Is anybody else writing both puts and calls at the same time? If so, how is that working for you?
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Not quite. This morning I was holding covered calls, but I bought them back and sold the covering stock, then sold OTM puts that, if exercised, would buy back the stock that I just sold at a small profit. (June 26 $1000 strike, $127.3 premium.) At this instant they're down a little, but time is on my side.
I'm feeling a lot better about those 910 calls today than I was at the beginning of the week. If nothing else, time decay is decimating them (to my benefit). Heck - I can nearly close them at the end of the day today at a break even. Another flattish day tomorrow, and I might be able to close them at a profit (go-go time decay).
I was able to roll out of that 910 call I had for this week, and into a 1000 call for the June 19 expiry. Also rolled the 1000 calls for next week out to June 19.
ALSO rolled the 800 puts for next week, into 800 Puts for June 19 expiry. At least it'll be easy to keep track of when the next batch of options expires
There were all on the low end of my typical profit %, but still in the 55-65% range. I especially wanted out of that 910 call and with a 55% profit on offer, I took it.
These new options are in the .15-.17 delta range.
ALSO rolled the 800 puts for next week, into 800 Puts for June 19 expiry. At least it'll be easy to keep track of when the next batch of options expires
There were all on the low end of my typical profit %, but still in the 55-65% range. I especially wanted out of that 910 call and with a 55% profit on offer, I took it.
These new options are in the .15-.17 delta range.
Ah, come on that's chicken-*sugar*
TBH, this is perfect trading, the SP is gravitating back to $885 at every opportunity. I could also have bailed-out of too week's $875 with 60% profits, but no, screw-it, live life on the edge a bit! And I'd appreciate 100 shares to play with next week anyway.
The $895 calls went to 50% profit too, but nah, let it ride...
One thing I'm trying to get more comfortable with is 'only' closing positions with 50-60% profits. With so many of my closes at 90-95%, the individual trades look a lot better. But I think the overall results are reduced.
I don't know what to expect next week (hence why I like having both puts and calls - I'll have a winning side either way). The max pain for June 19 was up to $700 yesterday (from 625 or 675 recently) and there is HUGE volume on that expiration. My guess of the moment is that the week of June 19 is going to see the stock price coming down.
At max pain (700), there's 1.65B to be paid out to option holders.
At 800, there's 1.78B. At 900 there's 2.3B. At 1000 there's 3.2B.
I doubt the share price will be pushed all the way down to 700, but there's pretty significant money to head in that direction. I also expect max pain to continue rising between now and then.
Mokuzai
Member
Have some sold $950 covered calls for Friday that seem to be at risk now. Thinking if they exercise will use that cash for some aggressive put option sales.
Gotta love sharp moves like today's. The put side on the 15 day option is closed after 4 days (2 of them the weekend) for 68%. I'm rolling that money in and up - the 800 strikes from 6/19 are now 885 strikes for 6/12 (I notice that @Lycanthrope get's his date components order wrong, but that's ok
). That 885 strike is the .20 delta. The new option is about $6.80 premium.I also noticed when opening the new position that ATM IV is up to .63 - we were down to .52 last week when I opened the 6/19 options.
EDIT: My thinking here is that with some recent big moves, I don't want something open for 2 full weeks. If this were Wed. or Thursday when I was closing the position, then I might have opened this for 6/19. With the full week ahead though, I preferred the smaller premium and the shorter time to expiration of this new option.
The call side I still have the 1000 strike calls. I'm starting to think those are in play, though recent history also indicates that we'll shortly have a down move. These strikes going ITM will require a new ATH, as well as swimming against a pretty big current next week. Heck, this week too, as an otherwise routine weekly option expiration is starting to look like bigger or similar money (option seller cost away from max pain) over the 6/19 expiration.
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I swapped my 2 sold puts July 17th 850 for July 2nd 870. I felt like time value would hold steady for too long on those puts for the 17th.
I had sold them last week for 56.50 and now bought them back for 40.70. I sold the new July 2nd 870 puts for 34.40.
That’s a learning experience: I shouldn’t write puts that take too long to expire, unless I’m being forced to. This swap gives me an extra two weeks of premium to earn with my next trade.
I had sold them last week for 56.50 and now bought them back for 40.70. I sold the new July 2nd 870 puts for 34.40.
That’s a learning experience: I shouldn’t write puts that take too long to expire, unless I’m being forced to. This swap gives me an extra two weeks of premium to earn with my next trade.
I remind myself of this - left to themselves, the time value on those options you've sold WILL be 0 on Friday. They might be in the money, so the option will be worth something, but the time value you've sold will be $0.
I like to look at the max pain chart - not just the max pain $$ itself, but the variance in the payout (if you will) at different strikes. $950 has a reasonably large option seller pain compared to $860. But $900 share price doesn't have a very large option seller pain compared to $860.
That option seller pain increases a lot faster as you get to $1000 (more call options in the money, means each $ for $ increase in the share price is increasing the $ value of option seller pain at expiration faster).
Which might mean something, and might mean nothing at all
So wild - the put I opened yesterday for this week, I've closed today for an ~80% profit. I plan to roll up - I think to the 920 strike for this week. My thinking here is that I can bump the time decay back up and maybe snatch a few more dollars this week than I would otherwise be able to get. This will narrow my strangle window to $80 - easily my smallest so far, but one side will expire in 3 days, so that's something.
EDIT: Went for the 915 strike; that's the .22 delta instead of .25, and it looks like 920 might be a (minor) OI wall. I figure these are in play for assignment this week as they're only $35 OTM.
I'm leery about next week - I might decide to sit it out on the put side; I haven't decided yet.
No change on the call side - my 1000 strike calls are feeling like they're in play
Mokuzai
Member
When trading options on a margin account it goes off of a Maintenance Requirement. Even held stock has a maintenance requirement (my TSLA shares hold about a 30% requirement) but this goes up and down with the share price of the stock. If your account starts to decline and your sold puts are at risk of not being able to be covered by selling other assets you can go into a margin maintenance call where you have to add more cash, sell some stock or exit your options or it'll be done for you.
A sold covered Call option carries no maintenance.
A sold covered Call option carries no maintenance.
In a cash secured put with no margin, you need $87,500 for the first put, and $89,500 for the second put; or a total of $176,000, and not a dime less (that's 1/10th of a dollar for those that don't interact with the world in dollars
That's correct, I don't use margin. Now, as the SP increases, that 176k will suddenly become 200k and so on. I tend to close the put once I am almost 85-90% and open a new one, as there is no point in waiting for that last 10-15%. What do you guys generally do?
That's what I'm doing (cash secured puts) as well. And with the increasing share price, I recently needed to shrink the number of puts I'm writing by 1. Ah well - I've been finding that the total cash / income I'm earning has been going up with the share price, so the number of puts isn't something I think much about - it is what it is
I run pretty conservatively - I have been opening puts in the .15-.20 delta range (which corresponds roughly to the market pricing in a 15-20% change of the option finishing ITM). I use the delta specifically to approximate the ProbITM, as my strategy is to collect premium and rarely get assigned (never so far, but I've only been at this for 3 months).
The pattern I've been seeing is that the .15 delta puts (or calls) get to about a 60% profit (rather the 80/90% you mentioned) at about the same time that delta has shrunk to .10 or .09. That has recently been my trigger to close the existing position for the 50-70% profit (it seems like it coasts to 70% before I can actually close - bummer!), and then immediately open a new .15 delta position. When it's working smoothly, I am rolling out 1 week - frequently at the same strike.
But the new position varies - this week my puts cratered so fast (yesterday plus today) that I closed them in 2 days. Those were 6/19 puts and because the week is so young, I've rolled in (shorter expiration) and up (higher strike) for this week. There isn't much money, but I am finding that I like the 3-8 days to expiration options the best (aggressive time decay, and frequently changing strikes enables me to adapt to the changing share price more quickly).
I've also been, off and on, doing 1 put at the .30 delta level. I call that my option where I'm daring the market to assign me. There are much better premiums available at that delta. @Lycanthrope is working at even higher deltas (I think around .40, though I think he's also not particular looking at delta). I like to work off delta as it gives me a consistent comparison from option to option, week to week, to compare how daring / risky I'm being with the options over time. I used to do .05 - .07 options; that drifted up to .10-.12, then .15. Now I'm doing .15 - .20 with occasional single options at .30 (light my hair on fire radical for me).
If you're only trading 1 underlying (TSLA; as I am as well), then I think that 70-100% profit level is a reasonable target to aim for. Or at least, 50%+ WITH a replacement position already lined up. The way I think about this - if I don't have a replacement position I'd like to take immediately (or I want out and to wait a few days+ while market conditions change), then I let the existing option keep aging out. If I don't have something to replace it with, then why not let that last $ or 2 age out?
I've mostly been finding that I find that new position when the current position hits 70-90%.
If you read other option strategies where people are trading large numbers of positions and underlying shares, you'll find them targeting 50% profits pretty consistently. They don't try to go higher - take the 50% and get a new position open ASAP. I think that's a good general plan, but with 1 underlying it doesn't work as well.
Then again - my overall target is that this is a really generous dividend play. That's my strategy, and so far it's running at 1-2% / month. Which is an outrageously good dividend, but it's also not life changing money (at least not after 3 months - if I can keep it up for 2 or 3 years, then it's retirement money and plan all on it's own).
Welcome to the thread, and I hope we hear more from you. I'm particularly interested in what you're thinking and why you're making a particular trade. That's the stuff that helps me learn and do my own trading better.
That's what I'm doing (cash secured puts) as well. And with the increasing share price, I recently needed to shrink the number of puts I'm writing by 1. Ah well - I've been finding that the total cash / income I'm earning has been going up with the share price, so the number of puts isn't something I think much about - it is what it is
I run pretty conservatively - I have been opening puts in the .15-.20 delta range (which corresponds roughly to the market pricing in a 15-20% change of the option finishing ITM). I use the delta specifically to approximate the ProbITM, as my strategy is to collect premium and rarely get assigned (never so far, but I've only been at this for 3 months).
The pattern I've been seeing is that the .15 delta puts (or calls) get to about a 60% profit (rather the 80/90% you mentioned) at about the same time that delta has shrunk to .10 or .09. That has recently been my trigger to close the existing position for the 50-70% profit (it seems like it coasts to 70% before I can actually close - bummer!), and then immediately open a new .15 delta position. When it's working smoothly, I am rolling out 1 week - frequently at the same strike.
But the new position varies - this week my puts cratered so fast (yesterday plus today) that I closed them in 2 days. Those were 6/19 puts and because the week is so young, I've rolled in (shorter expiration) and up (higher strike) for this week. There isn't much money, but I am finding that I like the 3-8 days to expiration options the best (aggressive time decay, and frequently changing strikes enables me to adapt to the changing share price more quickly).
I've also been, off and on, doing 1 put at the .30 delta level. I call that my option where I'm daring the market to assign me. There are much better premiums available at that delta. @Lycanthrope is working at even higher deltas (I think around .40, though I think he's also not particular looking at delta). I like to work off delta as it gives me a consistent comparison from option to option, week to week, to compare how daring / risky I'm being with the options over time. I used to do .05 - .07 options; that drifted up to .10-.12, then .15. Now I'm doing .15 - .20 with occasional single options at .30 (light my hair on fire radical for me).
If you're only trading 1 underlying (TSLA; as I am as well), then I think that 70-100% profit level is a reasonable target to aim for. Or at least, 50%+ WITH a replacement position already lined up. The way I think about this - if I don't have a replacement position I'd like to take immediately (or I want out and to wait a few days+ while market conditions change), then I let the existing option keep aging out. If I don't have something to replace it with, then why not let that last $ or 2 age out?
I've mostly been finding that I find that new position when the current position hits 70-90%.
If you read other option strategies where people are trading large numbers of positions and underlying shares, you'll find them targeting 50% profits pretty consistently. They don't try to go higher - take the 50% and get a new position open ASAP. I think that's a good general plan, but with 1 underlying it doesn't work as well.
Then again - my overall target is that this is a really generous dividend play. That's my strategy, and so far it's running at 1-2% / month. Which is an outrageously good dividend, but it's also not life changing money (at least not after 3 months - if I can keep it up for 2 or 3 years, then it's retirement money and plan all on it's own).
Welcome to the thread, and I hope we hear more from you. I'm particularly interested in what you're thinking and why you're making a particular trade. That's the stuff that helps me learn and do my own trading better.
Well, I have been following this thread with interest since I want to follow similar strategy with goal of getting some dividend type returns. But I couldn't really sell puts because I didn't have sufficient cash in the account to cover the puts. This is an IRA account, so the good part is no worries about taxes, but it also means no margin. I am good with that - not comfortable with trading on margin anyways.
Well, a few weeks back I made a stupid mistake and forgot about an old GTC sell order and ended up selling a portion of my shares at 825. Immediately after the SP went on a tear - so decided that for now, I have sufficient long term hold shares. The cost basis of those shares was less than 300, so it was at a good profit, but I felt so stupid when the notification popped up on my phone that the shares had sold! Anyways, it gave me sufficient cash to try my hand at selling puts.
My plan is a bit similar to @Lycanthrope - sell puts at a good premium, even it they are a little ways off in time. Also, I plan to stick to the options alpha.com recommendation of closing position at about 50-60% profit. Regarding selling calls, I am giving myself a limit of risking 2 calls or 200 shares for covered calls. So I have my limits defined, 2 puts and 2 calls maximum at any given time. I will also be using GTC or day limit orders - I live in CA and often forget about trading when busy with work.
Last week on Thursday, I sold my first put July 17 @ 830 for $56, delta was about 0.25. It is currently at $30, so I have a GTC buy to close order on it for $25. Will probably sell a second put this week - still not sure when. Similarly, haven't decided about selling the 2 calls either.
Anyways, this thread has been of great interest - learning a lot from you guys. Thanks.
That's awesome @EV forever.
My first put sale was actually 8 years ago. I sold 7 TSLA $29 puts about 6 months before the stock went crazy. I wanted to buy the shares; I just figured it'd be a good idea to get somebody to pay me to buy those shares.
Thankfully those shares were assigned; I have them today.
Haven't done anything else on the sell side with options since then.
I started this wheel strategy about 3 months ago; my implentation is decidedly dividend oriented rather than capital appreciate oriented.. My first put sale was so conservative -- some at $200 when the shares were lower $400's, and when new money arrived, some more at $175. Intentionally way far out of the money. And not only did it work, I think it was my single most success trade.
I would probably double or more that trade if the trading conditions were as good today as they were back then.
But it was a good learning experience, and I figured if I was being paid to acquire this education, then who was I to complain. I probably had something I could verbally identify that I learned in every one of the first 10 or 15 trades. And I learn from others.
I've thought about going out that far (1.5 - 2 months) - I know the premiums are huge. I keep stumbling over how volatile TSLA is though, and how far it can drop over that big of a time window. I probably earn about the same premium over that time period, maybe a bit more, but at a lot more work. The main thing is the volatility and that big time window - I get stuck on that every time
My first put sale was actually 8 years ago. I sold 7 TSLA $29 puts about 6 months before the stock went crazy. I wanted to buy the shares; I just figured it'd be a good idea to get somebody to pay me to buy those shares.
Thankfully those shares were assigned; I have them today.
Haven't done anything else on the sell side with options since then.
I started this wheel strategy about 3 months ago; my implentation is decidedly dividend oriented rather than capital appreciate oriented.. My first put sale was so conservative -- some at $200 when the shares were lower $400's, and when new money arrived, some more at $175. Intentionally way far out of the money. And not only did it work, I think it was my single most success trade.
I would probably double or more that trade if the trading conditions were as good today as they were back then.
But it was a good learning experience, and I figured if I was being paid to acquire this education, then who was I to complain. I probably had something I could verbally identify that I learned in every one of the first 10 or 15 trades. And I learn from others.
I've thought about going out that far (1.5 - 2 months) - I know the premiums are huge. I keep stumbling over how volatile TSLA is though, and how far it can drop over that big of a time window. I probably earn about the same premium over that time period, maybe a bit more, but at a lot more work. The main thing is the volatility and that big time window - I get stuck on that every time
So with this run-up, I took the opportunity to sell my 4 Jan $875's as they're getting too DITM and time begins to tick. Bought those in March for $146 and just sold at $257.50
I was hoping to sell for double, but would need the SP around $1050 and I'm dubious we'll conquer $1000 any time soon (famous last words).
Anyway, now I'll hunt some longer-out LEAPS, might pause a bit, see if we get a dip...
I was hoping to sell for double, but would need the SP around $1050 and I'm dubious we'll conquer $1000 any time soon (famous last words).
Anyway, now I'll hunt some longer-out LEAPS, might pause a bit, see if we get a dip...
Mokuzai
Member
Well, took my $950 sold calls for Friday and rolled them out to July 2nd at $1,025 while increasing the premium by about $5.50. Don't like that they're way out in July depending on when battery day is but a $75 strike increase is pretty good since they were about to be called away anyway.
Now to join the $1k celebrations!
Now to join the $1k celebrations!
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