I sold around 10 calls on Wednesday for today strikes $430, $440 and $445 and made around $1.5k. I am hopping that the IV and the SP go up close to AH around battery day or when the P&D numbers come out so I can sell longer dated calls September 21 or January 22 because I don't want to keep selling weekly calls. September 21 $800 strike were around $9k at AH and I think the January 22 $1000s were $8k.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
FWIW, I'm generally quiet in my accounts and so have a bunch of cash/margin waiting to be used...so...I sold a bunch of Iron Condors today for next Friday (9/18) at 3% return-on-capital. I'll realize full profit if the underlying stays between $280 and $500. Those strikes were chosen because $280 looks super solid on the downside and $500 is the recent (and all time) high, which all things considered is pretty safe to assume we won't get there by next Friday.
Also FWIW the same strikes would have returned ~12% on capital for 9/25, but I didn't want to take the risk of battery day blowing up the underlying.
Also FWIW the same strikes would have returned ~12% on capital for 9/25, but I didn't want to take the risk of battery day blowing up the underlying.
I think I am going to invest some time learning more about iron condors. I know the general idea - it's the dynamics of how the trade evolves that I need to learn more about. This might be a defined risk method for me to continue picking up some bucks here and there along the way.
Main reason I'm posting, besides bringing this thread back to page 1, is that I'm now 2 weeks into my use of yearly options for selling options (mostly). I am finding that the long duration is helping me stand back and not sweat the daily gyrations so much. I've also found that I haven't yet reached the point where I am actually ignoring the daily gyrations, but at least I don't sweat them as much (so that much at least is working).
I do still have 1 position dated this year. The October '20 520 covered call has been up and down. The last 2 day strong moves upwards make that covered call position look more likely to be headed to finish ITM (which will also mean a new ATH). However 2 weeks have come and gone, so the daily time decay is increasing. I don't have a good feeling either way on whether they'll just finish OTM.
One thing that I AM looking for is a serious IV spike leading into Battery Day. If I see a big enough spike out in November or December, then I might find that I can move the strike up and still collect enough of a net credit to find rolling to be a good choice. I guess I'm expecting Battery Day, in the short term, to be a buy the rumor, sell the news type of event, and rolling in a high IV environment sounds like a good way to collect incremental premium (if the situation arises, then high IV will cost more to close on a smaller absolute premium, while opening the new position with high IV on a larger absolute premium will net a useful benefit). More likely is that the closer in options see the bulk of the higher IV, where the longer dated options I'd be looking at won't see as much of an IV increase (and that, therefore, this idea won't work).
LN1_Casey
Draco dormiens nunquam titillandus
So, put in a sell order for a contract beyond my previous single. I currently have one for 520 18 Sep (that I unfortunately missed the peak sell price, lol), and now a sell order for one $580 25 Sep I'm trying to sell for $14, in case the SP goes up another amount today and someone nibbles at that price (as it's about $10 this morning).
Thus, this could mean I'd be selling 200 of my shares, and not just the 100 I'm currently planning for, as well as the extra cash therefrom. If both of those pop, than I legit will start doing the wheel (conservatively), and start selling puts even after buying my car!
Stonks.
Thus, this could mean I'd be selling 200 of my shares, and not just the 100 I'm currently planning for, as well as the extra cash therefrom. If both of those pop, than I legit will start doing the wheel (conservatively), and start selling puts even after buying my car!
Stonks.I sold another batch of calls for today about 12 calls, $470s, $485, $510 and $520 for a total of $1.9k.
Have you guys noticed that premiums for next week are super juicy? I sold a $575 call for $9.90 just now.. I am wondering if should wait for next week or just sell more Today.
LN1_Casey
Draco dormiens nunquam titillandus
Are you selling covered calls? Because otherwise may be a dangerous game.
My belief in that the reason they're so juicy (I sold one for 540 for $11.6) is because no one knows how Battery day will go, and how the market will react to it. The SP may be 600, 650 by next Friday, or it may go back to 300's. I'm fine if that call is exercised, as that's a price point I'd be happy with to buy my car, and I'm reasonably certain the wall of calls at 500 and 550 will at least cause some pause, or even the market will react negatively at first, and the MM's may keep it low until the week following. But that's my theory for my trades.
I have noticed that. I've also noticed that the IV on options is reasonably high. I've been looking at the October monthly (1 month out, with important Tesla news between now and then) and IV on the options I've been looking at over 100.
Big generalization - as an option seller, it's better to sell when IV is high. That leads to a reasonably common trade - selling options ahead of earnings, and then closing them the day after earnings. This is referred to as IV crush. I think of it as the uncertainty about what exactly the news will be, and then afterwards that uncertainty is resolved. And it's really the uncertainty leading to the high IV and high option premiums.
I've opened an October 600 strike covered call for $19 premium. As I mentioned up thread, I've shifted out of the weekly options. Not because I don't think there is money to be made there (I do think there are some good results to be had), but because I found I was spending more time on the weeklies than I wanted to. Stretching out to monthlies as the close in trade, with mostly longer trades of 1 or 2 years, has significantly lowered the time I'm putting into this.
One thing I'm trying to do to keep overall earnings closer to the weekly earnings - I'm looking for $10/contract/month to expiration (or $15 so I can close at 2/3rds and earn $10/month). So if the contract is 12 months out, I'm looking for $120-$180 in premium. And then evaluating if that's a position I really want.
So far this seems to be working for me, but the feedback cycle is a lot slower selling yearly contracts over weeklies
. Then again, it's really easy to ignore the daily and weekly share price gyrations.Yeah my calls are covered. Yeah IV is really high right now it is 120% and making the calls premiums high. Like you I would be ok with loosing my shares at $540 and selling puts.
I have noticed that. I've also noticed that the IV on options is reasonably high. I've been looking at the October monthly (1 month out, with important Tesla news between now and then) and IV on the options I've been looking at over 100.
Big generalization - as an option seller, it's better to sell when IV is high. That leads to a reasonably common trade - selling options ahead of earnings, and then closing them the day after earnings. This is referred to as IV crush. I think of it as the uncertainty about what exactly the news will be, and then afterwards that uncertainty is resolved. And it's really the uncertainty leading to the high IV and high option premiums.
I've opened an October 600 strike covered call for $19 premium. As I mentioned up thread, I've shifted out of the weekly options. Not because I don't think there is money to be made there (I do think there are some good results to be had), but because I found I was spending more time on the weeklies than I wanted to. Stretching out to monthlies as the close in trade, with mostly longer trades of 1 or 2 years, has significantly lowered the time I'm putting into this.
One thing I'm trying to do to keep overall earnings closer to the weekly earnings - I'm looking for $10/contract/month to expiration (or $15 so I can close at 2/3rds and earn $10/month). So if the contract is 12 months out, I'm looking for $120-$180 in premium. And then evaluating if that's a position I really want.
So far this seems to be working for me, but the feedback cycle is a lot slower selling yearly contracts over weeklies
Yeah on the last earnings the IV crush was insane specially since the stock went down a lot as well. I would love to be able to get $10 per 100 shares a month but with my current strategy of selling weekly calls 20-30% OTM I think it would be difficult. I think I might be able to make that this month because of the IV is so high but I think I should be able to get 8-6$ consistently unless I sell more aggressive strikes.
Absolutely, I want to shift my strategy to selling longer calls because it does take a lot of time.
pz1975
Active Member
I sold $700 covered calls for next week before close. Not a lot of profit but still decent with the high IV and I think they are safe. If the SP does actually go to $700 then I'll be super happy anyways! I also sold some $300 and $350 puts expiring next week back when the SP was in the high $300s. I will probably close them before battery day (already very green).
Stretch2727
Engineer and Car Nut
I have been selling puts for ARKK in a smaller HSA account. Not enough $$ here to do much with TSLA options. Actually just trying to get assigned to lower my cost basis and then maybe sell some covered calls.
I had 2 contracts $90 put that expired on Friday. The closing price was 89.88. I checked the account today and it looks like only one got contract got assigned. Is it possible that they don't assign both as the price was so close to the strike?
I had 2 contracts $90 put that expired on Friday. The closing price was 89.88. I checked the account today and it looks like only one got contract got assigned. Is it possible that they don't assign both as the price was so close to the strike?
gabeincal
Active Member
Thinking about selling a couple oct 2 580’s for a premium of $17. That sounds like a decent deal either way. If it runs up 30% in two weeks, I would be comfortable selling 2-300 shares to take some money off the table before a drop. Will see how the premium adjusts on Mon and pull the trigger! Thanks again @Lycanthrope and others for your helpful pointers! I’m ready to make some income and push this puppy to be a Teslanaire before xmas.
CLK350
Member
Newbie question here - so ideally, when the dip inevitably comes (or not), thinking of buying some LEAPS instead of stock for leverage (assuming a LT approach, perfect for ROTH IRAs) .. any suggestions /help welcome re
1 - is it necessary to be in a low IV period, or at low (relatively speaking) SP to sell & convert to LEAPS .. and then
2- how to tell which LEAPS are better candidates .. those with higher open interest ?
1 - is it necessary to be in a low IV period, or at low (relatively speaking) SP to sell & convert to LEAPS .. and then
2- how to tell which LEAPS are better candidates .. those with higher open interest ?
LN1_Casey
Draco dormiens nunquam titillandus
Definitely do some math on this. I did some Excel work over the weekend, trying to figure out where call and put premiums stand (as of when I looked, this weekend) using strikes I would like to be using right now, over a variety of time periods (2-6 mth, plus 1 and 2 year). I found that the premium/mth I could collect dropped steadily over that range, with the calls going steadily down from $10 to $4 per month. I think the 3-5 month covered calls will provide the best balance between effort and premium (around $8/mth premium). (And I'll be checking on this periodically to see whether the pattern holds, and the actual values hold).
The puts though had a range of $15 down to $5. At the very distant expiration options, they're about the same. But close in - zowie. I might focus more on months 2-4 with these, at least for awhile. I might stop caring and aim more for the 3-5 month window to be in sync with the call expirations.
I know that these numbers vary with the IV (a lot), and that there are periods where calls pay more than puts - this 1 time snapshot isn't the whole and complete story.
To get a feel for the range, I ran similar numbers for Apple (name pulled from a hat), and the monthly results were between 1/2 and 1/3rd of TSLA. The lower IV on these options translates to much smaller absolute results. Note that I have no interest in shifting to Apple - I just wanted a reasonably low IV comparison to a different underlying I would at least consider, so I'd have an idea of how this approach would work for me.
Being specific, the Apple calls went from $1.05 down to .67 (2 month to 2 years) and the puts went from 1.25 down to .40. Multiplying by 4 to put these on the same scale, that's $4.20 down to $3.67 on the calls, and 5 down to 2 on the puts.
To make these more like for like, I used 1% of the share price as the monthly target premium (keeping all my other criteria for these option sales in mind as well). For TSLA that works out to a target if about $4 and for Apple that works out to about $1 (each per month), and will change as the shares go up / down.
I also know that for many reasons, this is an odd and potentially dangerous way of looking at things. Focusing on the premiums collected is a reasonably easy way to get into trouble. My purpose is to be thinking about a level of income from this activity that I can live on in retirement. Your results will almost certainly vary, and you make your own choices / suffer your own consequences.
I would expect both to be assigned as they were ITM. My understanding is that all options that are $0.01 ITM (or more of course) are automatically exercised / assigned after expiration. One thing to keep in mind as well - we've seen situations where OTM options were assigned after end of trading on expiration day. Thus the suggestion that even for options further OTM, put in an order on that final day to sell at .01 (or some other trivial amount) to be sure that there won't be an after hours assignment.
At least at Fidelity and I believe eTrade (in the US), they encourage this behavior (proactive closure of OTM options) by making these buy-to-close orders commission free at an option premium of $0.65 and down.
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I opened a new Oct '20 365p position this morning, collecting a $25 premium.
My thinking was that I had some cash in that account (from previously selling some covered calls) and I wanted to put it to work in this relatively high IV environment. For overall effort reasons, I expect that these 1 month options will be the exception rather than the rule, and that 2 month options will be the shortest time period I sell. In this case though, I already had 2 other positions expiring in Oct, so monitoring a 3rd position for that same expiration is effectively 0 additional effort.
I was also thinking that I've effectively pre-bought shares at $365 should somebody be willing to sell, and collected $25 for the privilege of buying shares at $365. My guess is that I won't be assigned / nobody will take me up on my generous offer, in which case I do collect $25 for the month.
(And a sidenote - $365 is $1825 pre-split; there wasn't all that many months back where that wouldn't have been a 'safe' level to buy shares. My oh my how quickly things change with TSLA. AND I'm still wrapping my brain around the #s, post split. I'm getting there though)
My thinking was that I had some cash in that account (from previously selling some covered calls) and I wanted to put it to work in this relatively high IV environment. For overall effort reasons, I expect that these 1 month options will be the exception rather than the rule, and that 2 month options will be the shortest time period I sell. In this case though, I already had 2 other positions expiring in Oct, so monitoring a 3rd position for that same expiration is effectively 0 additional effort.
I was also thinking that I've effectively pre-bought shares at $365 should somebody be willing to sell, and collected $25 for the privilege of buying shares at $365. My guess is that I won't be assigned / nobody will take me up on my generous offer, in which case I do collect $25 for the month.
(And a sidenote - $365 is $1825 pre-split; there wasn't all that many months back where that wouldn't have been a 'safe' level to buy shares. My oh my how quickly things change with TSLA. AND I'm still wrapping my brain around the #s, post split. I'm getting there though)
We've got a nice mix of European and US contributors in this thread.
Europeans like to put the day first. As a data geek, my preference is the y/m/d format, but since we mostly assume the year, that leaves us with m/d. The reason being that in my work I sort on dates quite frequently, including dates stored as strings, and I'm guaranteed a useful sort on y/m/d format.
And yes, I realize that I never sort on the dates in this thread - that's just a habit that carries over from years of interacting with large masses of data. Oh - and that it's the format I've grown up with here in the US.
CLK350
Member
Not sure if I'm reading this right (correction/ clarification welcomed): does this mean you are leaving K36.5$ cash in your account till Oct 20 - if so, you are then forfeiting the possible SP appreciation if you just bought additional shares. In that case, do you mind sharing your calculations /assumptions for that trade?
Currently have some 540 Sep 25 call (covered), and eyeing selling some shares to get some LEAPS (anyone's feedback welcomed)
Yes, you have the math correct on the cash secured put (typical name). I'm starting to use "covered put" since it lines up so nice with covered calls.
So yes, I have cash in the account that is sequestered by the broker. It's not actually separated - it's just got a flag on it so if I withdraw / spend enough cash that I cut into the sequestered amount, then it doesn't go through and I get a message telling me that I'll leave my account in an invalid position.
And yes, I won't be getting SP appreciation from just owning those shares, and I'm confident that over a longer time period, this approach will leave me with a lower return than just owning shares. And yes, I'm confident that there are many ways in this sort of trading are suboptimal to outright bad in many situations.
There are lots of details as to why I trade like this and what I'm trying to accomplish - but the easy answer is to read the opening page of this thread. There are a bunch of assumptions laid out there that will address why I'd be doing something like this, as well as why this is a bad trading for many others.
My calculation on this trade is that 36,500 in cash, even for a year, is going to earn like $36 in interest (or is it $3.60?). Selling the cash secured put generates $2500, or something like 6% if I keep all of it when the put expires worthless. Repeated monthly (linear extension off of 1 data point is a BAD idea, but what the heck - it kinda sizes things up) that's something like 72% annual realized cash return.
All I'm really targeting is something closer to 1-2% each month, but that's an average across many trades, with some of them looking more like this one.
LOTS more details back in the first page.
So something you may want to look into is normalizing contracts to maximize return on capital as opposed to looking for hard values on return. For sold puts or DITM CCs, once you pick a solid strike--I like $320-330 for a short term expiration ~$275 for mid and ~$190-200 for long term, but YMMV--you can very easily figure out which expiration dates return the most profit/capital/day at your short/mid/long prices and choose accordingly. I have a quick .xls that I'll dump an exported option chain into when I'm looking to find an ideal contract...which I do from a slightly different angle for some DITM TSLA and ZM CCs that I've been carrying for a while...
OTM CCs are a bit more difficult because there's some speculation involved, but I'm sure you can fit some kind of risk profile curve to it.
It is of course an averaged metric that assumes full payout at expiration, but its really nice to compare returns.
I stumbled onto this, but it basically restates what was discussed in option alpha up thread.
OCH : (Option Clearing House)
19%: Expired worthless.
11.6%: Exercised.
69.4%: Bought or sold to close.
Closing an Option Position - The Options Playbook
OCH : (Option Clearing House)
19%: Expired worthless.
11.6%: Exercised.
69.4%: Bought or sold to close.
Closing an Option Position - The Options Playbook
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