I've decided I'm going to use that 1 put position closed earlier to try a longer dated put than I've done so far. I've sold the July monthly (July 17) 1060 put and collected 32.80 in premium. That was the .31 delta.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
I've decided I'm going to use that 1 put position closed earlier to try a longer dated put than I've done so far. I've sold the July monthly (July 17) 1060 put and collected 32.80 in premium. That was the .31 delta.
I'm also trying something I've stayed away from. I've got a strong enough view of the next few weeks that I've decided to buy a 1400 strike call for Aug expiration ($53). That was the .30 delta. I've been able to afford this call by way of covered calls sold in that account over the last few months (so I could think of this as playing with house money if I wanted).
I'm expecting good news from p/d, where good news = enough deliveries to get people thinking we'll see a GAAP profit this quarter.
My expectation today is that I'll close the call the day before or day of earnings, with the expectation that day will be significantly higher based only on IV (but also share price increase). By being a month further out with the expiration, I have the choice to wait a little longer, but mostly I'm avoiding the worst of time decay.
And what I'm really doing is tinkering around the edges to expand my knowledge and ability to translate convictions into actions. In this case, the conviction is that Q2 will looking stunning compared to the rest of the car market (I think this is largely expected at this point). I further think that we're more likely than not to be GAAP profitable in Q2 or at least close enough that we'll see significant positions being taken under that assumption.
So this is more exposure to the upside, and a buy the rumor / sell the news play. And it's small enough that I don't expect it to move the needle for me to a great deal however it turns out.
I don’t know if you can learn anything from what I do. I don’t do calculations with deltas or other greeks. I make my decisions based on a feeling: comparing strikes and dates, doing some calculations on a piece of paper and choosing what I think is the best result I can get without running the risk that I have to use margin.
Usually it feels best with expiry dates 3-5 weeks out and strikes that range from ATM to 30-50 points OTM. These options usually provide premiums of 50.00 to 90.00 and that is what I am looking for.
Today’s move made me roll my position to a higher strike and date again:
- Bought back 4 puts 1020 for 24 July @41.00 (sold those yesterday @55.00)
- Bought back 6 puts 1030 for 24 July @44.00 (sold those yesterday @80.60).
- Sold 10 puts 1100 for 31 July @91.30 (stock was at 1127 at that time and I’ve never seen such a high put premium for a strike that is 25+ points OTM with an expiry date of just one month. It does make sense though with the increased volatilty and the fact that the absolute moves get bigger as the stock rises)
Added 48.5k in premium to my balance but ofcourse the obligations increased too.
My goal is to gain premium through time decay, but if the stock moves this fast I roll the positions. There will be periods when it settles down and that is when I expect this strategy to make a difference compared to just holding shares.
- Bought back 4 puts 1020 for 24 July @41.00 (sold those yesterday @55.00)
- Bought back 6 puts 1030 for 24 July @44.00 (sold those yesterday @80.60).
- Sold 10 puts 1100 for 31 July @91.30 (stock was at 1127 at that time and I’ve never seen such a high put premium for a strike that is 25+ points OTM with an expiry date of just one month. It does make sense though with the increased volatilty and the fact that the absolute moves get bigger as the stock rises)
Added 48.5k in premium to my balance but ofcourse the obligations increased too.
My goal is to gain premium through time decay, but if the stock moves this fast I roll the positions. There will be periods when it settles down and that is when I expect this strategy to make a difference compared to just holding shares.
Your strategy is going well, my friend! I'm looking at this myself, although I can only finance the one put.
By pure coincidence, I was thinking last night to sell a 31/7 p1150 - that alone would net $11300, so the SP could drop to $1037 and still break-even. Unfortunately, I thought of this after market close, so to make this work I need the P&D to drop after trading today. Even better would be a bit of a pull-back on account of that.
But, I think it will be out before the bell... In that case I'm poised to sell a stratospheric call on the SP pop.
This is the great thing about these little option plays - so many ways to make money!
It's definitely not going badly. But I have to say that for this strategy, compared to just holding stock, the current scenario is the least favorable one. I have to 'work' hard to keep up with the rising SP.
The most favorable scenario, compared to holding stock, would be a stable SP (with some volatility within a band) or a slightly declining SP. But I'm sure we'll be getting plenty of those periods over the next years.
llirk
Member
I’ve been following this thread for some time and find it extremely useful in understanding the various strategies of options trading, so thank you @adiggs for starting it.
If I’m following the max pain logic, looking at today’s expiration, is it appropriate to assume (yes, I know what happens when you assume) that the market will force a close just shy of 1200 today? @Lycanthrope , care to make a prediction?
If I’m following the max pain logic, looking at today’s expiration, is it appropriate to assume (yes, I know what happens when you assume) that the market will force a close just shy of 1200 today? @Lycanthrope , care to make a prediction?
I show max pain today at 1050. So if there were no other factors at work, then there would be a tendency for the shares to drift towards that number, with a particularly pronounced tendency today as it's expiration day.
Other factors, such as the p/d report this morning, can easily overwhelm the influence of max pain.
That being said, I like to look at it more granularly. Within 1% of the max pain level (I'm calling it near max pain) is 1045 and 1055. Max pain itself is $294M. As 1 point of comparison, the big June expiration a few weeks back had max pain in the low 2B range.
At a share price of 1200, the pain level is up to $858M, so the resistance from this market force increases as the shares move away from max pain, and that resistance is already pretty high (I don't think I've yet seen this big of a difference between max pain and the current share price, but I've only been watching for a month or two - hardly enough to draw conclusions from).
I just started couple of months ago selling puts, and I have already made enough to buy Model Y. I have not even touched my shares/options/leaps or done covered calls. This is just crazy, cannot describe it any other way.
And, thanks for this thread, learned a lot.
And, thanks for this thread, learned a lot.
Indeed. I suspect we'll be locked around $1200 now until earnings, so that's opportunity
Busy day today. Those options ahead 10% yesterday all got closed today for 70-80% profits. This is like 3 out of the last 5 days where I'm closing week+ positions and then opening new ones.
In this rapidly rising share price environment, I've decided to try some longer dated puts so that I can get the premium up and the strike down (netting a much lower break even than I'd have for shorter dated puts). Call this the 'Fred' strategy
Also with the increasing share price, I've decided I'll keep 2 put positions open at a time instead of 3.
So, for July 24, I've got the 1125's for a $46 premium (.30 delta).
For the Aug monthly, I've got the 1050's for $61 (.27 delta). I looked at options with a $90 premium, and decided those were too high delta. For such a long option (50 days to expiration), I wanted the lower break even over the higher premium.
And because it looks pretty clearly like today's end of day price will be in the neighborhood of $1200 (and definitely below $1220), I've sold some covered calls that expire today at the 1220 strike. Only 1.60 premium, but they're melting nicely. I continue to think that this is about as close to covered calls as I'll be getting for another week, and probably the month.
These got their 1 penny buy to close order entered simultaneously
I dunno, looking like a long, slow climb into the close at the moment.Busy day today. Those options ahead 10% yesterday all got closed today for 70-80% profits. This is like 3 out of the last 5 days where I'm closing week+ positions and then opening new ones.
In this rapidly rising share price environment, I've decided to try some longer dated puts so that I can get the premium up and the strike down (netting a much lower break even than I'd have for shorter dated puts). Call this the 'Fred' strategy
Also with the increasing share price, I've decided I'll keep 2 put positions open at a time instead of 3.
So, for July 24, I've got the 1125's for a $46 premium (.30 delta).
For the Aug monthly, I've got the 1050's for $61 (.27 delta). I looked at options with a $90 premium, and decided those were too high delta. For such a long option (50 days to expiration), I wanted the lower break even over the higher premium.
And because it looks pretty clearly like today's end of day price will be in the neighborhood of $1200 (and definitely below $1220), I've sold some covered calls that expire today at the 1220 strike. Only 1.60 premium, but they're melting nicely. I continue to think that this is about as close to covered calls as I'll be getting for another week, and probably the month.
These got their 1 penny buy to close order entered simultaneously
It's interesting to me just how much option prices can jump around the last few hours of their trading life. I'm feeling pretty good about these options finishing OTM (1220's), though I also realize that I might be waiting until the final 5 minutes for them to clearly resolve to my benefit.
Or that I'll need to become more proactive about closing them early.
Yep, strange, at this moment the MM's resistance is gone. Which is odd given all the efforts earlier in the day.
I don't care either way, TBH.
Edit: wow, the MM's just gave up, simple as that! Never seen that before, not even like there's huge volume or anything? I guess they delta-hedged throughout the day...
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I think one learning for me today, selling this 0 day expiration option - set my buy to close price at 2-5 cents instead of 1 cent. It's going right down to the wire to get that last penny and it's use not worth it (though the entertainment value is worth at least the $7 I have on the line now).
Interesting end result - I came up to 2 pennies and got a partial fill. The apparent closing price for this 1220 strike was .03 - about .03 more than I think it was worth at the end of trading.
So next time, I'll aim for more like a 5 or 10 cent closing price when I'm trying to milk out the very end of a position. That would have closed the position at least 15 minutes ago, and maybe even with a half hour to go in trading. And will handle this situation where the option never reached 1 or 0 pennies.
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After today’s big jump I’ve considered rolling my 10 puts 1100 for 7/31 up to 1150, 1180 or even 1200, but the net premium gain didn’t convince me. And I want to see some evidence that the SP can build a base around 1200. I prefer not to get stuck with 1000 shares at 1200 if we decide to pay the 900 to 1025 zone a visit again. May decide otherwise if we see more gains heading into earnings. Or after a weekend of calculations.
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So, maybe I was drinking too much beer, celebrating my Te$lanair status, but I didn't bother closing out my call before the close.
I think part of my was finding selling covered calls with all this upside wasn't really working, so I allow it to exercise for Monday - this I'll have around $200k cash to play with. Those shares were $940 basis, so $40k realised gains there including the premiums, which isn't to be sneezed at.
Now, I'm thinking we might be in a $1200 channel until earning (nothing to support this, just a feeling), in which case selling a couple of puts might be lucrative.
However, I think longer term we're moving up again, especially once S&P is confirmed. I've been analysing more past trades and come to the conclusion that there's far more money to be made with LEAPS. So I'm thinking to throw a load of money in, just before the ER.
Example - my 4x Jun 2022 c1250's, bought when the SP was around $950 for $103k are now worth $160k - so the gains are 3x the rise in the share price. That's a good return. Plus they still have 2 years to run and are nearly ITM.
So some thinking to be done. I just wish I knew what's better - as far out and as high a strike as possible? Shorter term with lower strike?? Pffff!!
I think part of my was finding selling covered calls with all this upside wasn't really working, so I allow it to exercise for Monday - this I'll have around $200k cash to play with. Those shares were $940 basis, so $40k realised gains there including the premiums, which isn't to be sneezed at.
Now, I'm thinking we might be in a $1200 channel until earning (nothing to support this, just a feeling), in which case selling a couple of puts might be lucrative.
However, I think longer term we're moving up again, especially once S&P is confirmed. I've been analysing more past trades and come to the conclusion that there's far more money to be made with LEAPS. So I'm thinking to throw a load of money in, just before the ER.
Example - my 4x Jun 2022 c1250's, bought when the SP was around $950 for $103k are now worth $160k - so the gains are 3x the rise in the share price. That's a good return. Plus they still have 2 years to run and are nearly ITM.
So some thinking to be done. I just wish I knew what's better - as far out and as high a strike as possible? Shorter term with lower strike?? Pffff!!
Let us know what you end up doing. I am curious as well about the best way to play the S&P inclusion.
@FrankSG do you have any opinion on this matter now that the stock is at a way different level from a few weeks ago?
I am confused, do you mean debit spreads?
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