is all about sentiment and momentum. Plus the potential for macro economic instability (that would add further volatility to a growth stock).

 

[Causalien]

If volatility collapses post-earnings, maybe a straddle? I think that this stock will keep surprising with its volatility. I mean, nobody knows if the right market cap is $5bn or $50bn, so it is all about sentiment and momentum. Plus the potential for macro economic instability (that would add further volatility to a growth stock).

You learn so much from controlling TSLA options that it's insane. I've learned as much trading TSLA than I do in my past 3 years. Simply because every movement in TSLA is pronounced. You see the effect that changes the option price by 20~30 cents instead of just 1 ~ 2 cents. So, what happened was that the short term volatility got entirely moved to the long term volatility. The increase in call option's price wasn't as much as I'd liked. So even if I guessed exactly right with a 120 ~150 verticle. The collapse in premium means that The correct guess only netted a 50% increase. What would've been better, is a short volatility strategy skewed to the call side. A calendar would've been the perfect play. But again, it is something that I don't suggest for anybody to do. The next fibonnacci level is $200. This one will need more than execution to achieve. We need real GAAP profit in my opinion.

 

[sullitf]

I've been looking into doing a diagonal call spread with the long being a Jan14 call in the 160-170 range.

My thoughts here are:
1. I expect the next few months of trading to be fairly flat with the potential to climb up to the 150s
2. There is potential for a Q3 earnings bump if it goes well, though I'm expecting a moderate increase if it does rather than another Q1
3. If TSLA stays flat or climbs slightly before Q3 earnings the Jan14 call could be in a very good spot. The IV will likely go back up before earnings and there's potential for me to have a Jan14 call for very cheap/free depending on how the calls I write turn out


Does anyone have opinions on this strategy? Particularly, does a diagonal fit right now and if so what strikes would you be looking at?

 

[Causalien]

I've been looking into doing a diagonal call spread with the long being a Jan14 call in the 160-170 range.

My thoughts here are:
1. I expect the next few months of trading to be fairly flat with the potential to climb up to the 150s
2. There is potential for a Q3 earnings bump if it goes well, though I'm expecting a moderate increase if it does rather than another Q1
3. If TSLA stays flat or climbs slightly before Q3 earnings the Jan14 call could be in a very good spot. The IV will likely go back up before earnings and there's potential for me to have a Jan14 call for very cheap/free depending on how the calls I write turn out


Does anyone have opinions on this strategy? Particularly, does a diagonal fit right now and if so what strikes would you be looking at?

This might help. Call diag + put diag

 

[Jonathan Hewitt]

I've been looking into doing a diagonal call spread with the long being a Jan14 call in the 160-170 range.

My thoughts here are:
1. I expect the next few months of trading to be fairly flat with the potential to climb up to the 150s
2. There is potential for a Q3 earnings bump if it goes well, though I'm expecting a moderate increase if it does rather than another Q1
3. If TSLA stays flat or climbs slightly before Q3 earnings the Jan14 call could be in a very good spot. The IV will likely go back up before earnings and there's potential for me to have a Jan14 call for very cheap/free depending on how the calls I write turn out


Does anyone have opinions on this strategy? Particularly, does a diagonal fit right now and if so what strikes would you be looking at?

Any decision on your part? I'm interested in your conclusions.

Also, I'm looking at doing some medium term bull call spreads. I'm seeing that the factors I would think about for doing straight calls are somewhat different than the factors you are thinking of when setting up a spread. I may be jumping the gun as I initiated my first bull call spread this week (Sept 130/150) but I am liking the strategy so far and want to experiment with a medium term spread as well. Has anyone else been setting up spreads recently?

 

[ongba]

Any decision on your part? I'm interested in your conclusions.

Also, I'm looking at doing some medium term bull call spreads. I'm seeing that the factors I would think about for doing straight calls are somewhat different than the factors you are thinking of when setting up a spread. I may be jumping the gun as I initiated my first bull call spread this week (Sept 130/150) but I am liking the strategy so far and want to experiment with a medium term spread as well. Has anyone else been setting up spreads recently?

I have march 14 155 calls purchased right before earnings for around 20.50...looking to sell the march 14 175 calls when they get to 20.50, creating a zero cost bull call spread, with 100% gain if tsla expires above 175 in march. With the 20.50 that I receive from the sale of the 175s, I will be waiting for tsla to go on sale to initiate another delayed construct spread.

 

[sullitf]

Any decision on your part? I'm interested in your conclusions.

Also, I'm looking at doing some medium term bull call spreads. I'm seeing that the factors I would think about for doing straight calls are somewhat different than the factors you are thinking of when setting up a spread. I may be jumping the gun as I initiated my first bull call spread this week (Sept 130/150) but I am liking the strategy so far and want to experiment with a medium term spread as well. Has anyone else been setting up spreads recently?

I haven't decided yet, I'm planning to take some time tomorrow to plan it out and decide. The diagonal call spread Serena to fit my current expectations well though, neutral to slow growth in the short term with a bullish long-term outlook.

The real writings for me right now are (1) expiration/strike combinations and (2) adjustment strategy should it to wrong. I'm thinking Dec13 or Jan14 in the 150-165 range for the long but am not sure on what to write yet though, need to look at premiums and see what I'm with.

 

[DonPedro]

Here the other day I became aware that - speculating about potential investment strategies - I had more or less decided to do two things: (1) Buy puts and (2) sell puts.

As a consequence, my option strategy is now: Don't do options.

 

[sullitf]

I haven't decided yet, I'm planning to take some time tomorrow to plan it out and decide. The diagonal call spread Serena to fit my current expectations well though, neutral to slow growth in the short term with a bullish long-term outlook.

The real writings for me right now are (1) expiration/strike combinations and (2) adjustment strategy should it to wrong. I'm thinking Dec13 or Jan14 in the 150-165 range for the long but am not sure on what to write yet though, need to look at premiums and see what I'm with.

I ended up deciding against a diagonal spread for now, the premiums on Dec13 and Jan14 calls are just too high for me to justify. To really eat away at the premium for the long call I would need to play too close to ATM with the short-term calls and I didn't want that much risk.

 

[sub]

Can you guys help with the pros/cons of selling puts? What about leaps, Jan14 or Jan15? This would lock up some funds in my account correct? However, I can close out my position if I need to remove them for any reason (Don't plan to)?

 

[johnnydop]

Can you guys help with the pros/cons of selling puts? What about leaps, Jan14 or Jan15? This would lock up some funds in my account correct? However, I can close out my position if I need to remove them for any reason (Don't plan to)?

Pros:
Get income when you think a stock wont go below the strike you choose.

Cons:
Highly risky, especially with volatile stocks like TSLA. The stock could quickly move below your strike yielding losses and you'd then be at risk of getting assigned.

Like with all options, you can always close out your position at any time before expiration so in the event the stock starts to move downward you can cut your losses early and more importantly avoid getting assigned.


I have some decent success as of late selling Puts on AAPL, GOOG, NFLX, and TSLA. I especially like to sell puts just before earnings since the premiums are usually much higher (ie high implied vol). I did get burned with TSLA though. I got short some 100 Puts just before GS put out their note and boom i was rapidly in the red and the stock was quickly approaching the 100 mark. Since its a highly exposed position i quickly got out. Low and behold, the next day TSLA bounced back and i would have been fine but during that plunge it just looked like the bubble had burst and she was definately going to test 100. Oh well. Thats the risk for trying to make money by Selling Puts.

 

[sub]

Thanks. That is how I saw things just want to make sure i'm not missing anything. If you were long on TSLA, and were caught buying the stock at a higher price than it was currently selling, you could always just hang onto it. When weighing selling puts against covered calls, I like selling the put because I feel TSLA is heading up and I don't want to lose the upside potential.

 

[ongba]

Thanks. That is how I saw things just want to make sure i'm not missing anything. If you were long on TSLA, and were caught buying the stock at a higher price than it was currently selling, you could always just hang onto it. When weighing selling puts against covered calls, I like selling the put because I feel TSLA is heading up and I don't want to lose the upside potential.

There is no additional upside when selling puts outside of the credit initially received(unless you roll up). If tsla goes to 300, you will not be partaking in the outsized gain.

 

[clmason]

Can you guys help with the pros/cons of selling puts? What about leaps, Jan14 or Jan15? This would lock up some funds in my account correct? However, I can close out my position if I need to remove them for any reason (Don't plan to)?

I am no pro but did sell Jan 15 puts recently. My strategy was sell puts at strike prices of 30-50% discount of share price. If I got put I was ok with it as I do want to acquire more shares and with the range of put I theorized I'd be getting shares at the low. This is kind of like a buy order but getting paid to place the order.

I redeployed the premiums I received for the puts and bought just Out of the money calls. Then Thursday after earnings when share prices popped I sold the calls and bought back the puts, which were then less expensive.

Likely it was beginners luck and the MS report dip was excellent opportunity. I made out with hefty gains. It is short term gains, I have some other stocks at a loss in my account I will sell before end of year to offset the taxes.

I'm holding steady for another opportunity to do this again.

 

[Johan]

I am no pro but did sell Jan 15 puts recently. My strategy was sell puts at strike prices of 30-50% discount of share price. If I got put I was ok with it as I do want to acquire more shares and with the range of put I theorized I'd be getting shares at the low. This is kind of like a buy order but getting paid to place the order.

I redeployed the premiums I received for the puts and bought just Out of the money calls. Then Thursday after earnings when share prices popped I sold the calls and bought back the puts, which were then less expensive.

Likely it was beginners luck and the MS report dip was excellent opportunity. I made out with hefty gains. It is short term gains, I have some other stocks at a loss in my account I will sell before end of year to offset the taxes.

I'm holding steady for another opportunity to do this again.

Well you basically double leveraged yourself which is great so long as things go your way, but the risk is also double so to speak... Nice play.

 

[sub]

Would any one here write Jan15 puts for $110? Please share your opinion either way. I've done the math on this and worked out the worst case scenario (holding shares worth zero lol) and most likely bad scenario (caught purchasing shares above value, or buying back the puts at a loss). I'm very bullish on TSLA long term. I've thought about writing some OTM calls but I do not want to give up any upside, and writing them far enough OTM to make me feel comfortable isn't worth locking myself in. Thoughts?

 

[ongba]

Would any one here write Jan15 puts for $110? Please share your opinion either way. I've done the math on this and worked out the worst case scenario (holding shares worth zero lol) and most likely bad scenario (caught purchasing shares above value, or buying back the puts at a loss). I'm very bullish on TSLA long term. I've thought about writing some OTM calls but I do not want to give up any upside, and writing them far enough OTM to make me feel comfortable isn't worth locking myself in. Thoughts?

Selling a jan 15 110 strike put will get you $21 of premium, so a return of 19% over the next 16-17 months (if the put is cash secured) with 30% downside protection from closing price of 157 and break even of $89. The downside protection and break even are good, but the return of 19% on a potential thoroughbred stock such as tsla is a little low, especially as you appear to be very bullish on tsla for the long term. May I recommend a risk reversal strategy. Use the proceeds of the put sold to buy a jan 15 240 strike call, also trading for about $21, so net cost is zero. If tsla rises, the call will appreciate and the put will gradually lose value. If tsla tanks, the call will be worthless and you will get assigned at 110, with new break even of 110, still 30% below today's price. If tsla is in between 110 and 240 at expiration, you gain nothing, but lose nothing (ie a draw).