Wiki Selling TSLA Options - Be the House

[EV forever]

I think we're seeing a drop in volatility today. At this moment stock is down ~$3 while put option premiums on my positions are down ~$8. Those premiums should be flat to up with the stock down.

No complaints here on how this is helping the current batch of options, but with short dated options, the next batch will be sold into a decreased volatility environment (assuming that I'm reading things correctly). I guess one consequence if options premiums aren't looking as good for the next positions is to sit on these longer and squeak out a bit more of the premium.

Yep, volatility has dropped way down to 27th percentile. Doesn't the Optionsalpha recommendation say to sell options preferably above 50th percentile volatility? Well, I am holding off for now - not comfortable selling puts or calls.
My last cast covered put closed this morning for $37 for 50% profit in about 8 days, Gain of about 9K over 3 covered put trades in June. I am happy with that as learning experience.

 

[mongo]

Given next week is only 4 trading days and that seems to be historically bad for stock price, any thoughts on holding off on selling puts in favor of selling calls?
Production and Delivery number seem like they will come out post Market close on the 2nd (possibly the 3rd, which is the same thing).

Thanks for the thread!

 

[troyhouse]

Closing 06/26 950p for 90% profit. Will go for 07/02 or 07/10 975p.

 

[Chenkers]

I just bought back the 26/6 985 put I sold at $22 on Friday for $10.50. I also sold the 85 trading shares I bought at $1002 on Friday for $1010.50. This gave me sufficent cash to sell two puts for 2/7, one 1005 for $37 and the other a 1010 for $40.

I'm quite bullish on the P&D report likely to come out after market on the 2/7, so am hoping these puts get executed. If not I plan to buy shares and hold hoping for a rise after P&D and then sell calls/puts again leading up to earnings before another hold.

 

[adiggs]

Yep, volatility has dropped way down to 27th percentile. Doesn't the Optionsalpha recommendation say to sell options preferably above 50th percentile volatility? Well, I am holding off for now - not comfortable selling puts or calls.

Yes, you remember the options alpha recommendation correctly. That's also within a larger option trading strategy of 'selling volatility' where they will use low hundreds of different underlying ETFs and companies to enter and exit a large number of trades (I think 30-50 open trades at a time is pretty common, with days-to-expiration on the order of 30-40).

My own reaction to 27% volatility is I'll likely continue writing options even though I won't be earning as much per trade / contract. I might get even more conservative. I will try my best to not chase premium.

I'll also keep an eye out for volatility going even lower with the notion that at some point, even I might buy some options.

 

[adiggs]

I closed my remaining 6/26 put (965 strike) at 4.30 or so, keeping ~80% of the original premium. I'm finding that with fewer total positions (due to trading 1 underlying) and more difficulty finding new ones that are meaningful improvements, I tend to sit on positions until they're more like 2/3rd or 4/5th profit rather than 1/2.

So for instance, I have July 2 945's that are at 50% and with $13 worth of premium still to decay. I'm hanging onto those as there is still a lot of premium to be 'earned'. The ones I closed only had $4 worth of premium to decay.

I've opened a replacement position in 945 July 10 puts for $26 premium. These are at the .30 delta. They have the downside of having more days to expiration than I normally go, and are on the other side of the p/d report.

I chose this position over another 6/26 option. If I had gone with a replacement 6/26 option, it would have probably been the 985 strike with a .32 delta and a 9.40 premium. Actually upon further review that wouldn't have been too bad. The premium decaying would have been 2x the old position... I didn't want another 7/2 position as I have 2, so I was either staying with 6/26 or going out to 7/10. Going out is going to get me exposure to some longer dated options and some learning from how those evolve.

My recent evidence is that going out a little bit further on days to expiration is still leading to early closes, and the increased premium turns into a higher $/contract/day result (my standardized metric for evaluating positions, as it adjust for # contracts and for days the position is open).

I'll probably look to open another 7/10 position in the .15 delta range when the next 7/2 option is closed.

 

[Right_Said_Fred]

Yep, volatility has dropped way down to 27th percentile. Doesn't the Optionsalpha recommendation say to sell options preferably above 50th percentile volatility? Well, I am holding off for now - not comfortable selling puts or calls.
My last cast covered put closed this morning for $37 for 50% profit in about 8 days, Gain of about 9K over 3 covered put trades in June. I am happy with that as learning experience.

View attachment 555136

I’m not seeing a hugh drop in premiums for options that expire in one month time. A week ago ATM calls and puts with an expiry date of one month (7/17) had about 80.00 premium. That’s 77.00 now (7/24). After a week of virtually no stock movement I had expected more degradation.

I don’t mind. My preference is premium degradation through time decay or stock price movement, not through lower volatility. The last one will cost you money on your next position.

 

[vikings123]

If anybody is looking to sell puts I just want to say that we might test 940s today, that is a pretty strong support level. I'm looking to sell a 950 PUT for July 10th expiry, just waiting for more shenanigans before I pull the trigger.

 

[EV forever]

If anybody is looking to sell puts I just want to say that we might test 940s today, that is a pretty strong support level. I'm looking to sell a 950 PUT for July 10th expiry, just waiting for more shenanigans before I pull the trigger.

Wish I read this before pulling the trigger. Sold a 07/24 Put@995 for $84. Now it went up to $95.
Oh well, stock will definitely be above that after P&D report, so I have time to close.

 

[vikings123]

If anybody is looking to sell puts I just want to say that we might test 940s today, that is a pretty strong support level. I'm looking to sell a 950 PUT for July 10th expiry, just waiting for more shenanigans before I pull the trigger.

The drop to 940s did not happen but I still
sold one Jul 10th 950 put at the end there for 45$. The only risk I see is the macros but happy to own the shares if I get assigned.

 

[adiggs]

Wish I read this before pulling the trigger. Sold a 07/24 Put@995 for $84. Now it went up to $95.
Oh well, stock will definitely be above that after P&D report, so I have time to close.

As a bonus, if we see the sharp move up that so many of us are expecting, that put and price provides you with particularly large (beneficial) exposure to that up move. That's the equivalent of being ready to buy shares on 7/24 at $911 with the possibility that you won't get the shares, but you will keep the $84 (or more likely, close the position early, keeping $40+).

 

[juanmedina]

I sold a 1170 call for $0.51 such a high roller.

I should have closed it out

 

[adiggs]

I sold a 1170 call for $0.51 such a high roller.

I've been thinking about doing something equally far out and similarly low premium. It won't be much money, but money is money, it'll pay for the commission (comfortably), and hey - the stock's just sitting there anyway.

I'd stick to <1 week options doing this, for awhile. Too much good news (I think) coming down the pike, and too much chance of a significant move to expose myself to more than a few days on these trades.

 

[pz1975]

I've been thinking about doing something equally far out and similarly low premium. It won't be much money, but money is money, it'll pay for the commission (comfortably), and hey - the stock's just sitting there anyway.

I'd stick to <1 week options doing this, for awhile. Too much good news (I think) coming down the pike, and too much chance of a significant move to expose myself to more than a few days on these trades.

I do these moves every week. I sell significantly OTM puts and calls and pocket the small profits each week. It adds up and they are usually very low stress. For example, I have sold $800 and $850 puts and $1,100 and $1,200 calls this week, all of which I bought since last Thursday. If they all end up OTM, I will take keep around $4,500.

I also get closer to the money sometimes for higher profit. I did have some $950 puts that I bought back for a $1,100 loss today but had some $990 puts I bought back for a $4,200 profit yesterday. Sometimes you have to take a loss or close and roll out to avoid an even bigger loss, but I have been profitable with this strategy ~80-90% of weeks overall.

 

[Chenkers]

If the stock price stays down like this towards the 2nd then I'll be tempted to roll my puts over to the 10th of July. This will gain a bit more premium and time so I can wait for a rise after P&D to close them out and go long while its still (hopefully) rising.

 

[vikings123]

The drop to 940s did not happen but I still
sold one Jul 10th 950 put at the end there for 45$. The only risk I see is the macros but happy to own the shares if I get assigned.

In retrospect I should have listened to my own read and waited, could have got a few more hundred from the shorties. The next key support level is 910 area so if it breaks 938-940 area we could see some a huge sell off even though it is highly unlikely . Use the information as you like, not advise.

 

[riverFox]

Just sold some Jun26 1005 calls for $2.00

P.S. - This is my favorite thread on TMC right now. It has really helped me grasp the basics(along with the optionsalpha tracks), and as @adiggs likes to say I'm being paid to learn.

 

[adiggs]

Just sold some Jun26 1005 calls for $2.00

P.S. - This is my favorite thread on TMC right now. It has really helped me grasp the basics(along with the optionsalpha tracks), and as @adiggs likes to say I'm being paid to learn.

I'm glad this thread is helping @riverFox . I finally acted as well on calls expiring tomorrow - 1020's and 1035s, both for under $1 ($.40 and $.90 I think it was).

I chose these partly due to their delta - .03 and .06 when I opened the positions, and partly due to other factors that I think make these even further OTM. Namely the >$1000 strike and the very large 1000 strike calls already open (OI wall at 1000).

The 1005 strike is probably equally hard to reach.

And as usual, this and $5 is worth a cup of coffee. Assuming that these options close as I expect tomorrow, they are probably closer to $20/contract/day, than the more typical $50/contract/day for call sales (and $200/contract/day on my put sales). But hey - they've got a max of 2 days open (today and tomorrow), so what they heck.


I think that the soonest p/d announcement can happen is after close of business on 7/2, so I think calls next week will still be safe for me.

Actually this reminds me of something I'd like to see Tesla adopt - weekend important announcements. Berkshire reports quarterly earnings, and any other important potentially market moving news, on Friday after market close, or Saturday morning. Their philosophy being to emphasize the long term nature of the investment, along with enabling as much time as possible for all shareholders to learn about, and digest the news, before trading begins again.

Anyway, if I do hold any call sales next week, I'd be looking to close early on 7/2 (at the latest). I won't hold any open covered calls over next weekend or until I see the p/d report and see how that's received.


And the pay for this education - very nice. Like move-the-needle on retirement nice. And so much more to learn.

 

[juanmedina]

I closed my $1170 call from yesterday and sold a $1040 call for tomorrow. Lunch money.

 

[EV forever]

I'm glad this thread is helping @riverFox . I finally acted as well on calls expiring tomorrow - 1020's and 1035s, both for under $1 ($.40 and $.90 I think it was).

I chose these partly due to their delta - .03 and .06 when I opened the positions, and partly due to other factors that I think make these even further OTM. Namely the >$1000 strike and the very large 1000 strike calls already open (OI wall at 1000).

The 1005 strike is probably equally hard to reach.

And as usual, this and $5 is worth a cup of coffee. Assuming that these options close as I expect tomorrow, they are probably closer to $20/contract/day, than the more typical $50/contract/day for call sales (and $200/contract/day on my put sales). But hey - they've got a max of 2 days open (today and tomorrow), so what they heck.


I think that the soonest p/d announcement can happen is after close of business on 7/2, so I think calls next week will still be safe for me.

Actually this reminds me of something I'd like to see Tesla adopt - weekend important announcements. Berkshire reports quarterly earnings, and any other important potentially market moving news, on Friday after market close, or Saturday morning. Their philosophy being to emphasize the long term nature of the investment, along with enabling as much time as possible for all shareholders to learn about, and digest the news, before trading begins again.

Anyway, if I do hold any call sales next week, I'd be looking to close early on 7/2 (at the latest). I won't hold any open covered calls over next weekend or until I see the p/d report and see how that's received.


And the pay for this education - very nice. Like move-the-needle on retirement nice. And so much more to learn.

Well, whatdayaknow - first time ever decided to follow your example and see a call - sold 2 for tomorrow 1035 - was happy I got 0.5.
And then, the stock decides to spike to 985!!!