TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker and becoming a Supporting Member. For more info: Support TMC
  1. TMC is currently READ ONLY.
    Click here for more info.

Applying options strategy 'the wheel' to TSLA

Discussion in 'TSLA Investor Discussions' started by adiggs, Apr 16, 2020.

  1. Lycanthrope

    Lycanthrope S3XY old dude

    Joined:
    Nov 15, 2013
    Messages:
    8,633
    Location:
    At home
    I'm aiming myself at a balance of shares, LEAPS, covered calls and sold puts. Currently have $1.6m in LEAPS, $2.4m in CC's and $85k in puts, so looking for some CC's to exercise to give the cash for ore put exposure.

    I feel this mix nicely covers the upside, downside and sideways. Obviously greater gains if the SP rises and you hold more stock, but the leverage with the LEAPS helps balance that.

    And I'm looking to sell CC's against some of my LEAPS when we get the next SP pop - June 2022 for those, so plenty of time.
     
    • Like x 3
    • Informative x 2
  2. adiggs

    adiggs Active Member

    Joined:
    Sep 25, 2012
    Messages:
    4,172
    Location:
    Portland, OR
    Between being OTM and time value nearing $2 I decided to proceed today with moving out to Mar 5. I also decided to go to a .45 delta - now that I've done all this work to 'save' this position, I would actually like to have it assigned, thus the very high delta on the roll from Feb 19 820 strike to Mar 5 805 strike.

    The sequence of realized results now looks like this:
    760c = ($36)
    770c = ($34)
    775c = $12
    805c = $2
    820c = $76

    The original call was opened on Jan 4 and the 820c was closed on Feb 18. About $20 / share in realized results over 6 weeks. If my math is right that is around 2.5% on what has been the badly performing leg over this period.

    805c current position - open at $30.
     
    • Informative x 3
    • Like x 2
  3. LN1_Casey

    LN1_Casey Draco dormiens nunquam titillandus

    Joined:
    Mar 6, 2019
    Messages:
    1,990
    Location:
    Oahu, Hawaii
    Closed out the monthly I had for March, mostly because my margin requirement was creeping up as the SP was creeping downward. Still closed at a profit, but less than if I had closed earlier in the week.

    I am happy I closed out my margin shares, though, even if the SP (of course) went up after I had sold them, lol.
     
  4. bkp_duke

    bkp_duke Active Member

    Joined:
    May 15, 2016
    Messages:
    4,924
    Location:
    San Diego, CA
    My 780 CC expiring today is making me sweat. Do I wait till the end of the day, or just roll it now.

    Decisions, decisions . . .
     
    • Like x 1
  5. Oil4AsphaultOnly

    Oil4AsphaultOnly Supporting Member

    Joined:
    Mar 14, 2015
    Messages:
    1,904
    Location:
    Arcadia, CA
    What did you decide, since it seems to be closing right around that point?
     
  6. bkp_duke

    bkp_duke Active Member

    Joined:
    May 15, 2016
    Messages:
    4,924
    Location:
    San Diego, CA
    I rolled when the call expiring today dropped below $0.60. Too much heartburn, but picked up enough premium to buy 10 more shares, which rounded my position out to an even 700 in that retirement account, so I can sell another CC now.
     
    • Like x 6
  7. MXWing

    MXWing Well-Known Member

    Joined:
    Oct 13, 2016
    Messages:
    7,258
    Location:
    USA
    At this rate of decline, we'll be rolling our naked puts to 2023 at 300 strike price and hope we are not assigned at expiration.

    It's about time for Musk to go dancing in China again.
     
  8. st_lopes

    st_lopes Member

    Joined:
    Aug 3, 2020
    Messages:
    254
    Location:
    Canada
    Rolled some 910c 02/19 to 900c 02/26 yesterday. That roll brought all my CCs to same strike and expiration.

    Today I then rolled all of my 900c 02/26 down to 860c 02/26; clipped a lot of cumulative premium when I did that as these were primarily the calls I’ve been rolling since 12/31. Feels good to be off of that ladder!

    On the puts side of my strangles, rolled 850p 02/19 to 850p 03/05 for a $8 credit. Just as I climb off the CC ladder, I start climbing the puts ladder. That credit also gave me enough to add 100 shares to the pile. Haven’t done that yet as I’m running close to margin maintenance right now and moving cash to shares will tip the scales.

    Overall a small gain this week and now carrying two weeks of cumulative put premium, which once that unwinds will be a nice pick up.

    Would love to close in the 800s again!
     
    • Informative x 1
    • Like x 1
  9. Runarbt

    Runarbt Active Member

    Joined:
    Mar 1, 2013
    Messages:
    1,094
    Location:
    Drammen, Norway
    Lets hope not. :)

    I am feeling pretty good about my $780 3/5 naked puts. Not a lot (any) headroom - but I cant really imagine we dont get a slight boost next week - and with maximum pain around $800 for now I think (hope) I will ride this one out. :rolleyes:

    I am still a bull at heart, and want to sell naked puts (Will time my STO better, aim at Tuesdays MMDs - and keep some margin reserves) , but its also time to buy some calls with play money.. Dont think we will slide down for much longer.
     
    • Like x 1
  10. adiggs

    adiggs Active Member

    Joined:
    Sep 25, 2012
    Messages:
    4,172
    Location:
    Portland, OR
    With my 805 and 845 calls showing a realizable gain today of 65% or so I decided to close them earlier this morning at what I hope will prove to be the low point for the day (10:30am eastern). I'll be out doing errands for the remainder of the morning; with luck we'll be up from here (even if down overall) and I'll be able to re-enter both of these positions later today at a better strike / price than were available when I closed the positions.

    My thinking is that with a full 2 weeks remaining to expiration I'll be able to open replacement calls with more premium to decay these two weeks. Hopefully it'll be like getting seconds at dinner
     
    • Like x 2
  11. setipoo

    setipoo Breaker of Chains and Mother of Dragons

    Joined:
    May 3, 2017
    Messages:
    164
    Location:
    North of America
    The [email protected] $132 CC prems look very tasty. 17 shares 'profit' up front and no hassle managing the weeklies.

    Too good to be true. What am i missing? (I am aware one can potentially get more than $132 the next 10 months if doing multiple sells.)

    Thanks in advance...
     
    • Like x 1
    • Disagree x 1
  12. Discoducky

    Discoducky Happy owner of a P100D X and a brand new 2021 M3!

    Joined:
    Dec 25, 2011
    Messages:
    3,330
    Location:
    Seattle
    I'm not STOing any Ccs currently as I'm thinking the stock will be way above 1000 by then. I've sold a few $1650 CCs for that expiry though last time the stock spiked :p

    I have acquired 400 shares the last 4 weeks STOing puts. Waiting for the bottom.
     
    • Informative x 1
    • Like x 1
  13. ReddyLeaf

    ReddyLeaf Active Member

    Joined:
    Mar 19, 2014
    Messages:
    1,493
    Location:
    WA State
    Well, awhile back I sold some Jun 800p for $132, which seemed too good to be true (16% return for 5-6 months). They initially dropped as I’d hoped, but I was feeling like I had missed the boat, and should have bought calls/LEAPS or more stock with the cash. They reached $150 today and the March 850c that I sold around the same time has gone from being against me to almost 70% profit. Predicting the SP is tough. Maybe I’ll be fine and the SP will get back over $800 by June and stay below $850 for March, but maybe not. At this point, even my effective buy-in basis of 800-132=668 is looking in doubt, but my March 850s are awesome. I’m still at the point of trying to clear some profits from options, not optimize for maximum profits. With the SP seemingly to no longer follow recent trends, I’m hesitant to jump in with significant buying or selling.
     
    • Like x 1
  14. bxr140

    bxr140 Active Member

    Joined:
    Nov 18, 2014
    Messages:
    2,607
    Location:
    Bay Area
    Anything that seems too good to be true usually is, but ultimately its all up to your risk tolerance. And...beating the horse, the objective of the position relative to your strategy at large. If the position is a singular, all-in kind of deal, then my strong advice is unequivocally "bad idea". If it is instead one of a diverse number of positions across your TSLA holdings, its probably not a bad idea. If it is one of a diverse number of positions across all of your holdings, then its an even less bad idea.

    The upside to the position (and all sold positions) is that you can make modest to decent return with some downside protection. The downside to short positions (as with all sold positions, really, but especially long dated ones) is that it ties up a significant amount of capital, and in the event of unfavorable market movement your position gets progressively worse with the only real options being 1) hope real hard for a recovery or b) bail out at a loss. (Shorter expirations better enable c) stagnate capital by rolling.)

    TLDR, If its a small amount of your total capital that you're willing to tie up for a likely modest but probable return over a long period of time, with a corollary small total impact to your account balance if you have to cut bait at a loss, and you think TSLA is going up over the next year, then go for it.
     
    • Like x 1
  15. juanmedina

    juanmedina Active Member

    Joined:
    Mar 31, 2016
    Messages:
    1,816
    Location:
    SC

    Those calls were $200 two weeks ago. There is no way I would sell something like that. I actually bought 5x 1050s today instead.
     
    • Like x 2
    • Helpful x 1
  16. juanmedina

    juanmedina Active Member

    Joined:
    Mar 31, 2016
    Messages:
    1,816
    Location:
    SC
    What do your technical analysis say about Tesla for the week? we are already at $720 :eek:. I have 8x $610 naked puts and some 640/620 put spreads for Friday. I sold 3x 860 covered calls early in the morning but I don't think I will sell any more calls incase the stock turns around. I am tempted about selling some shares and maybe buying some ATM calls but IV kind of picked up a little today.
     
  17. Runarbt

    Runarbt Active Member

    Joined:
    Mar 1, 2013
    Messages:
    1,094
    Location:
    Drammen, Norway
    Well.. not feeling so good about those $780 5/3 puts anymore. :oops::rolleyes:

    I closed 10 out of 12 naked puts this morning at $43 (close price was $75-ish, so I avoided MUCH bigger loss).. Should have sold 'em all, but I ended up keeping two of them. Since maximum-pain is $800 this and next week.. I felt it was worth a gamble.

    Will let them turn into shares on margin and sell CC... to at least cover the running interest.
     
  18. bxr140

    bxr140 Active Member

    Joined:
    Nov 18, 2014
    Messages:
    2,607
    Location:
    Bay Area
    Well...price volume is pretty strong in the 695-705 range. If that doesn't hold, we'll probably go down to at least 640-650. I can also see ES/SPY pulling back at least a couple percent and maybe another 4-5%...
     
    • Informative x 1
  19. Chenkers

    Chenkers Member

    Joined:
    Apr 28, 2019
    Messages:
    187
    Location:
    Melbourne, AU
    I finally managed to clear a heap of DITM CC in the last couple of weeks but now find myself having to deal with a few DITM sold Puts. I'm much happier to be dealing with Sold Puts than CC's but still not looking forward to an prolonged roll down and out if this dip is extended. The main issue is that the increased put values have closed out my margin buying power so I can't use the cash thats in my account to buy the dip.

    Futures for Tuesday are looking up at this stage so we could be in for a quick partial recovery. If not I'll have to consider closing out a couple of Puts to free up buying power while TSLA is still on sale. Thankfully I have another account where I could buy some as low as $710 yesterday.
     
  20. Runarbt

    Runarbt Active Member

    Joined:
    Mar 1, 2013
    Messages:
    1,094
    Location:
    Drammen, Norway
    #2160 Runarbt, Feb 23, 2021
    Last edited: Feb 23, 2021
    Bought back my last remaining $780 naked puts today.. paid $43 yesterday, had to pay $112 today.. and 10 minutes later they cost $145..

    I am now back to HODL shares - and some margin used to cover the puts.. spent all premium from selling puts on new shares - which are now deep under water. :p But thats ok, this is temporary..

    I am not exposed to any open option contracts so can ride this one out and wait for it to turn around..

    Fck - had this happened in two weeks, I would have closed my naked put positions, and could have been ready to profit. :) Now, I just focused on surviving. :D:rolleyes::confused::)

    Edit: Since I capitulated, I also do assume this was the bottom - so happy to sacrifice myself to end this dip.. :-D
     
    • Informative x 2

Share This Page

  • About Us

    Formed in 2006, Tesla Motors Club (TMC) was the first independent online Tesla community. Today it remains the largest and most dynamic community of Tesla enthusiasts. Learn more.
  • Do you value your experience at TMC? Consider becoming a Supporting Member of Tesla Motors Club. As a thank you for your contribution, you'll get nearly no ads in the Community and Groups sections. Additional perks are available depending on the level of contribution. Please visit the Account Upgrades page for more details.


    SUPPORT TMC