JusRelax
Active Member
That preference for 900-950 is now long gone. It seems they definitely want the price over $950 now, look at all the $950 puts and very few $950 calls to balance them out:
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
That preference for 900-950 is now long gone. It seems they definitely want the price over $950 now, look at all the $950 puts and very few $950 calls to balance them out:
Today I started a new phase in trading, with a lot more funds available (I do not want to use margin).
- Bought 400 shares @985
- Sold 4 calls 1050 for 7/17 @54.35
- Sold 4 puts 985 for 7/17 @80.00
Total premium received: $53,740. Maximum proceeds are $79,740 if the calls get exercised above 1050.
I’m also still short 2 puts 1000 for 7/10.
My strategy is to collect a lot of premium, but as a convinced long I try to keep some upside in the position, especially with P/D numbers coming up early July. Therefore my puts are ATM and the calls 65 points OTM.
- Bought 400 shares @985
- Sold 4 calls 1050 for 7/17 @54.35
- Sold 4 puts 985 for 7/17 @80.00
Total premium received: $53,740. Maximum proceeds are $79,740 if the calls get exercised above 1050.
I’m also still short 2 puts 1000 for 7/10.
My strategy is to collect a lot of premium, but as a convinced long I try to keep some upside in the position, especially with P/D numbers coming up early July. Therefore my puts are ATM and the calls 65 points OTM.
Good stuff. Are you able to cover all that with $400k capital or you needed $800k?
Was gutsy yesterday, was less so today... Yesterday
More exactly: 800*985 - 53,740 = 734,260
And here I was stressing over one covered call I sold.
800k to buy 400 shares and cover 400 shares worth of puts.
More exactly: 800*985 - 53,740 = 734,260
And here I was stressing over one covered call I sold.
995k on that account now, so I’m all covered
You took it up a notch! I've only got $270 to play with and $100k of that is tied up in June 22 LEAPS
I was thinking the combinations of puts and calls cancelled each other out, as they sometimes do - guess I'll need a couple more years of this to get my head around some of this stuff.
You got your head around it alright, as your observation that the sold puts and calls cancel each other out is correct. The common trading method is: sell puts when you expect a rising stock price (as you don’t want them to be exercised) and sell calls when you expect a dropping stock price (as you don’t want them to be exercised). But my thinking is a bit different: I want those calls to be exercised, I want to gain the extra 65 points on top of the premium.
But I believe you are also trading a little bit contrary to ‘tradition’, as I’ve seen you say that you like it when puts get exercised.
This is the strategy I would love to execute, albeit with 1 call and 1 put, just a bit short on cash to cover the put right now.
I just noticed that the 6/26 put premiums look pretty good to me. The 945 put with a .30 delta is price at around $19. So I'll start closing my 6/19 puts tomorrow and opening some 6/26 positions. I'll also start spreading out my positions (expiration, strikes) with these trades -- you know, give that a try.
On the call side, my plan right now is to hold off on selling any new calls until next week at least (assuming of course that the current covered calls don't finish ITM). If the stock price heads up as I think it will next week (like the start of a breakout to a new trading range), then I might be sitting out covered calls for awhile.
One thought I've had that will probably influence my approach to covered calls is to wait on any covered call sales until 3 or 4 days to expiration - recent experience has been that the call premium is higher then than it is 5-8 days before expiration (which mostly means I'll go up to a higher expiration rather than collecting more premium). As a bonus, there won't be as much time for the shares to move (nor will there be, on balance, much premium). We'll see how the call side evolves.
On the call side, my plan right now is to hold off on selling any new calls until next week at least (assuming of course that the current covered calls don't finish ITM). If the stock price heads up as I think it will next week (like the start of a breakout to a new trading range), then I might be sitting out covered calls for awhile.
One thought I've had that will probably influence my approach to covered calls is to wait on any covered call sales until 3 or 4 days to expiration - recent experience has been that the call premium is higher then than it is 5-8 days before expiration (which mostly means I'll go up to a higher expiration rather than collecting more premium). As a bonus, there won't be as much time for the shares to move (nor will there be, on balance, much premium). We'll see how the call side evolves.
Max pain has continued increasing and is now $890, with a nearly max pain range of 865 - 910 (1% - I made that up). As @JusRelax notes, there is huge put transaction volume at 950, and huge call transaction volume at 1000. Sorta looks to me like the 950-1000 range for closing also
I honestly have no idea what I'm doing, but I'm making money like crazy, so
I do have a question regarding LEAPS.
How does one determine which strike to buy for the best return? For instance, on any given stock, right now June 2022 $2000 call strikes are $150, $1000 strike around $330
So you could buy roughly double the number of $2000 strikes compared to $1000.
But as the SP rises, is it the case that the ones closer to the money rise in value faster? Any easy way to analyse this?
I honestly have no idea what I'm doing, but I'm making money like crazy, so
I do have a question regarding LEAPS.
How does one determine which strike to buy for the best return? For instance, on any given stock, right now June 2022 $2000 call strikes are $150, $1000 strike around $330
So you could buy roughly double the number of $2000 strikes compared to $1000.
But as the SP rises, is it the case that the ones closer to the money rise in value faster? Any easy way to analyse this?
I use Options profit calculator
to compare different scenarios.
Caveat: I don't think it factors in IV changes.
I honestly have no idea what I'm doing, but I'm making money like crazy, so
I do have a question regarding LEAPS.
How does one determine which strike to buy for the best return? For instance, on any given stock, right now June 2022 $2000 call strikes are $150, $1000 strike around $330
So you could buy roughly double the number of $2000 strikes compared to $1000.
But as the SP rises, is it the case that the ones closer to the money rise in value faster? Any easy way to analyse this?
I honestly have no clue how LEAPS work, I've never looked into them. And never bought one. I prefer not to hand over money for things that can expire (LEAPS, options). I want time to be my friend, not my enemy. Which is why I only sell them
I honestly have no idea what I'm doing, but I'm making money like crazy, so
I do have a question regarding LEAPS.
How does one determine which strike to buy for the best return? For instance, on any given stock, right now June 2022 $2000 call strikes are $150, $1000 strike around $330
So you could buy roughly double the number of $2000 strikes compared to $1000.
But as the SP rises, is it the case that the ones closer to the money rise in value faster? Any easy way to analyse this?
My TSLA Investment Strategy
If you haven't read @FrankSG investment blog take a look. He goes into how he picks his options based on his modeling and potential returns; read Part 4 on options.
My understanding is that if he doesn't believe he can't more than 2X his money at option expiration based on his financial modeling he doesn't buy them. So he bases what shares to buy on his financial modeling.
As a noob I am also having difficulty figuring out when is a good time to buy options. My understanding is that the lower the IV the better but sometimes on days that we have lower IV compared to other days I take a look at the option chain and prices haven't changed...
I honestly have no clue how LEAPS work, I've never looked into them. And never bought one. I prefer not to hand over money for things that can expire (LEAPS, options). I want time to be my friend, not my enemy. Which is why I only sell them
If you have tons of capital thats the way to go. I can do a single covered call in my IRA but can't sell a cash covered put...idk how to get 90k in there
. Do you guys do any credit spreads?
For OTM, risky options, yeah, I like to aim for 2x at least. Otherwise it's just not worth the extra risk compared to just holding the stock imo. It also automatically builds in a margin of error, so that if I am off on something, maybe I still at least break even.
All depends on your goals though, and ATM/ITM options, that have a much lower risk of ending up worthless, but will probably only pay off 1.5x or maybe 2x, can also have a place in a diversified options portfolio in my opinion. It's all about knowing your goals and risk tolerance, having an expectation for what the future will look like, and then building a portfolio around these.
Finding the best time to buy options is just as hard as finding the best time to buy stock. In early April I bought some Jun'22 $1,400s when SP was $600, but I didn't go all in straight away because I thought I might get a better price in the coming weeks/months. The next few days the stock shot up to high $700s, and I never got a chance to further add onto that position. But when Jan'22 options first came out in September, I thought the same thing, and it ended up working out, because I got a much better price on half of my Jan'22 $400s the week after.
You just have to look at what opportunities are available at any given time, and if you think it's a super amazing opportunity, take full advantage of it straight away. If you think it's a so-so opportunity, maybe try to cost average in, and buy a little bit each time there's a drop. And if you think none of the option premiums are very attractive right now, just hold the stock instead.
I think the Jun'22s are pretty pricey atm, and aren't that attractive unless you think there's a decent chance of $2,500-3,000 by then, for which an argument can definitely be made. The Jun'21s are a bit better, but obviously a lot more risky. I think H2'20 is likely going to be strong and a big catalyst, but things are more likely to go wrong over the course of 6-12 months than 18-24 months.
Moving the discussion back to "the wheel"...
I'm about to get things moving on the wheel after a frustrating couple of weeks going through three brokers to find one in AU that would let me sell both calls and puts. I have some cash separate to my core TSLA position that would allow me to initially sell 3 puts at a time. However a couple of weeks of 4% gains have left the cash pile lower than I'd like to capture good premiums. One of the issues with the wheel is if the stock repeatedly goes up more than 2-3% a week you risk falling off the back of the wave and put premiums will struggle to keep up. I would ideally prefer to be more in stock over key events like deliveries, earnings, battery day etc.
My main issue right now is trying to decide whether to start with cheaper put premiums for the 26th or slightly higher for the 2nd. I'm wary of a big rise in TSLA if deliveries beat expectations and would like to have some puts convert by then. Looking at past deliveries reports I'm expecting Tesla to report on the 2nd before the Independence holiday market close on the 3rd. If they report after market close, then would a July 2nd put execute in time? Or would I be better to close a put earlier and purchase shares? Is anyone else looking closely at the impact of the deliveries report with options timing?
I'm about to get things moving on the wheel after a frustrating couple of weeks going through three brokers to find one in AU that would let me sell both calls and puts. I have some cash separate to my core TSLA position that would allow me to initially sell 3 puts at a time. However a couple of weeks of 4% gains have left the cash pile lower than I'd like to capture good premiums. One of the issues with the wheel is if the stock repeatedly goes up more than 2-3% a week you risk falling off the back of the wave and put premiums will struggle to keep up. I would ideally prefer to be more in stock over key events like deliveries, earnings, battery day etc.
My main issue right now is trying to decide whether to start with cheaper put premiums for the 26th or slightly higher for the 2nd. I'm wary of a big rise in TSLA if deliveries beat expectations and would like to have some puts convert by then. Looking at past deliveries reports I'm expecting Tesla to report on the 2nd before the Independence holiday market close on the 3rd. If they report after market close, then would a July 2nd put execute in time? Or would I be better to close a put earlier and purchase shares? Is anyone else looking closely at the impact of the deliveries report with options timing?
I honestly have no clue how LEAPS work, I've never looked into them. And never bought one. I prefer not to hand over money for things that can expire (LEAPS, options). I want time to be my friend, not my enemy. Which is why I only sell them
I make my biggest money buying LEAPS - when the SP is rising you can make a killing and if the strike is far enough in the future, you can recover from price drops.
Like the 4xJan 2021 $875 I bought in March when the SP was $800, for $148 - they dropped to $40 during the C19 crash, I held my nerve and sold them last week for $257. $50k profit, if I'd held the shares the same time then the profit was $20k.
Won't mention the $1 $675's that I sold for $220
In the case of LEAPS, time IS your friend...
I've closed the 940 puts expiring tomorrow and am working out what all I want to turn those into. I've opened a new put position at the 965 strike for next week (19.50 premium or so). That was at the .31 delta.
I'm thinking about the .15 delta for next week as well for my more conservative position. I'm also thinking about selling aggressive puts expiring tomorrow. For example, the 980 puts are about $4.50 premium right now (.22 delta) and expire tomorrow. I collect some fast premium and if I get exercised, then I have that many more shares for next week when I anticipate a significant move up.
Of course, if I'm wrong, then I'll have shares at $980 with a stock price heading down. If I'm right, then that many more shares for p/d report in a couple weeks. H'mm - I'm kind of liking the sound of this.
I'm thinking about the .15 delta for next week as well for my more conservative position. I'm also thinking about selling aggressive puts expiring tomorrow. For example, the 980 puts are about $4.50 premium right now (.22 delta) and expire tomorrow. I collect some fast premium and if I get exercised, then I have that many more shares for next week when I anticipate a significant move up.
Of course, if I'm wrong, then I'll have shares at $980 with a stock price heading down. If I'm right, then that many more shares for p/d report in a couple weeks. H'mm - I'm kind of liking the sound of this.
Just closed my 06/26 Put 1050 for 6900.69 - profit of $2598 over 7 days. Less than I would have liked, but with all the expected shenanigans tomorrow with max pain, preferred to release the cash. If stock is held around 950 tomorrow, may consider buying some calls, since just like you @adiggs and @Lycanthrope, I am expecting a breakout next week. So wanted to keep cash available.
I still have one put for 07/02 with 985 strike which I have a GTC order to close at 37 which would be 50% profit. I am liking the strategy of selling puts with dates 30-60 days out and then closing them to make reasonable profit. I still have not sold any covered calls for the wheel - just not willing to lose any of my current shares
I'm all ready for options expiration tomorrow. The thing I'm particularly looking forward to - all of the time value goes to 0 tomorrow. Since the calls have over $7 in time value at close today, that's all going away tomorrow.
And I think good idea (@EV forever) on closing that put if you don't want to get assigned next week. I consider 1050 next week to be very much in play and by closing now, you book a profit instead of either seeing that position turn into a loser, or being assigned at 1050. Of course I could be wrong about direction next week, and you might want to be assigned at that price next week.
And I think good idea (@EV forever) on closing that put if you don't want to get assigned next week. I consider 1050 next week to be very much in play and by closing now, you book a profit instead of either seeing that position turn into a loser, or being assigned at 1050. Of course I could be wrong about direction next week, and you might want to be assigned at that price next week.
Similar threads
