Wiki Selling TSLA Options - Be the House

[adiggs]

I have not found a cc-trade this week I'm either comfortable with risk-wise, or happy with premium-wise. So I sit on the sidelines. Can't lose my shares, as I'd be killed by taxes (cost base too low) - maybe need to load up on LEAPS and write lcc instead, but "wheeling" an lcc doesn't work, right?

Wheeling an lcc "works", but it's not strictly speaking a wheel. The leap cc's (poor man covered call, ...) is something that you manually resolve into cash, whether a gain or a loss. Same for a bull put spread. To be specific if you decide you are taking assignment on your lcc, what you actually do is STC the long call (LEAP) and BTC the short call. There's a range in the share price where the short call is ITM where the long call is gaining value faster than the short call is losing value (delta is higher on the long call). That's about as far ITM you'd want to go. There are also the Vega (IV) value changes and the time value (Theta) changes to consider that will move the timing of assignment around.

With cash in hand you decide whether your next position using that cash is on the call or put side. So you wheel back and forth to the degree that the lcc resolves into cash and is followed by puts (or put spreads). Or put (spreads) get resolved into cash which is then used to purchase a far expiration call to sell covered calls against.

Or you could be using that cash to back call spreads instead of buying the leap for covered call sales, with the bonus that the cash can ALSO back a put spread (aka - Iron Condor).

Or ...

Or ...

If you had done this with 800 strike Puts back in February, you would have gone 7 months with almost no income.

I resemble this remark.

 

[adiggs]

i haven't opened 10/8 IC yet but this is my 10/15 (i might regret the -c850)

View attachment 713127

Just using this IC related post as a jumping off point - for those opening IC's at a single transaction (rather than legging into them) and talking about the overall IC credit, how much of those credits are from the put leg and how much from the call side?

I haven't looked at any ICs for a month or more, but when I've looked at call spreads, the credit compared to the risk has been too low for me to add on the call spread. Like I'd expect a $4 IC to be roughly $3.50 for the put spread and .50 for the call spread. It's been those minuscule call spread premiums that's gotten me into trouble previously, and that has kept me out of the 'free' call spread I can get for every put spread (special - on sale now!).

 

[adiggs]

Seems many use Wingmantracker for tracking their options trades.
I signed up yesterday and uploaded from Etrade.
2 questions to those that use it:

1) How do you upload trades after the initial CSV?
I opened it yesterday, uploaded and I want to upload my trades that I've done since.

2) I don't think this is possible but I have some positions uploaded yesterday that I need to split legs.
For example I have 30 contracts that I need to split off into 3 different legs ( 1 for 10 1 for 15 and 1 for 5) and then combine those legs with different positions. I have several like this so I would really like to be able to adjust that.

An email to wingman gets a response with links to videos that show how to do it with uploaded trades after the initial upload I guess.
It seems you can do this with new trades via the ADJUST feature but for positions from the original upload ADJUST does not give you the Duplicate and Edit functions necessary to do that. Any ideas?

thanks for any help

There is an Import tab for ongoing uploads of new trades. I was initially careful to download just the new trades from my broker, for import into Wingman. I am no longer careful about that - Fidelity defaults to 30 days for the investment activity and I just take that. Wingman parses out the already uploaded transactions from the new ones and only adds the new ones. That makes thing faster.

For splitting legs - I've looked for that functionality and not been able to find it. In a similar position I put all 3 positions together into a single transaction. So you've got the 30 contracts as 1 of the legs, and then the matching 10/15/5 legs (4 total legs) representing the other side of those 30 contracts. I mark off individual legs as they close, and don't close the overall transaction until it's all closed. Assuming those are vertical (short put) spreads then I'd indicate that the whole collection of legs represent a single vertical (short put) spread. Then the overall results will accrue to that transaction type for identifying what's working well and what isn't in the Analysis tab.

 

[Yoona]

Just using this IC related post as a jumping off point - for those opening IC's at a single transaction (rather than legging into them) and talking about the overall IC credit, how much of those credits are from the put leg and how much from the call side?

I haven't looked at any ICs for a month or more, but when I've looked at call spreads, the credit compared to the risk has been too low for me to add on the call spread. Like I'd expect a $4 IC to be roughly $3.50 for the put spread and .50 for the call spread. It's been those minuscule call spread premiums that's gotten me into trouble previously, and that has kept me out of the 'free' call spread I can get for every put spread (special - on sale now!).

My IC was legged in. Correct - call credits are depressing.

BPS 19.56 credit.
BCS 1.77 credit.

 

[llirk]

My IC was legged in. Correct - call credits are depressing.

BPS 19.56 credit.
BCS 1.77 credit.

View attachment 713161

Honest question, since I am struggling with this decision. Why would you even write the BCS side of this IC?

 

[BornToFly]

My IC was legged in. Correct - call credits are depressing.

BPS 19.56 credit.
BCS 1.77 credit.

View attachment 713161

If I'm looking at this right, the 670 Put was $9.57, and buying the 630 cost yo $6.1, for a net of $3.40 each. You could make more money just selling a 600 Put with much lower chance of being in the money. Selling just a 620 put gets you $5. Are you doing this because of Margin requirements?

 

[SOULPEDL]

Hi, I was told you folks knew where I could get some crack. Am I at the right place?

Over 80% in TSLA chairs (until Cathie sells anyway), my strategy for about 6 mo has been to watch my Theta burn a few cheap calls I've been HODLing. It's hard to notice in all that noise, but now I can imagine the leak and see how this could get expensive. I do like that TSLA could just take-off any moment (which seems like always), so maybe there's hope for my 850 call on 10/15 still, but this could become my 3rd longshot fizzle. I mean, my god, FSD, Q3, Factories, Energy, what else? Who wouldn't want to double down at times... hellow!

Also holding slightly OTM leaps but I can see (as pointed out already) they're doing strange things lately, complete nonsense wrt TSLA SP. I now wonder if the special interest aren't selling those off just like the stock - scare people into bailing, then buying them right back after the sweep. IDK, I'm really Junior at this, but I don't worry the least about a 950 call in '23. To me, that's nearly equivalent to chairs. But these little ones ya pick up for pennies, well, they burn pretty quick in this Max Pain world. So not liking them anymore (but I'll hold through P&D at least... see!).

Not ready for covered calls that I still don't understand - I don't want this to be my new stressful career, I'd literally rather make stuff. So, am I still playing the Wheel with a couple 900 leaps? (Or is this like a crack house where some members in disguise try to slow Tesla? You know who you are! Paranoid/Curious...)

So what about those leaps? Anyone tracking this for a bit, or have a link to see it better? (Probably all of you, lol)

 

[UltradoomY]

Hi, I was told you folks knew where I could get some crack. Am I at the right place?

Over 80% in TSLA chairs (until Cathie sells anyway), my strategy for about 6 mo has been to watch my Theta burn a few cheap calls I've been HODLing. It's hard to notice in all that noise, but now I can imagine the leak and see how this could get expensive. I do like that TSLA could just take-off any moment (which seems like always), so maybe there's hope for my 850 call on 10/15 still, but this could become my 3rd longshot fizzle. I mean, my god, FSD, Q3, Factories, Energy, what else? Who wouldn't want to double down at times... hellow!

So what you are doing is burning all the theta off for who ever sold that option to you - even if we are over $800 on that week most of the premium wil have burned off.
If you want to buy an option - do so farther out from the event you are targeting and be close to ATM. Then your contract will increase in value around the event and still have plenty of time value left for you to sell it for a profit.

Also holding slightly OTM leaps but I can see (as pointed out already) they're doing strange things lately, complete nonsense wrt TSLA SP. I now wonder if the special interest aren't selling those off just like the stock - scare people into bailing, then buying them right back after the sweep. IDK, I'm really Junior at this, but I don't worry the least about a 950 call in '23. To me, that's nearly equivalent to chairs. But these little ones ya pick up for pennies, well, they burn pretty quick in this Max Pain world. So not liking them anymore (but I'll hold through P&D at least... see!).

Leaps are a fickle mistress. If you are going OTM then go way out and get a bunch. If you are looking to do something with them in the interim then buy ITM Leaps and sell Leap Covered Calls against them to help them pay for themselves.
Always go for the farthest out you can as they have the most time value.

Not ready for covered calls that I still don't understand - I don't want this to be my new stressful career, I'd literally rather make stuff. So, am I still playing the Wheel with a couple 900 leaps? (Or is this like a crack house where some members in disguise try to slow Tesla? You know who you are! Paranoid/Curious...)

So what about those leaps? Anyone tracking this for a bit, or have a link to see it better? (Probably all of you, lol)

You really can't play the wheel with the $900's now... Maybe in December.
But you would be selling anything over $900 against them - like a November 19th $1000 strike for example.
IMO not worth it though.

If you are serious about any of this - I strongly suggest reading the first page, taking the courses and then reading the entire thread and seeing the changes to strategy and positions play out. It's a fun ride!

 

[Discoducky]

Lots of volume at $760 as well as $755 and $750

I wonder what hedgies will be hunting for tomorrow?

 

[UltradoomY]

I think the time has come for me to switch over to 50% leaps instead of just holding a couple (2024's) and be all in on the leverage side of leap covered calls.
So as a reasonable person - I am not simply going to sell my shares to fund leaps. Every 100 shares sold can get 2.2 of the January 2024 leaps.
I am selling aggressive -I dare you- CC's to make it happen.
So Sell to open 10/01 $765's @ 8.25 each this afternoon.
Cheers to the longs!
Can't wait to up my Leap count for more CC's!

 

[Yoona]

If I'm looking at this right, the 670 Put was $9.57, and buying the 630 cost yo $6.1, for a net of $3.40 each.

my screenshot was too dark... $9.57 is the current market price of -p670, not the original credit

therefore:
"the 670 Put was $9.57 69.32, and buying the 630 cost $6.1 49.76, for a net of $3.40 19.56 each"

 

[stealthyc]

I think the time has come for me to switch over to 50% leaps instead of just holding a couple (2024's) and be all in on the leverage side of leap covered calls.
So as a reasonable person - I am not simply going to sell my shares to fund leaps. Every 100 shares sold can get 2.2 of the January 2024 leaps.
I am selling aggressive -I dare you- CC's to make it happen.
So Sell to open 10/01 $765's @ 8.25 each this afternoon.
Cheers to the longs!
Can't wait to up my Leap count for more CC's!

Which strike for the bought leaps?

 

[adiggs]

If I'm looking at this right, the 670 Put was $9.57, and buying the 630 cost yo $6.1, for a net of $3.40 each. You could make more money just selling a 600 Put with much lower chance of being in the money. Selling just a 620 put gets you $5. Are you doing this because of Margin requirements?

For me at least, I can sell 1 cash secured put with $67k backing or I can sell 11 $60 wide credit spreads (say 610/670s). The 630/670 is even more leverage! (too much for me ) So the spreads provide me with controllable leverage.

Or the way I approach it - I can sell 6x $100 wide spreads in place of that $67k cash secured puts. The additional volume offsets the lower credits, which can be used to increase income, to go further OTM (decreasing risk), or a balance between the two. Nothing is free of course - there are always tradeoffs - and here the size of the drop in the shares necessary to reach 100% loss is much smaller. This last example - a $550/650 spread will achieve max loss at $550 compared to max loss on a short $650 put when the shares reach $0.

Though if that short put is margin backed then 100% loss might be reached at more like $450 (1/3rd ish), with the opportunity for loss to increase beyond 100%.


In the example and numbers you cite, that $40 wide spread - one can sell 16 of those ($64k margin). So the 3.40 per spread can yield about $56 credit vs. a single $670 put at 9.57 or a $620 put at $5. This example, btw, is why I stay away from these small spread sizes - I'm too inclined to use all of that leverage . Though I might find the 560/600 put spread, using all of the leverage, to get me similar or better results than the 670 puts while being a lot further OTM (the leverage can be used to lower risk instead of increasing income).


Lots of interesting tradeoffs here - I've personally transitioned from nearly 100% cash secured puts (I might have used margin to handle <10%) to only put spreads. I use pretty wide spread sizes ($100 is my default). To start getting experience with these I used $200 wide spreads. At current IV you'll find that the $200 insurance puts are cheap - $0.30 kind of stuff, so the spread behaves like a short put in practice. That's the dynamic I wanted - the spread to behave like the short puts I already new and loved.

 

[Yoona]

Honest question, since I am struggling with this decision. Why would you even write the BCS side of this IC?

because of the BCS $16,815 credit

i will close it early due to earnings; it's up 53%

 

[alterac000]

my screenshot was too dark... $9.57 is the current market price of -p670, not the original credit

therefore:
"the 670 Put was $9.57 69.32, and buying the 630 cost $6.1 49.76, for a net of $3.40 19.56 each"

This is very impressive. My 40 width bps at various times are all single digit credits (mostly lower single digits) and not much different in strikes, and I have some out to November. How did you manage a $69 on the short side?? Your timing must be impeccable..

 

[UltradoomY]

Which strike for the bought leaps?

The $500's - $765 sold CC plus $8.25 =$773.25
The $500's are $345 each (midpoint)
773.25 / 345 = 2.24 leaps per CC executed.
And it only goes up if the shares don't get called away.

 

[SOULPEDL]

So what you are doing is burning all the theta off for who ever sold that option to you - even if we are over $800 on that week most of the premium wil have burned off.
If you want to buy an option - do so farther out from the event you are targeting and be close to ATM. Then your contract will increase in value around the event and still have plenty of time value left for you to sell it for a profit.

Leaps are a fickle mistress. If you are going OTM then go way out and get a bunch. If you are looking to do something with them in the interim then buy ITM Leaps and sell Leap Covered Calls against them to help them pay for themselves.
Always go for the farthest out you can as they have the most time value.

You really can't play the wheel with the $900's now... Maybe in December.
But you would be selling anything over $900 against them - like a November 19th $1000 strike for example.
IMO not worth it though.

If you are serious about any of this - I strongly suggest reading the first page, taking the courses and then reading the entire thread and seeing the changes to strategy and positions play out. It's a fun ride!

Not sure I'll read 376 pages but I'm keeping these tips around, thanks!

 

[Yoona]

This is very impressive. My 40 width bps at various times are all single digit credits (mostly lower single digits) and not much different in strikes, and I have some out to November. How did you manage a $69 on the short side?? Your timing must be impeccable..

bps was opened 7/20

 

[adiggs]

because of the BCS $16,815 credit

i will close it early due to earnings; it's up 53%

(I'm just adding on what I understand to be the larger context on this).

Looking up at the top of this page at your screenshot, I see a P/L on open of $19k - $9k, so credit of $10k. That credit is derived from 95 contracts of $40 ($4k backing each) so $380k is at risk. There is no incremental margin needed as there is a same date, same width put spread also being opened (hence we call this an Iron Condor). The risk assessment by the broker (and everybody else) being that if the put spread is experiencing a max loss, then the call spread is experiencing a max gain (and vice versa). The max loss of $380k can only be experienced on one side or the other.

So @Yoona has 95 contracts with the $40 spread size being opened. The call side generated a 3.21 - 1.44 credit, or 1.77 per share, $177 per contract. The call side position has a prob. OTM (1 - Prob ITM) of 95.5%.

Meanwhile she's also opening a put spread with Prob OTM of 79% and a credit of 69.32 - 49.76 = 19.56. Lots more credit but also lots more risk (based on how the market is pricing the positions).

I hazard a guess that most of us would be more worried about an 850 call going ITM than a 670 put going ITM, but the market is pricing the put as 10x as valuable to buy (and thus 10x as valuable for us to sell). This is where we (or at least I) believe that we have an information edge on the market as a whole - we (I) think that the puts are priced too high (good for us) and the calls are priced too low (bad for us, as option sellers). If we're right then that information edge can (is) earning us a lot of income.


Another way to look at this - by going out to 10/21, Yoona has found a position with what I at least consider low risk (put side anyway) that generates over 40% of the money at risk in premium. Collecting 40% of the money at risk each time she opens a position leaves a LOT of room to be wrong, as long as she's moderately aggressive at managing losers and taking early winners. The strikes are so far OTM, this doesn't sound like a stretch.


H'mm... maybe I need to look at this more closely Seems like whenever I dig into the details of what other people are doing, I find myself modifying what I'm doing! (We each make our own decisions, and experience our own consequences).

Thanks Yoona! Again!

 

[InTheShadows]

2 weeks out for better premium and time to adjust, but you may have missed in my post that I said I won't hold the position past 10/1.

My personal concern with 10/8 is IV will be increasing on those options through next week with likely Friday being the peak. So even if the price is stagnant, you may not see much theta decay on those.