Wiki Selling TSLA Options - Be the House

[adiggs]

Anybody do any successful Covered Calls only trading this week? I stayed away, and was kind of regretting it until 2:45 pm today, lol.

One day I will have the quiet time to learn about BPS and all the other Halloween candy you guys play with.

I've got a few (too many) 800 strike cc's open right now. I was looking at those positions earlier this morning and I realized that I've got more open than I thought. Most of the ones I opened are using Dec 500s as backing - contracts that I'm planning to sell sooner than later regardless to raise incremental cash for (you guess it ).

I still suspect an <800 close for this week but am mostly ignoring those as they'll be what they'll be. If we're really close to 800 then I'll evaluate what premium I can get on a roll to the premium I can get from selling BPS with that cash, and if the call roll won't at least keep up with the BPS, I'll be taking assignment or even *gasp* just selling those leaps.

This approach is going to keep my cc's VERY close ATM. If I keep swinging and missing while earning at least as much BPS income, it'll be an interesting learning opportunity.


To put some numbers to it - those 500 strike Dec calls are worth $300. I could sell 5 of the $60 spreads that I sold today. The spreads generated 3.40 or a total premium of $1700 per contract. I'd need a $17(+) credit from a call sale to keep up with that. The 800 strike for next week is selling for $19 (shares at 797) while the 805 is more like $16.

So the 800 strike is the minimum I'd do for premium purposes, but the risk I'd be taking on is much higher. What is that risk? It isn't seeing the shares go up - I'd get my $800 sales price plus the incremental $19 that I wouldn't have been able to earn via BPS. No - the risk is that the shares go down. I'd keep the $19 and would need similar aggression the week after in order to maintain the income, but I'd also have the opportunity (likelihood) of needing to sell the shares at a <$800 share price.

Based on this, I'm likely to sell 'em all. I might keep 1 for the purpose of running a small test series of trades where I'm very close OTM and just see how that evolves and how my emotions go with it. Knowing that at current IV and premium distribution I'll be giving up $$. Also believing that calls and put premiums will be closer in the future, and that I might need to have learned something on the call side to help me take advantage of that premium shift.

 

[adiggs]

I have had multiple people ask me to teach them how to trade. I give them the option alpha link on page one of this thread and tell them to watch all the videos then we can get started. No one has completed that step yet. I figure if they can't invest 6 hours of their time watching the videos, it's not worth my time to try and teach them. And as of late, my time is worth quite a lot.

I like this. As 'easy' as this all sounds, I'd guess that the least educated and experiences of us has at least 100 hours worth of options education, reading, and experience. And that's the frosting on top of all the time that we put into following Tesla, the company. Both are essential to this approach (MHO).

Somebody that isn't willing to invest in that really easy, digestible, easy to consume options education isn't serious. One reason I like that link is that its a single easy location to find a lot of information. There is a lot more information out there, but I haven't found anything comparable in quality and ease of access. Most of it involves me somehow stitching all of that together on my own - a nearly impossible task when I start off knowing nothing about the topic.

 

[MikeC]

That is much better than nothing.

True, I'm just happy I was able to buy TSLA instead of the stupid mutual funds most HSAs offer as the only choices. But imagine if BPS could be done in an HSA, you could pay any medical expense with pre-tax money at any age. It would be huge.

 

[Yoona]

At current sp=795 and volatility=62, one SD (ie 68% probability) for 10/15 is 710-880.
15% swing per side is 676-915 range.
10/15 maxpain is 750 this morning.

 

[EnzoXYZ]

NOT-ADVICE of course

But I like the small / aggressive position to consciously and intentionally get into a management situation because I've been in the situation where I needed to know how to do this sort of management and didn't. That was a big position and my off-the-cuff solution got me into a 2 year position that needed a year to finally resolve. This was one of my 3 or 4 big mistakes over the last 18 months and some better preparation would have led me to different choices. If a similar situation arose today for me, I'd be doing different things.

Expensive mistakes can be the best education. But even better are cheap mistakes that teach the same lesson.

Even better is learning from other's mistakes!

My biggest mistake was thinking I had the ability to buy put for a spread if I needed to free up margin on 3/5/2021. Up to this point I was only selling cash/margin secured puts. I had to liquidate shares to raise buying power. Panic mode all around just before market closed. Anyone new to options make sure you have LVL 2 or better in the trading account.

 

[mrmage]

I looked at this thread a few times in the past, but saw mostly posts about writing puts and calls. Somehow I missed all the discussion about weekly spreads. I've done lots of spreads, but mostly medium to longer term.

The backtested returns for weeklies seem interesting though. The capital required is the same between buying ITM call spreads and writing OTM put spreads with the same strikes. Calls are usually more $, so the return should be better with calls, although that isn't always the case.

Personally, I would just choose whichever (call vs put spread) has the best return for a given pair of strikes. Other than choosing the strikes (everyone's risk tolerance is different) and being lazy by not reading all 400+ pages of this thread, is there anything else I should watch for?

 

[adiggs]

I'm not sure how to broach this topic, so I'm just going to dive in and hope for the best.

The post count in this thread is getting really high.

I figured this out by looking for a decent starting point for somebody that I think I'll be successful at bringing into the fold (he and I have been talking about this stuff for more than a year). I discovered that page 300 is the start of September. We've added something like 40% to the thread length in the last 5 weeks compared to the previous 15 months.


Is that a good thing? A bad thing? I know that the last couple of months have been worth reading and contributing to a 1000 pages worth of thread, much less 130 pages. That being said the activity level can readily chase people away that would like to participate. As one example (I like to use myself) I only dip my toes into the main thread. I usually read the most recent 2 pages, one time per day and maybe 5 days a week.

I would like to read it much more consistently and completely, as well as participate, and you'd think with all this free time I (theoretically) have, it'd be easy. In practice its harder and the high post rate keeps me away (to my detriment).


So I have no specific ask, and I definitely don't have any particular requirement (I have no such privileges, nor do I want them), and I know that I am a significant contributor to thread length (why use 3 lines to say something, when 3 paragraphs or 3 pages can do it better!@?!). I probably won't try to be more concise in my posts.

But I am going to be more choosy about when and what I post about. That's my own choice and it derives from my own observation and preference about how this thread goes, and doesn't need to be what you do or what you want.

(And please, oh please, let this not be a wet blanket thrown over all the good ideas and enthusiasm!)

 

[mickle]

I'm not sure how to broach this topic, so I'm just going to dive in and hope for the best.

The post count in this thread is getting really high.

I figured this out by looking for a decent starting point for somebody that I think I'll be successful at bringing into the fold (he and I have been talking about this stuff for more than a year). I discovered that page 300 is the start of September. We've added something like 40% to the thread length in the last 5 weeks compared to the previous 15 months.


Is that a good thing? A bad thing? I know that the last couple of months have been worth reading and contributing to a 1000 pages worth of thread, much less 130 pages. That being said the activity level can readily chase people away that would like to participate. As one example (I like to use myself) I only dip my toes into the main thread. I usually read the most recent 2 pages, one time per day and maybe 5 days a week.

I would like to read it much more consistently and completely, as well as participate, and you'd think with all this free time I (theoretically) have, it'd be easy. In practice its harder and the high post rate keeps me away (to my detriment).


So I have no specific ask, and I definitely don't have any particular requirement (I have no such privileges, nor do I want them), and I know that I am a significant contributor to thread length (why use 3 lines to say something, when 3 paragraphs or 3 pages can do it better!@?!). I probably won't try to be more concise in my posts.

But I am going to be more choosy about when and what I post about. That's my own choice and it derives from my own observation and preference about how this thread goes, and doesn't need to be what you do or what you want.

(And please, oh please, let this not be a wet blanket thrown over all the good ideas and enthusiasm!)

What we really need is a single big FAQ posted that combines all the knowledge so far, and it gets posted and updated every few weeks, so new people to the thread can have a good starting point. It really is too much to ask people to go back through thousands of message with little info content spread throughout.

This could be done as a collaborative effort, maybe starting out with an outline of what it would contain, and various people could fill in sections as it goes along.

 

[adiggs]

I looked at this thread a few times in the past, but saw mostly posts about writing puts and calls. Somehow I missed all the discussion about weekly spreads. I've done lots of spreads, but mostly medium to longer term.

The backtested returns for weeklies seem interesting though. The capital required is the same between buying ITM call spreads and writing OTM put spreads with the same strikes. Calls are usually more $, so the return should be better with calls, although that isn't always the case.

Personally, I would just choose whichever (call vs put spread) has the best return for a given pair of strikes. Other than choosing the strikes (everyone's risk tolerance is different) and being lazy by not reading all 400+ pages of this thread, is there anything else I should watch for?

That's not lazy so much, as maybe rational!

If you did read all that I think that you'll find nearly 0 knowledge for the buying of call spreads. So anything you can share - the mechanics of specifically what you're referring to, and the sorts of results you've seen, I know that would be valuable to me. Even if I don't end up doing any of these myself.


Beyond that - I think that other things to watch for will either be basic for your existing knowledge level, or too voluminous to write out in the hope that we hit on something useful.

I think that the style of post that will be the most useful to get that sort of commentary or NOT-ADVICE, are trading posts. I like to talk about positions and not position sizes, and most importantly talk about why this, and not some other thing that I considered and didn't do. Maybe even a question or three if there's something on my mind. Welcome aboard!


EDIT to add: You didn't see much talk about spreads until the last few months, maybe back to the beginning of the year, because there wasn't much talk to be seen. Our knowledge and results are expanding.

 

[adiggs]

What we really need is a single big FAQ posted that combines all the knowledge so far, and it gets posted and updated every few weeks, so new people to the thread can have a good starting point. It really is too much to ask people to go back through thousands of message with little info content spread throughout.

This could be done as a collaborative effort, maybe starting out with an outline of what it would contain, and various people could fill in sections as it goes along.

I love the FAQ idea. I was looking at the TMC support/membership levels, and at a higher level of site contribution one gains the ability to start threads and retain unlimited edits (for time). Even better is something more like a wiki that anybody can contribute to. Heck - if I signed up at the right support level and gained the ability to edit the opening post, I'd do that and start pulling the outline and chunks of stuff into that. H'mm... Any moderator / site operator types that can tell me about that - if I sign up at the right membership level, do I gain the ability to edit starting posts for threads I started in the past? Or only new threads?


Anybody know enough about the tools around here, to know what art of the possible is and that might fit well with this idea?

I was recently on a highly curated and well moderated site - the information density was amazing. And probably not chatty enough for how things have proven to work well here, but might still provide a model for the other extreme to help find a middle ground.

 

[mickificki]

What we really need is a single big FAQ posted that combines all the knowledge so far, and it gets posted and updated every few weeks, so new people to the thread can have a good starting point. It really is too much to ask people to go back through thousands of message with little info content spread throughout.

This could be done as a collaborative effort, maybe starting out with an outline of what it would contain, and various people could fill in sections as it goes along.

Yes THIS! I've been spending the last couple nights looking through the forum trying to find ways that people have been rolling their BPS if things go wrong. I don't want to ask here because I know LOTS have already talked about it and it'd just kill the thread.

Clicking on link after link...I started looking July 2021 and still slowly going through all the messages, filtering as much data as possible.

 

[ggr]

Mod: Using my mod skillz I created the following thread, using @Chenkers (Thanks!) glossary as a start. Made it a wiki but not sure who can edit besides @Chenkers and mods. --ggr

Wiki - Options & "the Wheel" Glossary and FAQ

This is the Glossary and FAQ for: https://teslamotorsclub.com/tmc/threads/selling-tsla-options-be-the-house.191290/#post-4640780 The 'Be The House' Thread Glossary: IC: Iron Condor BPS: Bull Put Spread BCS: Bear Call Spread CC: Covered Call LCC: a LEAP Covered Call LEAP: A long dated option...

teslamotorsclub.com

 

[deerfield]

This dynamic is why I keep the two positions together. I open the BPS as a single position (made up of two options), and I close the BPS as a single position (again made up of the two contracts). I fiddled around briefly about dysyncing them, closing the short separately from the long, and found that in my situation I ended up putting just as much energy into trying to max out the long position position as I'd put into the short contract, with pennies or dimes on the table vs. dollars.

And then I was also fighting time decay instead of benefitting from it, and managed to turn all that extra energy into a minor additional loss.

So I just stopped - I don't see a path to consistent high returns that will be sustainable over the long haul, that won't always be high energy / effort. (That's my view anyway - which doesn't make me right. I've learned a lot from others about what I had been thinking was right, and then found a better way).

In some instances (today actually!) it's harder to fill if you keep them synced up. If the long is so OTM, there might not be enough buyers for you to fill your hundreds of contracts. In this case, I just break them up into 2 orders and let the long fill on its own. I actually gained a penny more doing this today .

 

[adiggs]

In some instances (today actually!) it's harder to fill if you keep them synced up. If the long is so OTM, there might not be enough buyers for you to fill your hundreds of contracts. In this case, I just break them up into 2 orders and let the long fill on its own. I actually gained a penny more doing this today .

This dynamic, very large contract counts, is something I foresee becoming more common, and the issues that come along with them. There has been very little or no conversation about fill quality over the 400+ pages of the thread.

I foresee a change on that - for now I'm still getting my fills. One way to mitigate against that issue is to make a better offer on the spread ticket. If the spread premium is $0.20 with the long / insurance nearly valueless, you may be able to get the position to fill by offering 0.21 as a for instance. The idea is that there will be market maker that will take the extra penny and the worthless long puts to get the other side of the position, and the remote possibility of those long puts increasing in value.

Or just close the short put proactively and let the long put expire worthless. I've done this in a situation where, it turned out, the long put wasn't worth the listed 0.01 - it was closer to the 0.0001 that we sometimes see positions trade at. I'm probably too militant about BTC my short options rather than let them expire worthless.

 

[Right_Said_Fred]

The best reason ever, and I agree.


I don't know about other FAQ / wiki type mechanisms on the site, but I'm asking about getting the ability for me to edit the original post (and maybe my original few posts) in the thread. Whether its idea or not, its an easy path to getting a start on the content.

If I can get those permissions then I'll be looking for everybody to help with curating an outline for what we'd like to see in there, and then help with getting that content created. Lots and lots of posts in the thread working out that content out would be marvelous

This other mod has made the thread a Wiki. You should now be able to edit your first post.

Might I also suggest a name change. It has evolved from a thread about a specific strategy (the wheel) to a thread about all kinds of options strategies involving - mainly - writing calls and puts. The title no longer seems to cover the content of the thread. So if you want to introduce a new title, I can change it.

 

[M3Rider]

Lots of activity, I'm still holding 10/8
70x -730/630bps sold on Fri
50x -740/720bps added on Mon
50x -750/725bps added on Tue
Total premium is 86k minus prob 1k to close them tomorrow. This would be my highest score per week ever if they stay OTM tomorrow.

Only sold 50x 10/15 -740/720 bps today @2.22.
Was not sure if it was worth it to close out early, so margin still blocked.

 

[adiggs]

This other mod has made this thread a Wiki. You should now be able to edit your first post.

Might I also suggest a name change. It has evolved from a thread about a specific strategy (the wheel) to a thread about all kinds of options strategies involving - mainly - writing calls and puts. The title no longer seems to cover the content and purpose of the thread. So if OP wants to introduce a new title, I can change it.

Thanks @Right_Said_Fred ! I'll get back to you on a name change (soon).


For participants and newcommers - I'm taking suggestions / ideas for the new thread name.

My first idea with little or no thought:
"Selling TSLA options for fun & profit"

(I like a bit of whimsy, in addition to being descriptive).

 

[adiggs]

Clearly we're on our way to some nice technical changes around here. While those details are being worked out, there's no reason not to get started in on all that new and consolidated content we'd like to see.

I'm open to, and like, any and all ideas that people have. My first thought is that we put those thoughts, ideas, links to previous posts, and what have you here in the ongoing thread. The primary reason being that one person's ideas can get its own comments and improvements from others, as well as tickle ideas from others.


My first preference is to get an outline established. I'm big on agile in pretty much every context - I prefer fast and evolving, to lots of study and evaluation before a single update is made. So an outline, with an expectation that the outline itself will change, even as content arrives to fill it in.


Looks like my original outline, over the leading half dozen or so posts (and I really did think about it like this - honest):

1. Intro / warning / education pointer (preliminaries)
2. What is the wheel? (I'm thinking this is better understood now as the market edge from selling options)
3. The start of a non-exhaustive list of risks. Think of these as the very first risks that should be understood as part of a personal decision to dig in deeper
4. Why do this, or at least my "why". This bit of intro should probably be 1 or 2.
5. The market mechanism / edge from selling vs. buying
6. The request for participation, help, mutual learning

 

[adiggs]

A management and readability idea that occurs - @Chenkers glossary has also been turned into a Wiki. The obvious thing to do is to link to that wiki / glossary, and maintain the glossary there, rather than trying to put that content into this thread. Hopefully Chenkers is ready and willing to expand on that glossary as needed (which means that somebody sees a term to add, or somebody is wondering what a term is - answer as usual, but also call it out for addition to that post).

Which also leads to an idea, with no specific idea on my part for implementation - putting chunks of ideas into their own Wiki for separate management, and link to them from here.

Maybe a management techniques post, which might in turn provide a pile of links to yet other content (Youtube videos, articles, whatever). I think the only thing to do for now is have this in mind, and when a section of the first post gets really large, and seems like it could stand reasonably well on its own, then we break it out and somebody takes on responsibility for it.

Or maybe I read this correctly elsewhere, and we can grant access to the wiki post so many can edit!

 

[Knightshade]

Well, after the investor meeting and Q&A I think expectations for Berlin event are gonna be pre-lowered... No production underway announce for Austin so highly unlikely we'd see one in Berlin in 2 days... might consider opening new BPS tomorrow instead of waiting for Monday if we get an opening dip...

Cross posting from other thread for anyone who didn't see it-
Summary of relevant stuff I heard... none of it super surprising, but some certainly less...enthusiastically bullish...than some speculation I've seen lately:

HQ moving to Texas, will still be doing production in CA and expanding.

CT end of 2022 to start, volume production in 2023

Semi and roadster not till 2023 he thinks

No 4680 other than Kato this year, 4680 production in Texas next year

Austin "by end of year" for Y (fed by kato sounded like), volume by end of next.

MIGHT start scouting for locations next year for new factories, maybe make a decision in 23 for location...meantime expand existing further including 50% in CA but space is very tight.... which to me reads as 2024 earliest before initial production would start for any new plant, volume 2025... bit later than many have speculated.

No plans for dividends, reiterates it means you're out of things to invest in internally

No plans for a split at this time- later maybe

Tesla insurance live in Texas next week, aspirational nationwide next yet but challenging for 50 states regulation

ATV probably will be made in Texas