Wiki Selling TSLA Options - Be the House

[phantasms]

"Yes, go up go up....but not too much!" is such a fascinating experience.

I luckily was in the stock before the first spring unwound, not in options though. eek! lol

 

[adiggs]

Sold everything I can sell for the week 760's on the shares and 770's the calls. I didn't follow my own rule of not selling everything on one day will see how it goes. I will deploy the the vertical spreads tomorrow.

I think it's time for the morning shower - maybe open some lcc later in the morning when I think the shares have found their 'level' for the day. I was hoping for this kind of pop before opening the new cc, still within my larger context of an income focus.

If I were to sell at this moment I think it'd be the 750 strike for this Friday at $6.80. I would do so expecting a roll out to next Friday (8/13) to further improve that strike, maybe 1 more roll, and then take assignment. And knowing that I'll probably see the shares regress for another early exit (and another delay in actually taking assignment ). I'm waiting for a bit longer into the morning as I think the opportunity is going to be better later today.


Interesting sidebar - my income focus has led me to replace a reasonably large pile of shares with long dated leaps. That's had the effect of increasing my total net delta - not just increasing the number of cc I can sell. As a result the total portfolio is increasing faster than it would have when it was all shares. Not an intentional part of the plan but a hoped for side benefit.

 

[Drezil]

"Yes, go up go up....but not too much!" is such a fascinating experience.

I luckily was in the stock before the first spring unwound, not in options though. eek! lol

Go up, up up! Good Stock .. now slow down.. SLOW DOWN .. TSLA WHAT ARE YOU DOING?? TSLA STAHP!!

 

[adiggs]

"Yes, go up go up....but not too much!" is such a fascinating experience."

I luckily was in the stock before the first spring unwound, not in options though. eek! lol

Yeah - I've had this thought off and on over the years.

The question I ask myself regularly is whether there is something in this sort of realization that I can learn. Was there something I knew back then (whenever it was) that I believed, such that if/when that situation arises again I will make a different choice.


The example I make from my own life - back in the '08 crash I remember finding a dividend paying company that should have been worth $80/share, but was selling at $40/share. At that price it was paying a 10.8% dividend, had a history of increasing the dividend every quarter, and every indication that was going to be continuing for at least a few more years. I looked at that 6 ways to Sunday, trying to figure out what I was missing.

Finally invested and it worked exactly as I was hoping and expecting. For years after I would tell people about how that worked out. And then my point - I had high conviction in an investment. "High conviction" as in that was something like the 3rd or 4th high conviction I'd had in my life at that point. And when it happened I dabbled. About a $5k investment when it should have been at least $50k.

The lesson - when 'high conviction' comes around: don't dabble. (High conviction is maybe 10 times in life- it's rare).

When Tesla came along we didn't dabble. By today's standard for me we dabbled, but by our standard at that time in our life we put on a max sized position. Which led to another realization - we COULD have invested a lot more in TSLA back in 2012 when we bought. But we weren't emotionally ready to make that large of a commitment to a single position, so it wasn't an option for us. We did put everything in that we could for a single position though - we didn't dabble . So no regrets or even thoughts about where we'd be if we'd put in 2-5x as much.

And that's made all the difference.

 

[adiggs]

If I were to sell at this moment I think it'd be the 750 strike for this Friday at $6.80. I would do so expecting a roll out to next Friday (8/13) to further improve that strike, maybe 1 more roll, and then take assignment. And knowing that I'll probably see the shares regress for another early exit (and another delay in actually taking assignment ). I'm waiting for a bit longer into the morning as I think the opportunity is going to be better later today.

Something I was thinking and forgot to write down - my guess is that functional IV is rising today faster than actual IV (in the nearer term options). As a result I think that option sellers are being under paid right now and is a second reason that I'm waiting on call sales today. I'll still probably take the under payment, but I can wait a few hours as well. IV is around 53% on those 8/6 750s - and I think that's not high enough.

Another indicator that buying calls is probably a better choice, but my account is so heavily biased upwards right now that I'm actually uncomfortable with it.

An important reason for why I sell calls in addition to puts (spreads actually now) is so that I've got some degree of offsetting results between the two. It is a way to simplify my decision making as well as damp out changes in realized income from week to week. Big up weeks are fun - big down weeks are not.

 

[UltradoomY]

Was trying to wait for a MMD to open a BPS but I agree functional IV is trending up and so I sold BPS - for 08/13 -$695/+$595 for $10 per contract!

 

[Chenkers]

I sold close to my max amount of CC's earlier, 750, 760 and 780 strikes. I missed the peak of the $750 ($5.20 vs $7.40) but happy with the rest. I can see the rest of the week being a tug of war with MM before we settle down somewhere likely below $750, unless there's some extra catalyst.

I'll probably wait a day or two before I sell some IC's this week. The thing I like about IC's is that you can still get very good premium compared to margin usage late in the week once the likely MM target range becomes apparent.

At this rate I should have all my ITM zombie Puts and BPS's cleared out this week to maximise my available margin. I did a calculation on what typical premium this margin would allow me to sell weekly and I was pleasantly surprised.

 

[jeewee3000]

I sold close to my max amount of CC's earlier, 750, 760 and 780 strikes. I missed the peak of the $750 ($5.20 vs $7.40) but happy with the rest. I can see the rest of the week being a tug of war with MM before we settle down somewhere likely below $750, unless there's some extra catalyst.

I'll probably wait a day or two before I sell some IC's this week. The thing I like about IC's is that you can still get very good premium compared to margin usage late in the week once the likely MM target range becomes apparent.

At this rate I should have all my ITM zombie Puts and BPS's cleared out this week to maximise my available margin. I did a calculation on what typical premium this margin would allow me to sell weekly and I was pleasantly surprised.

Tug of war seems likely indeed, but the thing/danger with TSLA runs on monday is that it could trigger margin calls for shorts by friday, leading to covering and therefore SP rise.

MM's will then have to hedge and ignore max pain.

 

[adiggs]

I'm back in as well - 740cc for this Friday. After all - these are I-dare-you cc .

I'll have to look into updating my BPS as well. The 540/640s are doing really well today - raises the possibility of an early close. But I have other things to do so it is time to let them simmer a bit longer - maybe late morning it'll be time to close. THey're ahead 60% at this point and worth about $2.

 

[stealthyc]

Something I was thinking and forgot to write down - my guess is that functional IV is rising today faster than actual IV (in the nearer term options). As a result I think that option sellers are being under paid right now and is a second reason that I'm waiting on call sales today. I'll still probably take the under payment, but I can wait a few hours as well. IV is around 53% on those 8/6 750s - and I think that's not high enough.

Another indicator that buying calls is probably a better choice, but my account is so heavily biased upwards right now that I'm actually uncomfortable with it.

An important reason for why I sell calls in addition to puts (spreads actually now) is so that I've got some degree of offsetting results between the two. It is a way to simplify my decision making as well as damp out changes in realized income from week to week. Big up weeks are fun - big down weeks are not.

Actual IV has been dropping as TSLA has been rising today.

Also I sold a few 790cc in my IRA for $2 premium for this week. I have a very hard time risking loss of shares, so I stay very conservative.

 

[st_lopes]

Quick update on my position management. As context for those that haven't followed my posts to this thread before, I generally sell weekly covered calls against all my core shares as well as against my purchased leaps (in accounts where debit spreads are permissible). I also sell puts using portfolio margin.

At the peak of the pull back, I found myself in margin call territory and decided that rather than liquidate positions, I would sell long-term covered calls against my shares to raise capital. Intent being that on the "inevitable" climb back up to ATHs, I would have an opportunity to un-wind those sold calls either flat or for net debits. At the bottom of the margin calls, I found myself with 850cc 06/2023 sold against all my core shares (not against my leaps). This was in parallel to sold puts being DITM and needing to be rolled as well.

In short, this year has been a learning experience in sizing positions and managing maintenance excess.

Update on where my sold call positions now stand:

• -9 850c 06/2023 - I have unwound 65% of this position for a nice cumulative debit; the idea of being paid to manage my margin maintenance is kind of nice, though definitely don't want to be back here again;
• -7 1200c 03/2023 - these were not direct rolls from the 850s, but rather I had unwound 850s back to weeklies, but then we had another pullback in May/June that resulted in me needing to move back to some sold leaps; these were flat up until this morning; even with the positive price action in recent weeks, though does look like IV has ticked up on these; I intend to leave these until I get through the rest of the 850s;
• -11 900c 09/2021 - I just rolled to these from 950c 08/2021 after clipping at 90%;
• -10 730c 08/13/2021 - these are my sold weeklies; they actually started as 715c 08/06 sold last Friday, but on today's rally I rolled them for a $15 strike improvement to next week;

And on the sold puts:

• -13 840p 10/2021 - I just rolled these from 09/2021 for a nice cumulative debit - I have been rolling these (usually 1-2 months out and trying to improve strikes) since March;
• The balance of my sold puts (9) were early assigned (got to keep all that sold premium) a couple months ago and I have been selling weekly cc's against those margined shares; intent is to exit the margined shares once we regain 850, and to keep selling cc's against them until then;

YTD cumulative sold premium is just shy of $500k CAD. After the chaos that was Q1, I'm pretty happy with that outcome.

 

[CHGolferJim]

Under the assumption that there may be a strong price move in the next week or so, I’m looking at a 2-3 week duration for covered calls, selling Monday probably. Think I’ll do a ladder of ATM, +$30 and +$60 or something like that, sacrificing upfront premiums to potentially minimize the amount of rolling.

Re cash balance in an IRA to cover rolling, after confronting the same issue as you did, I confirmed with my broker that cash is not needed to do the BTC as long as the STO is booked the same day (for a net credit, or debit if you have a sufficient cash balance for the difference). The payments are done after trading closes.

It was a good decision to delay any CC selling until late AM today. Watched the SP rise, plateau and start to possibly show signs of dipping --> pulled the trigger at ~11:20 at ~$722 SP (+$35, MaxPain $670) with sto against all IRA shares:

• 5% 081321C740 $14.80
• 30% 081321C740 $14.29
• 50% 081321C760 $7.62
• 15% 081321C780 $5.02
• avg. $9.44
• basically achieved total premium targeted at $30 higher strikes than Friday's close would have netted

Rationale:

• probable uptrend 1st half of month as the market digests spectacular ER, possible pause 2nd half of month
• book two weeks premium (just about reaching monthly target), spend rest of month rolling to protect shares and 8/2 premiums, tweaking for gains if possible
• complete the bulk of the month's trades (possibly completely exit CCs) before 8/19 AI Day, and the possible announcement of AGM/rumblings of another split
• "book 2 weeks early with moderately aggressive ladder and defend" may become the monthly approach as we move into the next 6-18 months updraft as $TSLA catalysts begin to materialize (Austin, Berlin, CyTruck, 4680, FSD, Semi, Roadster, Model 2/A)

 

[adiggs]

I'm back in as well - 740cc for this Friday. After all - these are I-dare-you cc .

I'll have to look into updating my BPS as well. The 540/640s are doing really well today - raises the possibility of an early close. But I have other things to do so it is time to let them simmer a bit longer - maybe late morning it'll be time to close. THey're ahead 60% at this point and worth about $2.

Then I realized during my morning drive that if its a good time to sell CC then it is also probably a good time to BTC put spreads. Did that - good for about a $4 profit since I opened them. I forget if that was Thu or Fri last week? Whenever - it was recently. These were 540/640 BPS for Aug 13 expiration.

I'll wait until tomorrow for replacement BPS.

 

[LN1_Casey]

I also sold the $810s. That's as close as I'm willing to get to this freight train.

I'm much more daring. I sold a $735 when I woke up for about $7. Missed the peak this morning as I was asleep.

 

[dl003]

I have some remnants from the last couple of weeks now at 810 for this week and 850 for next. Sold 700p this week and 645 next. Will roll the 645 up once we go deeper into this week and TSLA remains above 700.

The only thing I'm truly losing sleep over is a split announcement sometimes this week. As such, I'm loading up on cheap puts to reduce my margin so that I can keep the short puts open while being able to buy shares in the AH as the announcement comes out. My plan for the morning after would be to close all weekly calls and replace them with puts/put spread.

 

[jeewee3000]

Pardon my ignorance, but what is the source of the rumors regarding a second stock split? I've been on holiday for some time, just got back, and skipped huge chunks of the investor threads. Today I've read posts about a possible split at least five times, but my Google Fu is failing me.

Por favor, ajudame. Gracias

 

[Knightshade]

Pardon my ignorance, but what is the source of the rumors regarding a second stock split? I've been on holiday for some time, just got back, and skipped huge chunks of the investor threads. Today I've read posts about a possible split at least five times, but my Google Fu is failing me.

Por favor, ajudame. Gracias

There is no news.

Folks have been speculating about "the next split" for months and months.

Currently Tesla doesn't even have enough authorized shares to do a 2:1 split let alone the 5:1 and 10:1 splits some have speculated.

So they'd need a shareholder vote to authorize more shares.


That said- technically they could announce "We will be doing a split pending shareholders voting to authorize the additional shares" any time they wanted.

Speculation is probably on the uptick as the annual shareholders meeting is usually announced now-ish but hasn't been yet....and some are speculating it'll be held concurrent with AI day in August.

 

[MP3Mike]

Last year the meeting was July 7th and the split was announced Tuesday August 11th.

No, last year the meeting was held on September 22nd.

 

[Tslynk67]

Pardon my ignorance, but what is the source of the rumors regarding a second stock split? I've been on holiday for some time, just got back, and skipped huge chunks of the investor threads. Today I've read posts about a possible split at least five times, but my Google Fu is failing me.

Por favor, ajudame. Gracias

AFAIK, the only rumour is from people (mis?)interpreting Elon's Tweets...

However much I'd like another sick split, I don't feel the need for one right now. That being said, if there's enough headroom in the allowed number of shares, a 2 for 1 would position the SP quite nicely

Of course, to be caught with sold calls would be a tricky one... on the other hand, the possibility to sell twice the number of calls and puts, would be super

 

[Tslynk67]

True but we have to stay up late for the ER conference calls.

Oh I never bother listening to those any more, not even repeats, I just read the investor thread commentary