What is your opinion on both selling puts and calls? I assume selling puts alone is a good strategy to acquire stock I don't mind having, but that only works if I have a supply of money from outside this account.
I sold a put for 0.99 at $245, then after acquiring the shares, sold a call at $250 and lost the shares again. In the end I had ~$830 more (100*($0.99+$2.40+($250-$245)) minus the fees).
If the stock didn't have the volatility, I would still have collected $339 in premiums minus fees.
So is this a strategy with mostly upsides? What am I overlooking?
I think many folks on here do it, including myself. It's pretty satisfying and you can make a lot of money with it, but I would say the most important thing to do (aside from basic stuff like don't let your stock get called at less than you bought it) is set firm limits on these positions and
stick to them. There are two emotional factors that sneak in here that you must be absolutely rigid against.
The first factor is that getting assigned shares with puts can feel like a bargain, but getting your stock called away can be painful because you're probably both leaving money on the table and you feel like you're missing out on the price action.
The second factor is that as the stock goes up, you feel richer, more risk tolerant, and have a higher margin capacity. This can lead to entering trades that you shouldn't be entering.
When you sell puts and calls, it's very easy to get in the mindset of "oh well I didn't really mean to buy these shares but I'll just sell calls against them and make money in the meantime."
This is mostly true! But when you combine it with the other two factors it becomes very easy to take on (and hold on to) more stock than you really should be owning, and likely at bad prices. Consider when the stock is at ATH: Your mind will say "Don't sell calls! It's really going to the moon this time and your account is big and you can take on a little extra risk."
So you decide to sell puts. Bad idea. TSLA has touched $380 how many times? And each time it seemed like the real deal. Now your puts are more likely to get assigned and the shares you get assigned will be much harder to unload by selling calls since you bought them at such a high price. And now you're stuck with them. (Think about all the people that bought just after "Funding secured" tweet, including myself! They all wish they had that money freed up right now)
TLDR: keep things in balance. Limit yourself to X amount of shares/X% margin capacity/$X as your option play position and be absolutely disciplined about it. You must remember that TSLA rises and TSLA falls. You can only play off the volatility if you have the capacity for doing so, which means don't get bogged down in dumb emotionally-driven positions.
