Wiki Selling TSLA Options - Be the House

[juanmedina]

Welp, my call for 4 Sep at $540, sold for $3.40 on Monday when the SP was $440, is probably going to be well ITM by Friday (over $500 increase pre-split price, crazy!). Fate giving me the finger for dipping my toes into the Options market!

But, now I have more money than I expected this early, so I'm probably going to tempt fate again and sell some covered puts until I need the cash or they get exercised. Probably keep it fairly conservative.

you can close it for $5 right now or let it ride.

I end up closing one of mine and I have an order to close another one and I am going to let the other 3 ride.

 

[troyhouse]

back to selling cash covered puts post split, dont have to keep raising new cash with the sp increase. sold 4x sept 11 485p for 31, 12k premium. lets see how it turns out.

 

[LN1_Casey]

you can close it for $5 right now or let it ride.

I end up closing one of mine and I have an order to close another one and I am going to let the other 3 ride.

Letting it ride for now. In for a penny, in for a pound, as it were. I'll just hope the S&P500 is announced next week.

 

[Right_Said_Fred]

An update from my side: I have been pretty busy with rolling to other dates and strikes. Currently I have a position of 30 short p500 and 20 short p450 for November.

I’ve decided that I like my own version of the wheel best, where I do not let puts get exercised but roll them to a later date. I prefer to stay all cash instead of taking delivery of shares and starting selling calls. At least for now. In the future I may decide to also try the call part of the wheel.

I started in mid June with 929k. The balance currently is 2,025m. So not unhappy with the results so far. Ofcourse there are still some big open positions, but I’m confident I can roll those to a later date if necessary, for extra premium.

 

[adiggs]

An update from my side: I have been pretty busy with rolling to other dates and strikes. Currently I have a position of 30 short p500 and 20 short p450 for November.

I’ve decided that I like my own version of the wheel best, where I do not let puts get exercised but roll them to a later date. I prefer to stay all cash instead of taking delivery of shares and starting selling calls. At least for now. In the future I may decide to also try the call part of the wheel.

I started in mid June with 929k. The balance currently is 2,025m. So not unhappy with the results so far. Ofcourse there are still some big open positions, but I’m confident I can roll those to a later date if necessary, for extra premium.

Seems like I've been generating roughly 3-5x from the put side over the call side. I think that is primarily a function of how aggressive I have routinely done stuff on the put side compared to the call side.

PLUS this big move up is bad for covered calls, and great for cash secured puts.


@bxr140 has had a couple of posts (one pretty recent) with several ideas for how to avoid assignment. The basic roll is all I've been using, but there are others as well (that I'm still wrapping my brain around).

 

[juanmedina]

So I sold my first puts this week and it seems I am not very good at this haha. I sold a $440 for this week and a $440 for next week if I get assigned I will get my shares back for $3 bucks less than what I sold them for. At least my $500 calls for this week seem kind of safe at this moment.

 

[bxr140]

Seems like I've been generating roughly 3-5x from the put side over the call side. I think that is primarily a function of how aggressive I have routinely done stuff on the put side compared to the call side.

Be advised that selling puts on TSLA in 2020 has been pretty much like shooting fish in a barrel and is definitely not representative of a typical put/call return. Puts are usually a little more profitable, but in the long run if your strategies are symmetric your returns will be pretty symmetric. Calls (covered) can actually be a little more agressive so you might actually end up with better return for them over cash covered or naked puts.

 

[Criscmt]

An update from my side: I have been pretty busy with rolling to other dates and strikes. Currently I have a position of 30 short p500 and 20 short p450 for November.

I’ve decided that I like my own version of the wheel best, where I do not let puts get exercised but roll them to a later date. I prefer to stay all cash instead of taking delivery of shares and starting selling calls. At least for now. In the future I may decide to also try the call part of the wheel.

I started in mid June with 929k. The balance currently is 2,025m. So not unhappy with the results so far. Ofcourse there are still some big open positions, but I’m confident I can roll those to a later date if necessary, for extra premium.

Did you happen to calculate how much of the gain (929->2025) was from the options/puts you sold (specifically TSLA put options if you happened to have sold on other stocks too), and not from SP appreciation?
Did you do this through the margin on your account?

Also, have you or know of any who's been selling options on TSLA since a few years?
I am looking for data that's beyond 2020.
2020 is a unique year for TSLA, not great for sampling.

 

[Criscmt]

Be advised that selling puts on TSLA in 2020 has been pretty much like shooting fish in a barrel and is definitely not representative of a typical put/call return. Puts are usually a little more profitable, but in the long run if your strategies are symmetric your returns will be pretty symmetric. Calls (covered) can actually be a little more agressive so you might actually end up with better return for them over cash covered or naked puts.

By "symmetric", were you referring to selling both (cash/margin covered) puts and (covered) calls?

 

[Criscmt]

This game now gets a bit easier with the split

Bought 20 shares last week in my trading account with the sole intention to sell a call this week. IV must be quite high, just sold 11th Sep c510 for $25.2 ($2500 cash).

I am assuming you have been selling options (calls or puts) since more than a few months.
Did you happen calculate the return from selling the options in an year like 2019?
I am contemplating getting into selling options, the returns based on option prices now don't seem well representative given the unique period TSLA is in now.
I was wondering if making 0.4 - 0.5% (on average) a week is realistic. The average including buying back some at a loss, or loss from assignment of calls.

 

[Mulligan Jake]

Did you happen to calculate how much of the gain (929->2025) was from the options/puts you sold (specifically TSLA put options if you happened to have sold on other stocks too), and not from SP appreciation?
Did you do this through the margin on your account?

Also, have you or know of any who's been selling options on TSLA since a few years?
I am looking for data that's beyond 2020.
2020 is a unique year for TSLA, not great for sampling.

I’ve been selling TSLA calls and puts for 3 years. 2018-2019 were great for this. I was making as much as I did working a real job before I retired. This year has been a disaster for covered calls but sp appreciation has more than made up. Every investing strategy works great until it doesn’t. With that said I still sell calls and puts.

 

[Criscmt]

I’ve been selling TSLA calls and puts for 3 years. 2018-2019 were great for this. I was making as much as I did working a real job before I retired. This year has been a disaster for covered calls but sp appreciation has more than made up. Every investing strategy works great until it doesn’t. With that said I still sell calls and puts.

Do you mind sharing ballpark on returns on calls, puts?
Is 0.4%-0.5% a week on average reasonable, including the assignments and ones you had to buy back?

 

[bxr140]

By "symmetric", were you referring to selling both (cash/margin covered) puts and (covered) calls?

Sorry, my fault--symmetric in risk/reward profiles. And in that light its probably such that covered calls return better than puts, but...I digress.

I was wondering if making 0.4 - 0.5% (on average) a week is realistic.

If you're just getting started, I'd suggest avoiding TSLA, or at least start in a simulator ('paper trades'). That's not an unreasonable return goal, but...there's a lot to it. Selling options--especially puts--can easily turn into a "seems like easy money" trap.

 

[Criscmt]

Sorry, my fault--symmetric in risk/reward profiles. And in that light its probably such that covered calls return better than puts, but...I digress.



If you're just getting started, I'd suggest avoiding TSLA, or at least start in a simulator ('paper trades'). That's not an unreasonable return goal, but...there's a lot to it. Selling options--especially puts--can easily turn into a "seems like easy money" trap.

I can be considered a strong conviction TSLA HODLer.
I have been strong buyer of TSLA since a few years. and my portfolio has been TSLA to the most part since more than an year.
Got into LEAPs early this year. I am comfortable with volatility.

I tried weeklies a few times, sold calls against my LEAPs. Sold weeklies with strikes 30% or above. If the stock seems to have the momentum to move beyond 30% I take whatever profit I can and get out. I have done only a few times. So the sampling of data is low.

I am looking at the possible ways to generate some income (effectively not loosing my shares).

> but...there's a lot to it
Would appreciate pointers on this.
If on average 0.4%-0.5% per week is not too ambitious, that would give a strong reason to spend more time to explore and learn.

 

[Right_Said_Fred]

Did you happen to calculate how much of the gain (929->2025) was from the options/puts you sold (specifically TSLA put options if you happened to have sold on other stocks too), and not from SP appreciation?
Did you do this through the margin on your account?

Also, have you or know of any who's been selling options on TSLA since a few years?
I am looking for data that's beyond 2020.
2020 is a unique year for TSLA, not great for sampling.

Most of my gains with these puts come from SP appreciation, a smaller part from time decay. So the large appeciation of my cash balance in three months’ time is not typical. In normal circumstances returns are lower and mostly due to time decay.

A fast rising SP is the best time sell covered puts. But compared to just owning stock it is the worst time, as you will not have the same returns as those who hold through the SP rise and then sell high.

But there are a lot more scenarios where writing covered puts (and calls) is more lucrative than just holding shares: slow rising SP, stable SP, depreciating SP. And I believe that over the next years we will see many of those periods. That is where the strength of writing options (compared to just holding) will show itself.

I am using a bit of margin, about 15%. I don’t want to be too leveraged, to avoid being forced to liquidate positions with a loss.

 

[bxr140]

I am looking at the possible ways to generate some income (effectively not loosing my shares).

Would appreciate pointers on this.

First, I'm definitely a small-fry retail trader with zero formal financial training--I'm happy to opine on what I've learned; I encourage you seek out more than just a data point of me. There's quite a bit of good stuff in this and other threads here (and elsewhere) so I'll try not to repeat too much, but, IMHO, when it comes to selling options, and especially cash/margin puts:

-Don't fall into the 'its easy money' trap and assume you don't need to apply the same diligence to strike price and profit targets that you would when buying contracts/shares.
-IMHO (I know there are differing opinions), never sell a put with the intent of being executed. One crappy pullback can ruin months (or more) of incremental profit, and if you want to buy shares at a price, just wait till that price and buy shares.
-Sold contracts make terrible directional trades. If you think the price is going to move in a direction, buy.
-Volatility: Buy low, sell high. That applies much more on monthly timeframes than weekly, but generally if volatility is low, do not sell.
-Use common multi-leg strategies and shares to manage things like volatility and margin (hard to do in a retirement account)
-The big rub about selling contracts "for income" is that without a VERY well honed strategy and a fair bit of risk, other methods of profit generation ways to make the same amount of profit with basically as much effort.

The good news is, if you're really just selling covered calls against shares you would own anyway (and don't intend on releasing), its a little more forgiving to be a little more lax with how attentive you are and much more forgiving to be more agressive with your approach, because its basically impossible to royally screw up. The worst that can happen is you go DITM, and that's really not a big deal if you're really in it for the long haul.

 

[juanmedina]

So I sold my first puts this week and it seems I am not very good at this haha. I sold a $440 for this week and a $440 for next week if I get assigned I will get my shares back for $3 bucks less than what I sold them for. At least my $500 calls for this week seem kind of safe at this moment.

I got assigned 100 shares at least it was for less than what I sold them for. I am assuming that I will get assigned the other 100 shares next week. All the calls that I sold were safe but I end up closing them out and broke essentially even. For the month on 100/500 shares before and after the split I only made $1275 which is ok but I think if we're not for waiting for the S&P inclusion announcement I could have made more.

If there is no S&P announcement on Tuesday night I will go back to holding calls overnight instead of opening and closing the calls on the same day. I was also waiting for the S&P announcement to sell 1 year calls way OTM since the IV is so high and the stock was so high.

 

[Convert7]

Hi,
thanks for the Thread.
Am Starting to Sell Weeklies Puts.

i just saw That the 600$ September 2022 Put ist 315$. Break-Even is under 300$. My Margin is 8000$. So im Locking Away 8000$ to Potentially make 31.500$ and have a Break Even at Under 300$.

That Looks to to me That the Risk is acceptable.
Do i overlook some Risk or something?

What do you think about That?

 

[Right_Said_Fred]

Hi,
thanks for the Thread.
Am Starting to Sell Weeklies Puts.

i just saw That the 600$ September 2022 Put ist 315$. Break-Even is under 300$. My Margin is 8000$. So im Locking Away 8000$ to Potentially make 31.500$ and have a Break Even at Under 300$.

That Looks to to me That the Risk is acceptable.
Do i overlook some Risk or something?

What do you think about That?

Be aware that your (maintenance) margin for this position is not static. If the SP drops your margin requirement will go up. And if it exceeds the cash balance on your account your broker may close your position (buy back the put with a loss). So make sure you have enough funds to cope with a sizable increase of the margin requirement.

 

[strago13]

"All of the 2023 LEAPS® will be introduced on Monday, September 14th, 2020."@NicoV

I missed purchasing LEAPS last year on the day they came out. Can anyone talk through this process? Do they appear at 9:33am EST? What strikes are you targeting?

I believe @Lycanthrope and others got some JUN 2022 LEAPS very cheap and I am hoping given today, they are reasonably priced.