Wiki Selling TSLA Options - Be the House

[Chenkers]

Further to the analysis above, I thought I'd experiment with selling just a call spread to see how it plays out.

So I sold 50 x 750/770 Bear Call Spreads for around $1 each, yielding roughly $5,000. Margin impact was tiny and actually improved my maintenance margin by around $5000. I feel like this is a reasonably safe option the way things are trending for the week and a good way for me to generate extra premium as there's little margin impact and no shares needed to cover.

 

[Tslynk67]

Last month's income was my best month ever, breaking all records. That's courtesy of the knowledge base gained from reading everyone's good/bad experiences and tips, like the one above! And making $ regardless of SP direction is the eye-opener.

Looking back at the last 12(?) pages, I am sooooo envious of everyone's boatloads of cash. Too many times I was tempted to copy/paste the trades: I opened the copied positions but didn't click 'Send'.

Because I'm retired, I'm being extra cautious. "Don't be greedy and don't take unnecessary risk" is my #1 rule and it allowed me to meet my minimum weekly quota with no drama. That retirement income strategy seems to be working... so far, I'm up 13 of the last 15 weeks. The 2 fails are self-inflicted buyback pain due to greed!

Honestly, nobody says you need to be greedy or take high risks - I'm aggressive because I need $1M to cover house renovations by this time next year, I know I have to pay this money, so I'm doing all I can to generate that cash without depleting my initial capital

That being said, literally gambling with $millions on a daily basis, is kinda addictive...

But once I have this house sorted I'll switch again to accumulation of capital and shares. I have set a target of $6M portfolio after which I'll try to de-risk my trading, if I can...

 

[Buckminster]

Because I'm retired

But you look so young...

 

[dl003]

Time sensitive: TSLA's call IVs are winding up across the board this morning. This more often than not precedes a jump in share price.

 

[dl003]

But you look so young...

Korean showbiz is a fiercely competitive scene in case you haven't noticed.

 

[Yoona]

But you look so young...

... and fabulous

 

[UltradoomY]

Closed out my BPS for 85% profit a minute ago - will look for another tomorrow or if we get an afternoon dip!

Edit - these were 08/13 -$695 / +$595's that I received $10 each for on Tuesday - Closed for $2.5 each

 

[Tslynk67]

But you look so young...

Have to admit that I preferred the previous avatar...

 

[juanmedina]

Reloaded again with 750cc and 760lcc this time.

 

[Yoona]

Reloaded again with 750cc and 760lcc this time.

brave!

 

[juanmedina]

well you guys scared me, I closed everything at 50% profit 2k for 2 hours of holding . Maybe I get to reload a 3rd time this week.

 

[phantasms]

I figure it's inevitable that I'll get greedy and start selling something other than "shitcalls" therefor it's inevitable that I'll accidentally sell some shares and therefor I better be prepared to hang with the rest of the cool kids here... lol

 

[AxlxA]

I figure it's inevitable that I'll get greedy and start selling something other than "shitcalls" therefor it's inevitable that I'll accidentally sell some shares and therefor I better be prepared to hang with the rest of the cool kids here... lol

View attachment 692046

This doesn't let you do spread though right?

 

[phantasms]

This doesn't let you do spread though right?

Doesn't seem like it, nor roll at all. Also everything is done though a web browser. It sucks but it's where I'm at. lol

 

[phantasms]

Oh quick very n00b question that I think I know the answer to but I just want to be sure as I haven’t had this ability before.

If the stock goes down a ton I can spend $500 or whatever to buy a call to purchase the shares at $1000 or whatever in a couple years. For this hypothetical I only need the $500 cash which I will spend and give to the bearish call writer. [hopefully no one in here lol]

Fast forward the stock recovers and the call is worth more. Is there any point in which I need the $100k in cash to buy the shares at that later time? As in, is this a forced transaction? What normally happens in these events? Would I simply sell the call to someone else as the expiration date nears for a, hopefully, large some of money? What happens if I do nothing and hold the call as the expiration date passes? I’m just not sure on the mechanics of this. I don’t have margin on this account and don’t intend to at any point. At this point all cash I’ve made selling calls I’ve simply turned into shares at the end of the week. Unless one of my sold calls gets exercised and I start selling puts I don’t intend to have a ton of cash in my account.

Thank you !

 

[Buckminster]

Oh quick very n00b question that I think I know the answer to but I just want to be sure as I haven’t had this ability before.

If the stock goes down a ton I can spend $500 or whatever to buy a call to purchase the shares at $1000 or whatever in a couple years. For this hypothetical I only need the $500 cash which I will spend and give to the bearish call writer. [hopefully no one in here lol]

Fast forward the stock recovers and the call is worth more. Is there any point in which I need the $100k in cash to buy the shares at that later time? As in, is this a forced transaction? What normally happens in these events? Would I simply sell the call to someone else as the expiration date nears for a, hopefully, large some of money? What happens if I do nothing and hold the call as the expiration date passes? I’m just not sure on the mechanics of this. I don’t have margin on this account and don’t intend to at any point. At this point all cash I’ve made selling calls I’ve simply turned into shares at the end of the week. Unless one of my sold calls gets exercised and I start selling puts I don’t intend to have a ton of cash in my account.

Thank you !

1000 strike Jun 23 call is $14k - I wish they were $500...
You can always sell - no need to exercise and buy the shares.

 

[phantasms]

1000 strike Jun 23 call is $14k - I wish they were $500...
You can always sell - no need to exercise and buy the shares.

Yeah but wait until Consumer Reports says that Tesla AP gives its users the Covid Epsilon varient!

 

[UltradoomY]

Oh quick very n00b question that I think I know the answer to but I just want to be sure as I haven’t had this ability before.

If the stock goes down a ton I can spend $500 or whatever to buy a call to purchase the shares at $1000 or whatever in a couple years. For this hypothetical I only need the $500 cash which I will spend and give to the bearish call writer. [hopefully no one in here lol]

Fast forward the stock recovers and the call is worth more. Is there any point in which I need the $100k in cash to buy the shares at that later time? As in, is this a forced transaction? What normally happens in these events? Would I simply sell the call to someone else as the expiration date nears for a, hopefully, large some of money? What happens if I do nothing and hold the call as the expiration date passes? I’m just not sure on the mechanics of this. I don’t have margin on this account and don’t intend to at any point. At this point all cash I’ve made selling calls I’ve simply turned into shares at the end of the week. Unless one of my sold calls gets exercised and I start selling puts I don’t intend to have a ton of cash in my account.

Thank you !

As a fellow TSLA and Tesla lover and investor, please please please take the time right now and go to page 1 of this thread and go through the options course for a good introduction to and answer about your question and learn a TON of other stuff.
Without the basics, you won't be able to tell why you are winning or losing and what has happened in between.
But yes - if it goes to expiration it will be exercised. But you can sell it before hand for the increased value.

 

[adiggs]

Oh quick very n00b question that I think I know the answer to but I just want to be sure as I haven’t had this ability before.

If the stock goes down a ton I can spend $500 or whatever to buy a call to purchase the shares at $1000 or whatever in a couple years. For this hypothetical I only need the $500 cash which I will spend and give to the bearish call writer. [hopefully no one in here lol]

Fast forward the stock recovers and the call is worth more. Is there any point in which I need the $100k in cash to buy the shares at that later time? As in, is this a forced transaction? What normally happens in these events? Would I simply sell the call to someone else as the expiration date nears for a, hopefully, large some of money? What happens if I do nothing and hold the call as the expiration date passes? I’m just not sure on the mechanics of this. I don’t have margin on this account and don’t intend to at any point. At this point all cash I’ve made selling calls I’ve simply turned into shares at the end of the week. Unless one of my sold calls gets exercised and I start selling puts I don’t intend to have a ton of cash in my account.

Thank you !

Adding on to @Buckminster 's response.

When you purchase the 1000 strike call, you are purchasing the right to purchase 100 shares at $1000 at some point in the future up to the expiration date. But you have also just purchased an asset, so you also have the choice of simply selling the asset. The original transaction is a BTO (buy to open) and the closing transaction would be STC (sell to close).

In practice most options are sold rather than exercised. The value is the same either way (assuming immediate sale at the share price at that point). My understanding of tax consequences in brokerage accounts, US taxes, is that a purchased call held for >12 months will qualify for long term capital gains. I don't know if exercise resets the clock on long term capital gains or not (see a tax pro on that).

The downside to an early exercise from your point of view is that whatever time value is in the option at that point, you just gave it away to whoever gets assigned. There's no time value when you allow the option to go all the way to expiration and buy the shares at that point - you've allowed all of it to tick away. This is an important reason why many purchasers of long dated options will STC the option with ~3 months to expiration. There will still be as significant amount of the original time value remaining at that point (around 1/2 if the shares haven't gone anywhere is about what I've seen in my research), so an early STC cuts down on your cost to enter the position pretty significantly.

 

[corduroy]

Oh quick very n00b question that I think I know the answer to but I just want to be sure as I haven’t had this ability before.

If the stock goes down a ton I can spend $500 or whatever to buy a call to purchase the shares at $1000 or whatever in a couple years. For this hypothetical I only need the $500 cash which I will spend and give to the bearish call writer. [hopefully no one in here lol]

Fast forward the stock recovers and the call is worth more. Is there any point in which I need the $100k in cash to buy the shares at that later time? As in, is this a forced transaction? What normally happens in these events? Would I simply sell the call to someone else as the expiration date nears for a, hopefully, large some of money? What happens if I do nothing and hold the call as the expiration date passes? I’m just not sure on the mechanics of this. I don’t have margin on this account and don’t intend to at any point. At this point all cash I’ve made selling calls I’ve simply turned into shares at the end of the week. Unless one of my sold calls gets exercised and I start selling puts I don’t intend to have a ton of cash in my account.

Thank you !

This advice always stuck with me about buying calls. I lost the original source, but I just pulled it from my notes document:

Buying call options with the goal of owning the stock when the options expire is counterproductive. You buy call options to make money when the stock price rises. If your call options expire in the money, you end up paying a higher price to purchase the stock than what you would have paid if you had bought the stock outright.