Wiki Selling TSLA Options - Be the House

[InTheShadows]

Why are Puts trading at such high premiums for next Friday?
Every indicator to me seems bullish yet Put credits are at high premiums.
710s for 9/17 Bid Ask 7.00- 7.20
That just seems too high.
what am I missing?

Same question. I sold most of mine Wednesday about 3 hours before the IV spiked. Most are under by 60-75%. And the share price has pretty much been flat.

that’s why I was looking at the volume today for next weeks options. To see if I could make sense of it.

700 strike puts have had more volume today than that strikes OI puts and calls combined from this mornings OÍ report.

 

[dl003]

My theory is traders are betting on TSLA dropping bigly with the market in this coming Quad Witching week. This is not nearly as drastic as the late Feb crash when put premium spiked 200, 300% in an hour but the day is still young.

 

[Drezil]

green = today, yellow = next week.

With every dollar down IV is trending up FAST... Maybe SOMEONE™ is trying to aquire 500k stock via sold puts ..

 

[InTheShadows]

Guess someone else is noticing too.

 

[Cherry Wine]

Guess someone else is noticing too.
View attachment 707569View attachment 707570

That's what's always confounded me with unusual options activity. There is a buyer and seller for every large transaction - how does one determine, in a vacuum, whether the trade is bullish or bearish?

 

[AquaY]

A bargain?

Sold 10

 

[UltradoomY]

That's what's always confounded me with unusual options activity. There is a buyer and seller for every large transaction - how does one determine, in a vacuum, whether the trade is bullish or bearish?

Usually it is centered around the order entry on level 2 of market depth.
If someone wants to sell say 500,000 shares - the buyers will no doubt be broken up into many many smaller orders - thus bearish.
on the other side if someone wants to buy 500,000 shares and enters a buy order for that it will be made up of many many smaller sell orders to fill it - thus bullish.

With options it is much the same.
But as @Lycanthrope pointed out many times - if you want to buy or sell a large stock position - the most fun way would be by selling options to gain a premium and "lock in" your price.

 

[Drezil]

i tried to take advantage of the "high" IV. IBKRs "Option strategy lab" suggested a wide iron-condor for 17/9 .. but i just took the BPS-side of it.

Now i have bought 100x 695/690 17/9 BPS @0.4.. and an order to close half at 50% gain. For the rest i have to see on monday.

 

[Cherry Wine]

Usually it is centered around the order entry on level 2 of market depth.
If someone wants to sell say 500,000 shares - the buyers will no doubt be broken up into many many smaller orders - thus bearish.
on the other side if someone wants to buy 500,000 shares and enters a buy order for that it will be made up of many many smaller sell orders to fill it - thus bullish.

With options it is much the same.
But as @Lycanthrope pointed out many times - if you want to buy or sell a large stock position - the most fun way would be by selling options to gain a premium and "lock in" your price.

So you're saying there's a way to determine whether the buy-side / sell-side of orders for a particular strike is "real" vs what is simply offered as a function of market making? Using next week's $700 put volume as an example, ie., that the sell orders are real, whereas the buy orders are being filled by MMs?

 

[adiggs]

That's what's always confounded me with unusual options activity. There is a buyer and seller for every large transaction - how does one determine, in a vacuum, whether the trade is bullish or bearish?

As I understand it the trade is bullish or bearish based on whether it is mostly conducted at the bid or the ask.

So if buyers are showing up at the top end of the trade, then it's bullish (buying despite the relatively high price). If the buyers are at the bottom end of the bid/ask spread, then it's bearish (the sellers are willing to take the lowest available price, enticing the buyer into the market at their best acquisition price).

 

[AquaY]

Apologize if this is old news ( as in everyone but me knew it already) but i just saw this from Forbes dated yesterday:

TOPLINE​

Cathie Wood’s Ark Invest Sells $110 Million In Tesla Stock As Insiders Also Dump Shares​

Ark Invest, the New York City investment firm founded by famed Wall Street stock-picker Cathie Wood, sold off a massive stake in Tesla on Wednesday, joining a crop of insiders in cashing out of shares this week as the stock recovers from its lackluster performance this year.

According to Ark’s daily transaction reports, three of the firm’s funds, includings its flagship Ark Innovation ETF, sold a combined 142,708 shares of Tesla on Wednesday, representing a stake worth about $108 million and adding to separate sales of about $166 million since late July.

The newest transactions come just days after Wood touted Tesla’s success and gave shares a price target of $3,000 (nearly 300% more than current levels) in an interview with Yahoo! Finance, saying the company’s growing market share makes it poised to benefit from a nearly 18-fold increase in electric-vehicle sales by 2025.

Though they’ve climbed about 6% over the last month, shares of Tesla, priced at about $757.50, are down nearly 15% from an all-time high in January.
Meanwhile, Wood isn’t alone among noteworthy Tesla investors selling off shares after the recent runup in prices: Three company officers, including two c-suite executives, sold about $4 million worth of stock in a series of transactions this week, according to regulatory filings.
Ark and Tesla did not immediately respond to Forbes’ requests for comment.

SURPRISING FACT​

Though Wood is notably bullish on Tesla, the consensus on Wall Street doesn’t reflect the same lofty expectations. According to Bloomberg data, the average analyst price target for Tesla shares is $701, suggesting shares could fall 8% over the next year.

KEY BACKGROUND​

In the past, Wood has said Ark likes to trade around Tesla’s outsized volatility, taking advantage of low prices to buy, and selling when she feels prices could take a hit. “When we feel like analysts are hyperventilating about a stock—including Tesla—we naturally just take profits because we know we’re going to get another opportunity associated with controversy to buy the stock lower,” Wood said last year after a wave of selling. Despite the recent sales, Tesla still makes up nearly 11% of Ark’s flagship fund, which holds about 3.1 million shares worth a staggering $2.3 billion and also owns outsized stakes in Coinbase, Zoom Video Communications and Spotify. On Wednesday, Ark also sold shares of chipmakers Nvidia and NXP Semiconductors, while picking up stock in software firm UiPath, real estate website Zillow and ecommerce companies Etsy and JD.com.

Cathie Woodâs Ark Invest Sells $110 Million In Tesla Stock As Insiders Also Dump Shares

The famed Wall Street money manager has previously said the electric-vehicle company could be worth more than $1 trillion.

www.forbes.com

 

[InTheShadows]

As I understand it the trade is bullish or bearish based on whether it is mostly conducted at the bid or the ask.

So if buyers are showing up at the top end of the trade, then it's bullish (buying despite the relatively high price). If the buyers are at the bottom end of the bid/ask spread, then it's bearish (the sellers are willing to take the lowest available price, enticing the buyer into the market at their best acquisition price).

So I wonder what it shows up as when I enter an order for 600p/-700p and it takes an hour to fill.

 

[adiggs]

Was all out when the day dawned. Back (edit: all) in with 9/17 $60 and $100 BPS at the 720 strike, premiums in the 6.50 and 3.80 range.

I continue to believe that the 700 strike represents really strong support. Good enough that I could also be at the 730 strike and feel quite comfortable. But at this strike I'm all in again with the BPS and liking what I see.


If I do wake up on Monday to a share price spike then I'm likely closing early / immediately for a nearly no time, and ridiculous, gain. I'll also be looking to open fairly aggressive CC despite the relatively bad premiums - probably in the .25 delta range. After all those Dec calls either need to be called away or just sold, so something needs to trigger their sale

 

[adiggs]

So I wonder what it shows up as when I enter an order for 600p/-700p and it takes an hour to fill.

If you're selling that BPS then the other side is buying and they want to buy for as little as possible (the low end of the spread credit range). To do so, they need you to sell at the low end of the spread credit range, or sell at the bid. That'd make the transaction bearish as it happened at the bid (lower end of the bid/ask range).

Or at least that's how I understand it

 

[MaxPain]

Apologize if this is old news ( as in everyone but me knew it already) but i just saw this from Forbes dated yesterday:

TOPLINE​

Cathie Wood’s Ark Invest Sells $110 Million In Tesla Stock As Insiders Also Dump Shares​

Ark Invest, the New York City investment firm founded by famed Wall Street stock-picker Cathie Wood, sold off a massive stake in Tesla on Wednesday, joining a crop of insiders in cashing out of shares this week as the stock recovers from its lackluster performance this year.

According to Ark’s daily transaction reports, three of the firm’s funds, includings its flagship Ark Innovation ETF, sold a combined 142,708 shares of Tesla on Wednesday, representing a stake worth about $108 million and adding to separate sales of about $166 million since late July.

The newest transactions come just days after Wood touted Tesla’s success and gave shares a price target of $3,000 (nearly 300% more than current levels) in an interview with Yahoo! Finance, saying the company’s growing market share makes it poised to benefit from a nearly 18-fold increase in electric-vehicle sales by 2025.

Though they’ve climbed about 6% over the last month, shares of Tesla, priced at about $757.50, are down nearly 15% from an all-time high in January.
Meanwhile, Wood isn’t alone among noteworthy Tesla investors selling off shares after the recent runup in prices: Three company officers, including two c-suite executives, sold about $4 million worth of stock in a series of transactions this week, according to regulatory filings.
Ark and Tesla did not immediately respond to Forbes’ requests for comment.

SURPRISING FACT​

Though Wood is notably bullish on Tesla, the consensus on Wall Street doesn’t reflect the same lofty expectations. According to Bloomberg data, the average analyst price target for Tesla shares is $701, suggesting shares could fall 8% over the next year.

KEY BACKGROUND​

In the past, Wood has said Ark likes to trade around Tesla’s outsized volatility, taking advantage of low prices to buy, and selling when she feels prices could take a hit. “When we feel like analysts are hyperventilating about a stock—including Tesla—we naturally just take profits because we know we’re going to get another opportunity associated with controversy to buy the stock lower,” Wood said last year after a wave of selling. Despite the recent sales, Tesla still makes up nearly 11% of Ark’s flagship fund, which holds about 3.1 million shares worth a staggering $2.3 billion and also owns outsized stakes in Coinbase, Zoom Video Communications and Spotify. On Wednesday, Ark also sold shares of chipmakers Nvidia and NXP Semiconductors, while picking up stock in software firm UiPath, real estate website Zillow and ecommerce companies Etsy and JD.com.

Cathie Woodâs Ark Invest Sells $110 Million In Tesla Stock As Insiders Also Dump Shares

The famed Wall Street money manager has previously said the electric-vehicle company could be worth more than $1 trillion.

www.forbes.com

I think this belongs in the main thread but I'll respond anyway. Ark has a target weight of ~10% for TSLA. They have a tendency to trim when this is exceeded and they buy when it gets below 10%. You can see the current weight of each Ark fund here: All 48 ARKK ETF Holdings

 

[Tslynk67]

i tried to take advantage of the "high" IV. IBKRs "Option strategy lab" suggested a wide iron-condor for 17/9 .. but i just took the BPS-side of it.

Now i have bought 100x 695/690 17/9 BPS @0.4.. and an order to close half at 50% gain. For the rest i have to see on monday.

Nice spread, that's the sort of thing I've been considering, quite far OTM and tight

 

[CHGolferJim]

• Bought (BTO) 091721C760 @ $8.52
• Set an automated sale (GTC STC) of 60% of the contracts @ $20 for Monday AM; will hold the others for a few hours/days

 

[adiggs]

I think this belongs in the main thread but I'll respond anyway. Ark has a target weight of ~10% for TSLA. They have a tendency to trim when this is exceeded and they buy when it gets below 10%. You can see the current weight of each Ark fund here: All 48 ARKK ETF Holdings

My own previous observation is that if I were to trim and add using Ark's daily email as my trigger, then I'd be doing quite well on those swings, and adding shares almost every time through the cycle. The fact that this trim was $100M is a testament to how much $ the funds have under management.

I agree with your assessment

 

[bkp_duke]

Hadn't planned to open anything up, but the puts just looked too juicy today.

25 x 9/17 BPS 685/715 for $2.88 in premium. Will look to close these out before 9/17 due to volatility of triple witching, and/or add a Call spread to them for some added premium when the stock trend goes green.

Not advice.

 

[dl003]

Put IVs are going back down almost to a normal level.
This couldn't have been a short attack with put sweeps, could it?