Wiki Selling TSLA Options - Be the House

[Criscmt]

So that factor is not now against me

Looking for inputs around my current position, appreciate your help!
Inputs can make the situation a learning opportunity for me.

On Tuesday (yesterday) and Wednesday (today) this week, I sold 04/09 750C, 755C, and 770C.

Here's my thought process and rationale for selling those calls.

• When it comes to options, I tend to ask myself if I am being Greedy or Fearful, always better to err on the side of fearful.
• A key criteria for me, I would rather take loss and buy back the options than let my stocks taken away and ITM options closed out (sold against stock and ITM LEAPS I have). This influences my strike and expiry on the options sold.
• I thought 30% gain in 2 weeks from this Monday open is of low probability given the macro climate.
• Sold 2 weeks out to give me enough time to roll, one week might not give enough room to buy out or roll
• I have margin, if P&D disappoints hugely and stock reacts very negatively I wanted to have at least a small cushion added to the margin through this sale. I guess, my margin is sort of putting pressure on me to err on the side of making some money, as long as I will have opportunity to roll the calls at least with almost no loss.

Here are the paths the stock can take next week

• Worst case, up 30+% from current price: If the stock price goes up a lot, say to $850 by say 04/07, will I have the risk of getting the calls assigned by Wednesday and not have the chance to roll?
• Up by ~20% from current price: Stock goes up, say to 800 or over 800 by Wednesday (04/07). Looks like I will be able to roll into 900C expiring 30 days from 04/07. I am using option-price.com for an approximation of the 900C. Let me know if I can. use better tools here. I have accounts with multiple brokerages.
• Up not by much, or stays flat: Stock at best moves up a bit, say to $730 by Wednesday (04/07). I guess I might be able to roll.
• Goes down: Not much to worry about.

My biggest worry is the fact that in Shanghai trucks fully loaded with Model-Ys left the factory after midnight on Dec-31-2020, seemingly intentionally planned to be delivered in Q1 2021, even when they were available to be delivered in Q4-2020. I am not sure if these were counted towards Q4-2020 production or into Q1-2021. I am seeing this as indication that Tesla team carefully planned for Q1 numbers.

Trickiness with decision based on the price action tomorrow (04/01).

• If the stock goes up significantly tomorrow, that lowers the odds of a significant rise next week.
• If the stock goes down, there's some chance of positive surprise, and rise next week. So, maybe I should close my positions if the stock goes down significantly tomorrow?

 

[juanmedina]

Looking for inputs around my current position, appreciate your help!
Inputs can make the situation a learning opportunity for me.

On Tuesday (yesterday) and Wednesday (today) this week, I sold 04/09 750C, 755C, and 770C.

Here's my thought process and rationale for selling those calls.

• When it comes to options, I tend to ask myself if I am being Greedy or Fearful, always better to err on the side of fearful.
• A key criteria for me, I would rather take loss and buy back the options than let my stocks taken away and ITM options closed out (sold against stock and ITM LEAPS I have). This influences my strike and expiry on the options sold.
• I thought 30% gain in 2 weeks from this Monday open is of low probability given the macro climate.
• Sold 2 weeks out to give me enough time to roll, one week might not give enough room to buy out or roll
• I have margin, if P&D disappoints hugely and stock reacts very negatively I wanted to have at least a small cushion added to the margin through this sale. I guess, my margin is sort of putting pressure on me to err on the side of making some money, as long as I will have opportunity to roll the calls at least with almost no loss.

Here are the paths the stock can take next week

• Worst case, up 30+% from current price: If the stock price goes up a lot, say to $850 by say 04/07, will I have the risk of getting the calls assigned by Wednesday and not have the chance to roll?
• Up by ~20% from current price: Stock goes up, say to 800 or over 800 by Wednesday (04/07). Looks like I will be able to roll into 900C expiring 30 days from 04/07. I am using option-price.com for an approximation of the 900C. Let me know if I can. use better tools here. I have accounts with multiple brokerages.
• Up not by much, or stays flat: Stock at best moves up a bit, say to $730 by Wednesday (04/07). I guess I might be able to roll.
• Goes down: Not much to worry about.

My biggest worry is the fact that in Shanghai trucks fully loaded with Model-Ys left the factory after midnight on Dec-31-2020, seemingly intentionally planned to be delivered in Q1 2021, even when they were available to be delivered in Q4-2020. I am not sure if these were counted towards Q4-2020 production or into Q1-2021. I am seeing this as indication that Tesla team carefully planned for Q1 numbers.

Trickiness with decision based on the price action tomorrow (04/01).

• If the stock goes up significantly tomorrow, that lowers the odds of a significant rise next week.
• If the stock goes down, there's some chance of positive surprise, and rise next week. So, maybe I should close my positions if the stock goes down significantly tomorrow?

Factset seems to be 172K not 162K.

 

[UltradoomY]

Sold my 4/16 bought calls this morning -
10 contracts $685 strike - paid 13.85 - sold 37
sold 8 keeping 2 over the weekend, wanted to off load all of them today before P&D but feeling good with letting 2 YOLO.
Will buy shares with proceeds as usual to sell more CC's

 

[Tslynk67]

Sold my 4/16 bought calls this morning -
10 contracts $685 strike - paid 13.85 - sold 37
sold 8 keeping 2 over the weekend, wanted to off load all of them today before P&D but feeling good with letting 2 YOLO.
Will buy shares with proceeds as usual to sell more CC's

Ugh, I can't be doing buying weeklies like that, lot's of money at risk if you get a dip at the wrong time... Done it in the past and mostly lost my premiums. Got lucky last year with some medium term calls though, but still played havoc with my sleep and blood-pressure...

 

[UltradoomY]

Ugh, I can be doing buying weeklies like that, lot's of money at risk if you get a dip at the wrong time... Done it in the past and mostly lost my premiums. Got lucky last year with some medium term calls though, but still played havoc with my sleep and blood-pressure...

Yeah, Definitely high risk of losing the cash totally. That's why I wanted to off load before the P&D. Will look at doing it again towards Q2 if the set up is the same.
Back to selling CC's!

 

[Criscmt]

Looking for inputs around my current position, appreciate your help!
Inputs can make the situation a learning opportunity for me.

On Tuesday (yesterday) and Wednesday (today) this week, I sold 04/09 750C, 755C, and 770C.

Here's my thought process and rationale for selling those calls.

• When it comes to options, I tend to ask myself if I am being Greedy or Fearful, always better to err on the side of fearful.
• A key criteria for me, I would rather take loss and buy back the options than let my stocks taken away and ITM options closed out (sold against stock and ITM LEAPS I have). This influences my strike and expiry on the options sold.
• I thought 30% gain in 2 weeks from this Monday open is of low probability given the macro climate.
• Sold 2 weeks out to give me enough time to roll, one week might not give enough room to buy out or roll
• I have margin, if P&D disappoints hugely and stock reacts very negatively I wanted to have at least a small cushion added to the margin through this sale. I guess, my margin is sort of putting pressure on me to err on the side of making some money, as long as I will have opportunity to roll the calls at least with almost no loss.

Here are the paths the stock can take next week

• Worst case, up 30+% from current price: If the stock price goes up a lot, say to $850 by say 04/07, will I have the risk of getting the calls assigned by Wednesday and not have the chance to roll?
• Up by ~20% from current price: Stock goes up, say to 800 or over 800 by Wednesday (04/07). Looks like I will be able to roll into 900C expiring 30 days from 04/07. I am using option-price.com for an approximation of the 900C. Let me know if I can. use better tools here. I have accounts with multiple brokerages.
• Up not by much, or stays flat: Stock at best moves up a bit, say to $730 by Wednesday (04/07). I guess I might be able to roll.
• Goes down: Not much to worry about.

My biggest worry is the fact that in Shanghai trucks fully loaded with Model-Ys left the factory after midnight on Dec-31-2020, seemingly intentionally planned to be delivered in Q1 2021, even when they were available to be delivered in Q4-2020. I am not sure if these were counted towards Q4-2020 production or into Q1-2021. I am seeing this as indication that Tesla team carefully planned for Q1 numbers.

Trickiness with decision based on the price action tomorrow (04/01).

• If the stock goes up significantly tomorrow, that lowers the odds of a significant rise next week.
• If the stock goes down, there's some chance of positive surprise, and rise next week. So, maybe I should close my positions if the stock goes down significantly tomorrow?

Rolled most of the 04/09 calls (770C) to 800 strike.
Left the few 750C I had, few in IRA account, few in a smaller account.
Plan is to roll those calls up and out if there's a risk of being called away.

If the stock goes down, will probably consider rolling them down and picking some more premium.

 

[adiggs]

Ugh, I can be doing buying weeklies like that, lot's of money at risk if you get a dip at the wrong time... Done it in the past and mostly lost my premiums. Got lucky last year with some medium term calls though, but still played havoc with my sleep and blood-pressure...

I feel a bit the traitor this morning

A recent pattern I've noticed from my own trading is that I get too aggressive with my strikes, following the shares down with covered calls or following the shares up with short puts.

SO I decided to try something out today. With the shares up quite a bit recently plus my view that the general investor community (no doubt helped by some FUDsters) will react badly to P/D, I decided to buy 1 625 Put for 4/16 expiration to get a bit of experience with this. Recent experience suggests to me that its time for the share price to reverse - this will get me some minor exposure to that reversal should it happen, as well as starting to gain some experience with this.

Next time I find myself wanting to roll highly profitable calls towards the share price I'm likely to buy a call instead. If nothing else this will help me not follow the shares up or down chasing premiums

And hey! I managed to roll calls today pretty much at the peak (par) but I also bought that 1 put pretty much at the peak as well. So my TSLA short is off to a great start.

 

[Flehmenlips]

I am wanting to accumulate more shares. I have 108 at the moment and have been playing with selling covered calls for the past three weeks. So far, so good. I am thinking of selling 2x $650 Apr 09 puts this coming Monday to collect a fat premium and hopefully about 200 more shares. My fear of course is whether or not that entry point is too high. Maybe I will do 1 @ $650 and 1 at $620 or so. Thoughts?

 

[adiggs]

I am wanting to accumulate more shares. I have 108 at the moment and have been playing with selling covered calls for the past three weeks. So far, so good. I am thinking of selling 2x $650 Apr 09 puts this coming Monday to collect a fat premium and hopefully about 200 more shares. My fear of course is whether or not that entry point is too high. Maybe I will do 1 @ $650 and 1 at $620 or so. Thoughts?

My first thought is it sounds like you're getting started with this. So I'd suggest going slow and easy with it - maybe strikes that are further out of the money.

And the main thing - if you sell the puts, even if you later roll and roll to avoid assignment, you need to go into the sale ready to buy the 200 shares at $650 that is represented in those two contracts. If you're ready to buy 100 shares, then stick to 1 contract, whether margin will enable you to sell more or not. Or 100 shares at $650 and another 100 shares at $620.

Similarly if you're selling covered calls, then again you can roll or buy them back early (possibly at a loss) to avoid assignment, but I would still only sell covered calls on shares that you're ready to sell if needed.

 

[Flehmenlips]

My first thought is it sounds like you're getting started with this. So I'd suggest going slow and easy with it - maybe strikes that are further out of the money.

And the main thing - if you sell the puts, even if you later roll and roll to avoid assignment, you need to go into the sale ready to buy the 200 shares at $650 that is represented in those two contracts. If you're ready to buy 100 shares, then stick to 1 contract, whether margin will enable you to sell more or not. Or 100 shares at $650 and another 100 shares at $620.

Similarly if you're selling covered calls, then again you can roll or buy them back early (possibly at a loss) to avoid assignment, but I would still only sell covered calls on shares that you're ready to sell if needed.

Thanks for the input. Yes, I am prepared to buy 200 shares with cash/margin. My goal is optimizing the balance between premium and assignment price. I recognize that those strikes are not far OTM, especially given current trends, but I do want to find the optimal way to accumulate 200 more shares in the next week or two. If I don't get assigned, I guess I am fine taking fat premiums.

 

[Oil4AsphaultOnly]

I feel a bit the traitor this morning

A recent pattern I've noticed from my own trading is that I get too aggressive with my strikes, following the shares down with covered calls or following the shares up with short puts.

SO I decided to try something out today. With the shares up quite a bit recently plus my view that the general investor community (no doubt helped by some FUDsters) will react badly to P/D, I decided to buy 1 625 Put for 4/16 expiration to get a bit of experience with this. Recent experience suggests to me that its time for the share price to reverse - this will get me some minor exposure to that reversal should it happen, as well as starting to gain some experience with this.

Next time I find myself wanting to roll highly profitable calls towards the share price I'm likely to buy a call instead. If nothing else this will help me not follow the shares up or down chasing premiums

And hey! I managed to roll calls today pretty much at the peak (par) but I also bought that 1 put pretty much at the peak as well. So my TSLA short is off to a great start.

I wish you luck with this experiment! When I've tried it (before falling in love with selling covered calls and puts), I found that the theta decay made it VERY difficult to make significant profit off of buying puts. Even when I had the direction right (SP is declining), the option wouldn't appreciate enough to warrant the risk taken. I had better luck with buying calls, but that endeavor was also fraught with failure, so I ended up sticking with HODLing until learning about the wheel.

 

[ReddyLeaf]

Ok, Wheel gurus, what’s the consensus CC sell plan for next week? Given the Q1 monster 185K P/D report are we expecting 800? 850? Since we nearly touched 700 on Friday, opening above 750 looks easy. I would expect a minimum of 20% rise and that IV will increase substantially right at the Monday open. The 800s are at 0.028 delta as of Friday, but that will certainly bump up closer to 0.3-0.4 after the open. I might try 900s, but I’m still a bit gun-shy, and once again spent down most of my free cash buying up shares the past two weeks. Damn, I should have followed the advice to convert my regular IRA into my Roth IRA while the shares were near 600.

 

[bkp_duke]

Ok, Wheel gurus, what’s the consensus CC sell plan for next week? Given the Q1 monster 185K P/D report are we expecting 800? 850? Since we nearly touched 700 on Friday, opening above 750 looks easy. I would expect a minimum of 20% rise and that IV will increase substantially right at the Monday open. The 800s are at 0.028 delta as of Friday, but that will certainly bump up closer to 0.3-0.4 after the open. I might try 900s, but I’m still a bit gun-shy, and once again spent down most of my free cash buying up shares the past two weeks. Damn, I should have followed the advice to convert my regular IRA into my Roth IRA while the shares were near 600.

My thoughts (not advice):
1) don't be surprised for a "less than stellar" opening on Monday ("but the rumor, sell the news"). WE LOVE these numbers, but the FUDsters have 3 days to spin things and push sentiment down.
2) I'm going to evaluate pre-market on Monday and then watch for the first few minutes of trading before I make any CC decision, but any CC I sell will be a weekly, nothing longer. We are going to start seeing earnings estimates be built from these P&D numbers, and those estimates may push things further up.
3) There are, however, a lot of Technical issues that are going to give fits (from algo bots), since we have not really shown to have broken above resistance levels.

Monday will be an interesting day for sure.

My gut tells me to not even consider selling any CC below 805, but I've been wrong plenty of times in the past 6 months since starting playing with CCs.

 

[pz1975]

My strategy is to sell puts and/or calls only when I think the SP will be (relatively) stable, preferably after a big move when the IV will be higher. I don't quite understand the need to rush into CCs early next week immediately after a SP-moving event like delivery numbers. The risk/reward analysis tells me that the IV will not match the likelihood of a big move over the next week. IV was higher this past week anticipating the delivery numbers, but should fall back Monday unless there is an immediate big move. I am personally going to wait a few days until the SP appears to have stabilized before selling any options.

 

[bxr140]

I wish you luck with this experiment! When I've tried it (before falling in love with selling covered calls and puts), I found that the theta decay made it VERY difficult to make significant profit off of buying puts.

It all goes back to understanding how an option earns or loses value and how a trader balances corollary risk and reward. For instance, in may cases a closer expiration +C or +P can take on HIGHER financial risk (with corollary higher reward) than a farther expiration contract, even though the farther expiration contract costs more.

Generally, short expiration long positions should result from very strong directional and volatility entry indicators and should only be held for a short period of time.

 

[juanmedina]

My strategy is to sell puts and/or calls only when I think the SP will be (relatively) stable, preferably after a big move when the IV will be higher. I don't quite understand the need to rush into CCs early next week immediately after a SP-moving event like delivery numbers. The risk/reward analysis tells me that the IV will not match the likelihood of a big move over the next week. IV was higher this past week anticipating the delivery numbers, but should fall back Monday unless there is an immediate big move. I am personally going to wait a few days until the SP appears to have stabilized before selling any options.

are you considering on adding any short term long calls on Monday? I wonder if it will be like previews times that after a P&D report where we are significantly higher in PM and later we end the day flat or even red IIRC. I started trading shares to calls at $715ish with some contracts down 50% and some up 25% mostly LEAPs and a few Jun 700 calls.

 

[pz1975]

are you considering on adding any short term long calls on Monday? I wonder if it will be like previews times that after a P&D report where we are significantly higher in PM and later we end the day flat or even red IIRC. I started trading shares to calls at $715ish with some contracts down 50% and some up 25% mostly LEAPs and a few Jun 700 calls.

I bought 10 Apr9 $700 calls Friday before close so I will look to close them if we get a big spike Monday followed by a drift down as we often see. If the SP rises all day I will hold them into Tuesday.

If the SP opens flat/down or up and then fades back near close Thursday, I am loading up (more 2022-2023 LEAPS). I already have a lot as I have been buying them from $750 down to $550. They are overall net in the red now, but with the P&D and very high chance of >1 million deliveries (>100% from 2020) this year, I cannot see the SP being held down below $900 into next year unless macros go south for a long-term (recession/bear market). I am on margin now and will go deeper if needed with LEAPS.

 

[Discoducky]

Wow, I wonder if anyone snatched some of these 870's up prior to close on Thursday!

 

[bkp_duke]

Wow, I wonder if anyone snatched some of these 870's up prior to close on Thursday!

View attachment 650326

I want to borrow your crystal ball. You stand to make a mint off those options.

 

[adiggs]

Thanks for the input. Yes, I am prepared to buy 200 shares with cash/margin. My goal is optimizing the balance between premium and assignment price. I recognize that those strikes are not far OTM, especially given current trends, but I do want to find the optimal way to accumulate 200 more shares in the next week or two. If I don't get assigned, I guess I am fine taking fat premiums.

This general approach, by the way, is how I got my original collection of shares back in 2012. I wanted to buy some TSLA but I wasn't in a rush and I was in favor of being paid to buy the company.

Somebody paid me $1.70 for a $29 strike put. 7 of them actually. Shares finished around 27.50 and I got paid about $1k to buy 700 shares. That one has worked out ok for me (Still have those shares)