Wiki Selling TSLA Options - Be the House

[EnzoXYZ]

Quick couple of questions for the folks who have sold calls covered by ITM LEAPS... (as an aside, I've since learned that this is called "surrogate covered call")

1. I'm presuming this is only allowed with margin accounts? Otherwise an ITM LEAP doesn't represent 100 shares by itself. I'm quickly realizing that margin is a must-have for increasing return on capital employed, but for the moment I'm on a cash-only account.

2. Does anyone happen to have tried this with TD Ameritrade? They've got absolutely no written guidance about surrogate covered calls on their online resources.

This thread has led me to consider selling covered calls, but I'd love to increase my leverage with some deep ITM LEAPs at the same time.

Ha! I just sold 100 TSLA shares to buy 4 March ‘22 600 calls in my TD Roth IRA account. This was Wednesday/Thursday of the past week. Opening an option approval account don’t you have margin already? My case a IRA can’t margin. It’s a 6 month call option that I will only use 3 months to sell covered calls against. I’m hoping to generate enough income and underlying options to appreciate to make it worth it.

In theory the lower strike longer dated calls should always be worth more so margin isn’t required.

 

[MP3Mike]

Opening an option approval account don’t you have margin already?

Nope. I have level 3 options but no margin on my accounts. (I think going to level 4 options requires a margin account.)

 

[CrunchyJello]

do you have a sample executed trade to share? i am also looking into SPX/SPY but clueless where to begin; thanks in advance!

David Sun (ref: TastyTrade FB group) has a podcast and a number of different SPY/SPX trading plays that he tracks (and deploys) on www.TheTradeBusters.com.
He’s got sheets going back a number of years, and lists his mechanical criteria for each daily (!) play.

 

[willow_hiller]

Opening an option approval account don’t you have margin already? My case a IRA can’t margin. It’s a 6 month call option that I will only use 3 months to sell covered calls against. I’m hoping to generate enough income and underlying options to appreciate to make it worth it.

In theory the lower strike longer dated calls should always be worth more so margin isn’t required.

Nope! Had to look this up myself, but TD Ameritrade technically has 4 levels of options approvals, depending on cash or margin. Level 1 is covered calls and cash-secured puts. Level 2-cash is long options (where I am presently). Level 2-margin is spreads. And Level 3 is naked short options.

My main concern with selling covered calls is early exercise. If my broker allows me to cover short calls with a LEAPS, things could go really pear-shaped if my short call gets exercised and I don't have enough cash to exercise the LEAP to cough up the shares.

 

[MP3Mike]

If my broker allows me to cover short calls with a LEAPS, things could go really pear-shaped if my short call gets exercised and I don't have enough cash to exercise the LEAP to cough up the shares.

Normally your broker will buy shares at market price and give them to the call holder, so you would need to have the cash to cover the difference between the CC strike and the market price. (If you don't have margin I think E*TRADE gives you two days to cover any gap.) So, yes, that is a concern, as you may end up having to sell some/all of your LEAPs to make up the difference. (You wouldn't want them to exercise your LEAPs for you as you would lose all of the time value.)

 

[Tslynk67]

Just a heads-up that things look a little ugly in Frankfurt trading this morning, although it tends to follow the US Futures, which are a mess, and not necessarily indicative of $TSLA's moves

 

[dc_h]

Don’t forget macros and we’re back to at least one civil servant who seems to be a tslaq fan at NTSB. Premature is ~743 at this point. Elon may be picking a fight now, with inventory sold out for 3 months and FSD 10.1 due in two weeks, this would be good timing. I’ll sell bps this morning, but want to wait for the weekly mandatory Monday dip to finish.

 

[willow_hiller]

Premature is ~743 at this point.

Not sure if this was intentional or autocorrect, but it's a great Freudian slip!

 

[dc_h]

Not sure if this was intentional or autocorrect, but it's a great Freudian slip!

my iphone knows me too well Autocorrect reveals all.

 

[AquaY]

Futures are ugly.
And premarket TSLA suggests we might have the beginnings of an interesting week.

 

[corduroy]

The prophecy is nigh …. The blood of the triple witch shall run red next week. Beware…. Buttershrimp is occasionally crazy accurate on price finishes …..

(For the record, I’m hoping this is not the case.)

I think I will start taking your predictions more seriously.

 

[ReddyLeaf]

Futures are ugly.
And premarket TSLA suggests we might have the beginnings of an interesting week.

Wow. Right now I’m happy that I was forced to roll my CCs on Friday. However, rethinking things, forced selling at the 750/755 exercise price and buying back at ~730 would have been even better. Unfortunately, rolling my CSPs to -p750s on Friday……well not so smart (except I’ll gladly take more shares, and I needed to release the cash backing).

 

[dc_h]

Wow. Right now I’m happy that I was forced to roll my CCs on Friday. However, rethinking things, forced selling at the 750/755 exercise price and buying back at ~730 would have been even better. Unfortunately, rolling my CSPs to -p750s on Friday……well not so smart (except I’ll gladly take more shares, and I needed to release the cash backing).

I let two 750's roll and closed two cc's at 9.00 on Friday. Hard to let go of the shares with my bullish bias. With a big drop like this, we could see limit orders hit, causing a secondary drop and then recovery. Good luck lycanthrope.

 

[Yoona]

SPY broke 50-SMA and is going for 100-SMA

 

[AquaY]

I got aggressive ( for me) towards the end of last week and STO BPS 5x +615/-715
Glad i only did 5 right now.
Macros had me concerned to commit more.
Lets see how this rollercoaster ride goes

 

[Knightshade]

Was just looking at that exact thing to sell for next week... showing 6.57/6.85 credit at the moment though- thought about doing a $7 day order to catch the next couple buck SP dip

OTOH maybe makes more sense to wait for tomorrow to see if they get it down to the 740-745 range to sell these?

Better lucky than good I guess, just got to sell these at $5 lower strike and for $8 instead of $7.

(though we'll see how lucky as the day/week progresses)

 

[dc_h]

I am starting with a clean slate this morning, so easier decisions. I opened 6 bps 710-660 and 6 690-640. If we rebound, I can more my 690-640 up to 710 on Wednesday and start selling cc's and call spreads to open an IC with the bps. If pricing holds or rebounds, I've made my budget goal for the week, which is more modest than many here. If we appear to stabilize and this is not part of a broader market revaluation, I'd like to buy March 2022 500 calls. There is almost premium ($27 on Friday) and I can sell bps with the free cash flow. Tesla itself is a sure bet, but macros can really mess up any micro plan.

 

[vikings123]

I’m going to be patient before selling my BPS. I believe we will see us test the 720 support level today. OTOH I will also be looking to tier into some LEAPS in my IRA. The Jan 24 1100 leaps are selling for about 100$.

 

[PastorDave]

I'm trying to be patient as well, but 732 is acting as support as the 20SMA on the daily chart and as a prior resistance/support level. So I dipped my toe in with this when we bounced off of 732 a couple of minutes ago:
STO 10x BPS 730/710 @ 5.21

 

[bkp_duke]

Closed out my BCS from last Thursday for 65% profit. Opened a 670/700 BPS.