Wiki Selling TSLA Options - Be the House

[st_lopes]

@adiggs truly appreciate your insights and the sharing of your observations

We have very similar approaches to picking positions and managing the risk of those positions; most significant difference is that you’re selling cash covered where as I have been using portfolio margin (and, as I’ve learned, too much of it).

Other difference is that I’m not yet retired, or retiring. Still have a few decades of work, though lately I’ve been toying with ideas of taking on more passion project / different risk profile roles rather than the same grind. My approach to options has been an exercise in assessing how consistent an income stream this can be. The more consistent, the more comfortable I’d be with taking on a higher risk project professionally.

These last couple weeks have been a lesson in how much of that available margin I should deploy when entering a weekly or biweekly trade. I have had some margin calls, but fortunately have not come out of things with any less share exposure, but I have given back some of my premium gains YTD, and find myself more leveraged than I was a couple weeks ago.

03/05 will be a big reset of position week for me as I have several strikes on both sides of my strangles expiring this week; I equally find myself in an inverted strangle and whereas I used to be 2:1 puts to calls I’m closer to 1:1 right now (sign of margin buyer power having reduced with the recent pull backs)

Current sold positions: 830c 787.5c 850p all 03/05 expirations

I had also sold some 875p 04/16 as we were dropping, but had to close those due to margin calls for a small loss (netted my small gain on closing some covered calls).

I also shifted some shares to Mar 2023 1500c this week. Bi-product of a margin call forcing to close some shares, but was able to achieve same share exposure through a 1.9 leverage on these leaps.

 

[adiggs]

03/05 will be a big reset of position week for me as I have several strikes on both sides of my strangles expiring this week; I equally find myself in an inverted strangle and whereas I used to be 2:1 puts to calls I’m closer to 1:1 right now (sign of margin buyer power having reduced with the recent pull backs)

Current sold positions: 830c 787.5c 850p all 03/05 expirations

That's good stuff and I hope to hear more details from you on how this all evolves. There are two main reasons I started this thread and continue posting regularly. The first is that I suspect there are other people that can learn from what I've done, mistakes I've made, and victories I've had that they can make use of themselves. Or as is frequently the case for me - something I can learn from while running my own experiment to see for myself (so I have an idea of what will happen).

The other reason is for myself. I find that thinking things through well enough to make them conscious for myself as well as write them down in a sufficiently organized fashion for others to know what I was thinking requires me to think these things through. Doing so, and then writing it down, makes these lessons more memorable for myself. So whether anybody reads my posts or not I am somewhat indifferent - I am locking in my own education at a minimum.


Anyway, given the current share price and the open call positions you mention, those calls look like good opportunities for increasing exposure (and therefore reward / premium) to me. One of my key learnings - something I've sort of known for more than 6 months, but have only crystallized recently enough to be able to say out loud - rolling the calls closer will in some meaningful ways lower risk on the overall position.


Here is an idea I'm creating on the spot to illustrate the idea (for you to consider - not advice).
Using the 830c as the starting point, my option chain shows that as having a $0.80 premium at 0.03 delta and 0.30 theta (yes - I round to nearby numbers to be easier to read and still directionally accurate). My interpretation - there is very little incremental realizable earnings available to you in the coming week.

Let's see what the 700c would look like (maybe think of this as an extreme to better illustrate the idea). The 700c is about $15, .34 delta, and $1.77 theta. That is still the March 5 expiration.

The obvious risk here is the shares come back up above 700 next week, and now the calls are ITM. It wouldn't even need to be all that big of a run up for the call position to be a net loser.

The pros, or the reason I'm suggesting this idea for you to consider.
- A whole bunch more immediate cash flow. You'll probably hang onto the cash rather than use it (I would ), but its there for whatever you want to do.
- A big improvement is that if the shares keep going down, then you'll be realizing $15 in gains in the coming week rather than $0.80.
- And that will be a big help when you're figuring out the big reset for next week.

The way I look at it, the 700c is going to be a pure win in the context of your overall situation (all assuming roughly equal numbers of contracts). The shares could end up somewhere around where they're at. The 700c becomes worthless (which I take to really mean something like $1 or $2 - that exposes my bias towards small premium options ) and you've got an extra $15 ($13-14 really) as extra income, or money you can use for improving the roll from the 850p, or whatever combination that makes sense to you.

Or if the shares go back up, then yes - the calls can end up ITM. Which means you'll be rolling both sides. Presumably the absolute worst situation would be to end up at 775 - exactly in the middle of the 2 positions (of the 850/700 inverted strangle). That will mean that both are $75 ITM. That'll still be a reasonably good roll on both sides that will also have the effect of shrinking the strangle window, making the next position even better, etc.. Actually I think that is the single best outcome, but anything between the strikes in the inverted strangle look good to me (at least within my 830/680 strangle)

From what I've seen I would much rather face two legs that are each $75 ITM than a single leg that is $150 ITM.

And I think that is the key to the larger strategy I described in my previous opus -- don't focus on any one single position. Look at the overall position and how it works together. I claim that the 850/700 inverted strangle for next week is safer than the 850/830 inverted strangle you're in right now. And yes - I know that I've simplified multiple call/put positions down to this single position - it's the idea I'm going for. The specifics are up to you either way.


I had a similar situation for this March 5 expiration starting with an 875 call. On the last roll when I landed at 680 the shares were around 680 as well. I intentionally went to such an aggressive strike specifically for the safety. My biggest concern at that moment is that we'd be drifting down to 600 over the next week (and still is). Therefore the 680 call provides me with the most immediate cash flow AND the best downside protection that I have quickly available to me (roll existing covered calls down closer to the share price). Managing a move up over next week would be delightful

If the shares go back to mid 700s then I might have a 2 week window where all I'm really accomplishing is to roll both my put and call to being closer ATM, but I can do so in a cash flow positive way and the outcome is inevitable - one leg or the other will get back to being OTM and back to generating income. And I don't give up any shares if I don't want to, and I don't turn any cash into shares unless I want to. All I lose from this big move down is a few income generating opportunities (I think of each leg, in each expiration window, as 1-2 income generating opportunities; I don't even need 1/2 of them to generate income to come out ahead).

Generalizing from my situation to yours, if you are primarily dreading or forecasting a further drop during next week, then you might go even MORE aggressive on the call. Something like the 680 I'm at, or even going a bit ITM - say 670. The 670 call is about $27.50, a .52 delta, and $2.03 theta. If the shares trade upwards then that option will finish ITM and you'll be rolling - maybe on Thursday with a good roll available on each side. It also means that the 850p won't be so badly ITM.

If the shares trade downwards then that call is providing just about the most coverage as you plan for as that 850p goes even further ITM.


But we'll need the flexibility to keep rolling, potentially for months, for this to work. So having a time constraint on when the cash needs to be free for a home purchase or a college education or .. - that is an additional constraint you will also need to consider. I have something like that coming up and the amount is sufficient that I've begun planning for it now. The obvious impact being that I can't write as many puts, and if all of my cash is tied up backing puts, then that is bad cash management on my part.

Best of good fortune to you!

 

[adiggs]

Other difference is that I’m not yet retired, or retiring. Still have a few decades of work, though lately I’ve been toying with ideas of taking on more passion project / different risk profile roles rather than the same grind. My approach to options has been an exercise in assessing how consistent an income stream this can be. The more consistent, the more comfortable I’d be with taking on a higher risk project professionally.

A good topic for one of the retirement threads. But keeping this brief - though I've personally stopped working for a paycheck, to me the point of "retiring" isn't stopping work for a paycheck. It's really about financial independence.

The freedom, as you mention, to be more selected and aggressive about the projects you take on. Maybe also the freedom, if you're doing contract work in the high tech industry (where I'm at), to take a few weeks or a few months off between projects, combined with the ability to be more choosy regarding the projects you take on and the companies you work with.

Or in my case - the freedom to take a really big break, and then do some volunteer work. Work that won't get back to full time for a full year, I expect ever again.

 

[st_lopes]

The way I look at it, the 700c is going to be a pure win in the context of your overall situation (all assuming roughly equal numbers of contracts). The shares could end up somewhere around where they're at. The 700c becomes worthless (which I take to really mean something like $1 or $2 - that exposes my bias towards small premium options ) and you've got an extra $15 ($13-14 really) as extra income, or money you can use for improving the roll from the 850p, or whatever combination that makes sense to you.

Excellent food for thought. Thank you!

 

[generalenthu]

Good update @adiggs in the context of how you're managing thru this down turn. like your approach of aggressively rolling calls down. And even then you're net long deltas.

If anything the biggest risk to this strategy is a sharp rise > 900 or 1000 in the very near term, where digging out of the $150 put call overlap becomes pain.

Meanwhile, the elevated implied vols make tightening that overlap that much easier.

 

[EVCollies]

A good topic for one of the retirement threads. But keeping this brief - though I've personally stopped working for a paycheck, to me the point of "retiring" isn't stopping work for a paycheck. It's really about financial independence.

The freedom, as you mention, to be more selected and aggressive about the projects you take on. Maybe also the freedom, if you're doing contract work in the high tech industry (where I'm at), to take a few weeks or a few months off between projects, combined with the ability to be more choosy regarding the projects you take on and the companies you work with.

Or in my case - the freedom to take a really big break, and then do some volunteer work. Work that won't get back to full time for a full year, I expect ever again.

Thank you soooo much adiggs. Your insight to the wheel has given me a path to financing life after a paycheck and look forward to your wisdom in finding life after a career. I am about 6 years (16 years if my SO so chooses) behind you in this major life change.

Guide me wisely my master.

 

[ZeApelido]

PREFACE: not advice, my own view on how I approach these.

The answer is . . . it depends.

So, rolling that call right now is probably not the best simply because the stock has been down-trending, so you are going to roll to a call that has a good chance of going up (most likely) if the stock price appreciates. So that is a vote in favor of just letting the current call expire worthless and collecting all of the premium.

There are, however, some people that don't like to chance what a call may do over the coming days and will Buy to Close when the call is in the 75-80% profit range (where you are now). This books the profit of the premium and closes the position, so there is no chance of the call being called away. The downside here is that because you are not rolling the call, you must have enough cash in your account to Buy to Close the position. You are also, of course, giving up that remaining premium.


My 0.02 - if the stock is trending like it is, and I have a $785 CC expiring on 03/05, I am just going to let it either get to 90-95% on the premium, and I will Buy to Close, or just let it expire because I view the odds of that large a share price increase to call away the shares as very low. I will then wait for an up-trend to sell another covered call.

Thoughts on a similar question, but with respect to longer expiration dates? I sold CC's on a bunch of shares with a Jan 22 expiration at a variety of OTM strike prices (about 50% of them above $1500 strike) for a nice total premium.

Currently, the premiums have been essentially halved since I sold them, so I could close them out and keep 50% of the premium.

#1 benefit of doing this is removing any risk of those ending up ITM and having them assigned (though I would totally okay if it happened).

#2 is if the stock price rises again significantly in say the next few months, I could sell CC's against them against them again to generate even more cash. Though I'm not sure if I would end up with more or less cash than just staying where I'm at now. If I make the expiration still almost a year out, I should end up with more cash this way...

Thoughts?

 

[SN_8]

Thoughts on a similar question, but with respect to longer expiration dates? I sold CC's on a bunch of shares with a Jan 22 expiration at a variety of OTM strike prices (about 50% of them above $1500 strike) for a nice total premium.

Currently, the premiums have been essentially halved since I sold them, so I could close them out and keep 50% of the premium.

#1 benefit of doing this is removing any risk of those ending up ITM and having them assigned (though I would totally okay if it happened).

#2 is if the stock price rises again significantly in say the next few months, I could sell CC's against them against them again to generate even more cash. Though I'm not sure if I would end up with more or less cash than just staying where I'm at now. If I make the expiration still almost a year out, I should end up with more cash this way...

Thoughts?

My not advice is that you've been given a gift to be able to close them out with a significant profit now. Close them out, wait, and write new calls as IV and price both rise. You have more flexibility this way.

This is what I've done with shorter dated June calls. The only reason to leave the position open IMO is if you think the stock will continue to drop.

 

[bkp_duke]

Thoughts on a similar question, but with respect to longer expiration dates? I sold CC's on a bunch of shares with a Jan 22 expiration at a variety of OTM strike prices (about 50% of them above $1500 strike) for a nice total premium.

Currently, the premiums have been essentially halved since I sold them, so I could close them out and keep 50% of the premium.

#1 benefit of doing this is removing any risk of those ending up ITM and having them assigned (though I would totally okay if it happened).

#2 is if the stock price rises again significantly in say the next few months, I could sell CC's against them against them again to generate even more cash. Though I'm not sure if I would end up with more or less cash than just staying where I'm at now. If I make the expiration still almost a year out, I should end up with more cash this way...

Thoughts?

My not-advice opinion: I think this is a good strategy. The pull-back in share price, and subsequently call premium price, has given you a nice opportunity to lock in some gains during what is historically Tesla's weakest quarter.

I believe we all here expect the stock and options prices to go back up after say Q2 deliveries (I'm not sold that Q1 deliveries will be that good), or FSD is released, etc. Sharp up-trends are always the best time to sell those covered calls to maximize your premium.

Again, my not-advice, but how I am approaching things.



On the flip side, buying some of those long dated calls (i.e. LEAPS) is something to be done now, or when you think there is a big drop in the premium price. Example, I loaded up on 200 calls of AMD at an absurdly high strike price ($185) that expire Jan 2022. I viewed the downside as limited, and the upside as VERY high. Might be a strategy to consider with TSLA (one I am eying).

 

[adiggs]

Good update @adiggs in the context of how you're managing thru this down turn. like your approach of aggressively rolling calls down. And even then you're net long deltas.

If anything the biggest risk to this strategy is a sharp rise > 900 or 1000 in the very near term, where digging out of the $150 put call overlap becomes pain.

Meanwhile, the elevated implied vols make tightening that overlap that much easier.

It's true that a big and fast rise in share price will be a challenge. More generally a big and fast move in either direction is something of a problem.

But "problem" in this context means, worst case, that the put leg will be performing really well and then I make the choice to turn all of the cash flow from the puts into net debits on the call side in order to keep the call strike rising as quickly as I can. I can readily imagine this turning into a few months of effectively 0 income.

But that sharp move up also means that the current deep ITM put will be offsetting some of that loss as its very large premium gets crushed by such a move. If I rolled today for the $5 strike improvement and small net credit, then the new position will have a premium of ~$150. That's a lot of premium to earn as the shares go up sharply, and will be earned quickly in the scenario we're considering.

That sharp move up will also be mitigated by aggressive rolls on the put leg as the shares move quickly over $1000. In fact the aggressive rolls are a requirement for mitigating the risks in the strategy (those net credits are critical to the dynamic management of losing legs).

It's the opposite problem of what I'm handling right now with the fairly sharp move downwards - the put strike has fallen well behind of the share price.


As best I can tell there are three patterns for share price moves that look particularly bad for this approach.
1) The obvious one - the shares head off in some direction, quickly, and don't stop.
- While this can, in theory happen, there is also some limit. We've had a couple of recent stretches where we first went through 2 weeks of constant increases in the share price, and then a couple of weeks with constant decreases in the share price. In both cases the shares did take off in one direction and keep going, but it wasn't too long before they stopped. Or at least take a short breather.

2) Shares go a long ways in one direction, and then plateau and trade around that new price level with no meaningful retracement. On the current down move this might manifest as a move down to 500 tomorrow morning and then further trading around 500-550 for a few months.
- Because i don't get the pull back, the deeply ITM puts take a long time to drag themselves back to the share price.
- AND because the shares are reasonably flat for an extended period the calls aren't performing all that outstandingly (a single premium per 2 week window).
- AND IV is likely to drop during that extended plateau further reducing the value generated from the calls.

3) We see an extended period of trading something like what we're seeing right now, but extended into the future. Shares move down aggressively into the 600s - maybe even down to 600. And then the shares turn around and move sharply back up to say 900. And back down, and back up, spending just long enough at the outer bounds to draw the OTM leg up and then push it quickly deep ITM when the shares go sharply back down.

I think of this as the whipsaw pattern - it's not just trading sideways (ideal for this strategy); it's trading sideways, but up and down fast enough, and far and fast enough, that the legs alternate being deeply ITM and drawing the income off of the winning leg to keep both close for the breakout (up or down) where the sharp move just keeps going.


In all 3 cases I think that the overall result is approximately the same.
1) Income probably drops to ~0 as all of the net credits on the winning leg get turned into net debits on the losing leg and help it catch back up as quickly as possible. This may turn into multiple months of rolling legs with no income. This is a bad use of capital but my optimal use of capital is different from most - this circumstance is just fine and one of the risks I take.

2) I still have my backup to the backup available in all 3 cases - take assignment and restart this process around the new strike price. I probably take the restart option over running the wheel, as running the wheel would mean that instead of 50/50 puts/calls, I'd be more like 100% on one side and 0% on the other, and somewhat balanced on each side is a requirement of this larger trading approach.

The consequences I can see from any of these 3 scenarios:
- Taking assignment will likely mean taking a permanent loss of capital.
- It might "only" mean losing out on a big chunk of a significant gain (or buying fewer shares during a really good buying opportunity). These are risks I'm willing and happy to take as both are acceptable outcomes for me. I come out ahead in both of these, even if I don't come out as far; to me that's the cost side of the benefit side of what looks like a reasonably stable and large income source.


The permanent loss of capital scenario is the single biggest worry that I have and that I make choices around. It's why I'm more likely (current situation) to roll the 830 put to 775 for a $40 net debit over rolling the 830 put to 825 for a small net credit. If I push the income down to 0 using only the most recent call, I actually have a $70 net debit available to use, so I am currently still generating income in this $40 net debit choice at or above my target, while pulling the put a long ways towards the share price.

This is that dynamic position vs. static position idea I mentioned here and there, and am still figuring out how to articulate well.

Doing this well requires balancing the ongoing income with the permanent loss of capital risk. I can push the ongoing income to ~0 for multiple months without issue (a single good 2 week window can generate as much as 4 months of income I've discovered. Which I interpret to mean that we'll need a truly extraordinary move in the shares, and I think one that is significantly more extraordinary than I've witnessed in 8 years following TSLA to trigger one of the scenarios that might put me into the permanent loss of capital situation. That doesn't mean it can't happen, but there are always tail risks that can't fully be accounted for.


A reminder - if anything looks like free money -- it isn't.
If something looks too good to be true -- it isn't, and something about the situation isn't understood. Keep looking (or asking for help to understand what you're missing).

 

[adiggs]

Thank you soooo much adiggs. Your insight to the wheel has given me a path to financing life after a paycheck and look forward to your wisdom in finding life after a career. I am about 6 years (16 years if my SO so chooses) behind you in this major life change.

Guide me wisely my master.

The guidance and master part - be careful

But the larger idea is why I started this thread. Not to see anybody duplicate or attempt to mimic my trades or exactly what I'm doing. But to help myself figure this stuff out - where I've landed this year is different from where I started a year ago, and to offer up my own experiences to help others with their feedback and learning loop (as well as learn from others experience, so I can accelerate my own feedback loop). The education and experience from a year of selling both puts and calls were a requirement for me to get here.

I hope that anybody that wants, and has similar requirements / objectives, will find my experiences helpful in guiding their own acquisition of experience.


Two simple YES-ADVICE that I would definitely make:
1) Don't jump all the way into the pool. Do the basics education (the OA videos, other sources you find helpful - TastyTrade also does a bunch of videos I found helpful). And then do some small trades to start getting your toes into the water. Make sure you know the mechanics of entering and exiting both a put and a call by doing them. Also do some roll transaction tickets, and make sure you know the mechanics of a roll in your interface.

Really basic stuff, but you don't want to be in the middle of a large and badly losing position and need (not want) to figure out how to do a roll. (Ask me how I know)

2) If/when this strategy for generating income makes sense and you've got experience with the pieces, then start with a 1 contract position (100 shares, 1 covered call, 1 cash secured put). There's no rush nor would you want to rush into doing this at larger scale.


In your case, with ~6 years to retirement, starting up the single contract position and running it for a year or more looks like a completely reasonable thing to do. You'll increase the opportunity to see some more extreme share moves, which will expose you to both the mechanics of doing this. And most importantly (my opinion) it'll expose you to the emotions of (for instance) associated with handling the more extreme situations. The emotional reactions to what's going on are what have gotten me into trouble. And besides, hollow feeling in my stomach doesn't sound like a fun retirement. I've got to be comfortable with a put leg that is $150 ITM and a call leg that is ATM - not just out loud, but explaining the situation to my wife, and when I go to sleep at night (yes to all 3 in my current strangle).

In retirement the extreme tail risks that is consuming the bulk of the comments - that's also the bulk of what I'm thinking about every time I move the strangle (or inverted strangle). The income is a desirable by-product - it's not my micro-focus though (and I think the broader focus on the tail risks / how this goes wrong, is exactly the right focus).

 

[Stretch2727]

Trying to take the emotion out of my strategy. Close to retirement, recently change to a less stressful but lower paying job, but no need for income right now. Trying to figure out the best strategy for retirement.

I have diversified some of my gains out of TSLA but would still like to hold a large position and diversify further if it makes more large gains and buy back in if it declines.

My general strategy for some income against the TSLA holdings. I just started a few weeks ago.

Hold a targeted fixed $$ amount in TSLA. It's a fairly large position.
I sell 2 layers of weekly puts and calls that put me at approximately at the same $$ amount for TSLA if they assign. The price goes up the calls sell the shares, the price goes down the puts buy the shares.

For instance for March 5th I have sold 1 contract of the following:

Layer 1 Strangle
715C
650P
Layer 2 Strangle
750C
625P

If the options go ITM, I let them assign.
If both sides are OTM I will usually roll everything. Actually pretty rare. My position will not change as the the selling and buy points are based on my target $$ amount and the number of shares I hold.
I will usually try to adjust the trade every Friday for the following week. If one side is ITM I will assume it will assign and will open a new position for the following week.
Have plenty of shares for the covered calls. As well I make sure I have plenty of cash to secure the puts. I have other diversified index ETF's in the same account I can sell if I need cash. Had to do this with the recent stock decline.

I usually get $3-4K per week, but also benefit by buying low and selling high. It will keep me in a fixed $$ amount of TSLA which I comfortable with in my overall portfolio. As well does not take too much of my time so I can actually retire at some point.

 

[juanmedina]

@adiggs have you look historically out the 52 weeks with weekly Strangles set at .3 delta how many times would the strangle expire worthless?

 

[EVCollies]

Trying to take the emotion out of my strategy. Close to retirement, recently change to a less stressful but lower paying job, but no need for income right now. Trying to figure out the best strategy for retirement.

I have diversified some of my gains out of TSLA but would still like to hold a large position and diversify further if it makes more large gains and buy back in if it declines.

My general strategy for some income against the TSLA holdings. I just started a few weeks ago.

Hold a targeted fixed $$ amount in TSLA. It's a fairly large position.
I sell 2 layers of weekly puts and calls that put me at approximately at the same $$ amount for TSLA if they assign. The price goes up the calls sell the shares, the price goes down the puts buy the shares.

For instance for March 5th I have sold 1 contract of the following:

Layer 1 Strangle
715C
650P
Layer 2 Strangle
750C
625P

If the options go ITM, I let them assign.
If both sides are OTM I will usually roll everything. Actually pretty rare. My position will not change as the the selling and buy points are based on my target $$ amount and the number of shares I hold.
I will usually try to adjust the trade every Friday for the following week. If one side is ITM I will assume it will assign and will open a new position for the following week.
Have plenty of shares for the covered calls. As well I make sure I have plenty of cash to secure the puts. I have other diversified index ETF's in the same account I can sell if I need cash. Had to do this with the recent stock decline.

I usually get $3-4K per week, but also benefit by buying low and selling high. It will keep me in a fixed $$ amount of TSLA which I comfortable with in my overall portfolio. As well does not take too much of my time so I can actually retire at some point.

That is pretty close to the formula I am testing, strangles with 15-30 delta. If I need more cash when Puts were assigned with the last cycle, I'll sell Calls at 30 delta and Puts at 15 delta and vice versa.

 

[Yoona]

"I sold a bunch of 2023 $1300 covered calls and as of now I'm planning to let them execute. Maybe I'll roll them up to $1500, we'll see."

I found that on the main thread. For the benefit of newbies here (me!), can someone please provide insight on what is the thinking behind selling 24 months out. Prem is $170, so that's only $708/month income ($17k/24 months). Isn't that too little? What am i missing?

Thanks in advance!

 

[sub]

I would be very, very cautious and put in a lot of time learning (on page one of this thread, and other places) about options and more importantly early assignment before jumping in to these types of trade strategies.
They are complex to say the least, that is if you are doing the research on IV and the greeks for each trade.
Definitely a strategy to start small and learn before moving up.

If you are looking for some historical context you can go through this whole thread and see a lot of learning in real time from others.

Just my 2 cents

I know options pretty well, not a newbie. If you sell the same strike put and buy the call, it's basically exactly the same as owning shares (give or take a few pennies). You don't have to worry about the greeks if you're using it as stock replacement.

 

[samppa]

I know options pretty well, not a newbie. If you sell the same strike put and buy the call, it's basically exactly the same as owning shares (give or take a few pennies). You don't have to worry about the greeks if you're using it as stock replacement.

So what are your thoughts about going long with a bull call ratio backspread?

 

[juanmedina]

"I sold a bunch of 2023 $1300 covered calls and as of now I'm planning to let them execute. Maybe I'll roll them up to $1500, we'll see."

I found that on the main thread. For the benefit of newbies here (me!), can someone please provide insight on what is the thinking behind selling 24 months out. Prem is $170, so that's only $708/month income ($17k/24 months). Isn't that too little? What am i missing?

Thanks in advance!

can you link the original post? I seen $1050 January 2022 as high as $210 two-three weeks ago, yeah that sounds like too little to me for that contract. I would wait until IV is high 100-90 to sell something like that. I sold LEAPS like that before and I was down as much as 150k and I waited until the stock went down and took a 50k loss to close the contracts.... however if I had waited longer until today I would had make 50k .

 

[Yoona]

can you link the original post? I seen $1050 January 2022 as high as $210 two-three weeks ago, yeah that sounds like too little to me for that contract. I would wait until IV is high 100-90 to sell something like that. I sold LEAPS like that before and I was down as much as 150k and I waited until the stock went down and took a 50k loss to close the contracts.... however if I had waited longer until today I would had make 50k .

Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

 

[sub]

So what are your thoughts about going long with a bull call ratio backspread?

I personally don't like any position where I have to be correct on both direction and time, it's not my game. Occasionally I might buy a lottery ticket but that is very rare. I'm currently just selling OTM calls in the ~15% OTM range and buying more shares with the cash. I've got a large enough account that this is all I need to do along with my wife working a well paying job, I plan to have her retired as well in the next few years with a combination of real estate and stock income.

reading Adiggs recent posts, I'm making about the same % of income with much less stress and dancing around the stock movement. I think I'm also going to start using margin to sell some far OTM puts for a little extra income with really low risk. I could adjust those down to basically zero and never get assigned, or get assigned Tesla shares extremely cheap. I like selling my calls in the 3 weeks out range and rolling in 1-2 weeks, better consistent theta return this way imo. Theta might be faster in the final week but overall $ decay is better keeping them 1-2 weeks further out.