Wiki Selling TSLA Options - Be the House

[BornToFly]

The stupid Margin calculators at Fidelity won't let you simulate a trade, and then use the price adjustment tool to see what that new account will look like if the SP drops.

So I had to try to just buy Jan 2024 200 strike protective Puts, and then do the price adjustment tool after the trade. Guess what. IT didn't help at all. I did not sell the same number of CC to pay for it. So it could be that the problem is I used up cash reserve to buy the Put. I'm tempted to sell the CC and see what happens. Of course, if that doesn't help, I'm losing more money reversing the trades tomorrow.

 

[elasalle]

Frustrating, decided it is better to have to manage items are year out then just see SP keep dropping ...

So I sold Jan 24 CC's 500-550 against a large chunk of Jan 24's in my IRA account , and added Jan 25 250's with the proceeds. Jan 25 250's are off by at least 30$ in past 2 weeks, where as jan 24 are off by maybe 2-3$ from 2-3 weeks back.

Will be happy if I get opportunity to manage these a year from now. time will tell ...

+ Added 25 Jan 25 CC's ... now I am HODL for a year with this OPM trade
++ so maybe now SP decides to go up. If I cry next year atleast it will be tears of joy

 

[Max Plaid]

The stupid Margin calculators at Fidelity won't let you simulate a trade, and then use the price adjustment tool to see what that new account will look like if the SP drops.

So I had to try to just buy Jan 2024 200 strike protective Puts, and then do the price adjustment tool after the trade. Guess what. IT didn't help at all. I did not sell the same number of CC to pay for it. So it could be that the problem is I used up cash reserve to buy the Put. I'm tempted to sell the CC and see what happens. Of course, if that doesn't help, I'm losing more money reversing the trades tomorrow.

I've honestly no idea on the margin, but if you're worried about downside then can you not sell ITM CC's?

 

[SebastienBonny]

We’re clearly getting capped beneath 200.
Thinking about selling 220 CC for friday, but just need a bit more premium.

 

[intelligator]

Last spread roll is stubborn to fill, at 11.75 which is above midpoint of 11.45, spread is 8.15 - 14.80. I realize there's no obligation for MM to fill ... just annoying that I have to throw more at it to give the trade a nudge.

 

[scubastevo80]

I sold BPS 180/160 this morning.

As hard as I think the MMs want to take this down, I don't think we get to a valuation that looks like any other Nasdaq stock. There's clearly three camps here - AAPL, which appears untouchable, TSLA and GOOGL, which are getting hit (for different reasons, GOOGL missed numbers and TSLA seems to be Musk activity related), and META/NFLX which are getting slaughtered due to businesses being in decline. Unless the narrative of growth is just flat out wrong, I disagree with the market which seems to believe Tesla can't continue to growth sales and keep consistent margins of their $50k+ cars. Forget FSD, Optimus, Robotaxi, etc as those aren't even considered at this point in time.

 

[Max Plaid]

I've quite a lot of TSLA shares with cost basis of $300, which I obviously don't want to sell down here

I have a weekly realised profit target of $10k, which can be achieved quite often selling 10x -cATM's, but with the inherent risk that they go ITM

Now I was thinking, if that were to happen, I could ratio roll, adding extra contracts to push the strike up much more than a straight roll, could be 10x -> 20x, then 20x -> 40x the week after, then 80x, after which I can't double-up any more, but could go 1.5x with 120 contracts

This would require a weekly relentless rise in the SP for almost a month, which we've seen before, but at then end the strike price would be substantially higher than now and probably close to the cost)basis, a few "free rolls" if needed would likely put them into profit

I don't know of any tool that could model it, anyone have thoughts on this approach?

Does it even make any sense what I wrote?

 

[Oil4AsphaultOnly]

bought some 11/18 240c for a gamble that tomorrow's an up day for TSLA (while S&P & Dow consolidates).

 

[strago13]

Bought some *sugar* puts, because this is nuts.

 

[corduroy]

Last spread roll is stubborn to fill, at 11.75 which is above midpoint of 11.45, spread is 8.15 - 14.80. I realize there's no obligation for MM to fill ... just annoying that I have to throw more at it to give the trade a nudge.

I had a lot of trouble getting fills as well. I had to go well under the midpoint which usually isn't the case. Seemed unusual.

I rolled my -245 and -250s out to Dec 2 as they went negative extrinsic today.

 

[vikings123]

We’re clearly getting capped beneath 200.
Thinking about selling 220 CC for friday, but just need a bit more premium.

Let Theta do the work for you

 

[ReddyLeaf]

Clearly the target was to close below the 10/24 intraday low of $198.59. Mischief managed. So, I really, really, really, again, didn’t like today’s action so rolled out/down my straddles another $5 to 12/09 $215, thus freeing up more cash. Had enough to sell a 11/11 p197.50 for $5.40. Perhaps dumb, but can always roll or take the shares. Also. bought a few more shares, but accidentally sold some as well, so probably a trading violation. Hopefully, I’m not locked out of that account. Oops.

Still wondering where/when this will end, and like others, I’m frustrated, confused, and thinking seriously about getting out of TSLA all together. I think this is the whole point, to push everyone away from Tesla the car, the company, and the stock, so that the oil barons can return to glory. Well, $&#&#%&@& that you bastards, I’m staying, but only because of selling straddles. This definitely mitigates the pain of seeing the account balances dropping. Unfortunately, I also have shares purchased near the ATH and therefore would never try selling CCs at these levels without the corresponding short puts. GLTA.

 

[adiggs]

I've quite a lot of TSLA shares with cost basis of $300, which I obviously don't want to sell down here

I have a weekly realised profit target of $10k, which can be achieved quite often selling 10x -cATM's, but with the inherent risk that they go ITM

Now I was thinking, if that were to happen, I could ratio roll, adding extra contracts to push the strike up much more than a straight roll, could be 10x -> 20x, then 20x -> 40x the week after, then 80x, after which I can't double-up any more, but could go 1.5x with 120 contracts

This would require a weekly relentless rise in the SP for almost a month, which we've seen before, but at then end the strike price would be substantially higher than now and probably close to the cost)basis, a few "free rolls" if needed would likely put them into profit

I don't know of any tool that could model it, anyone have thoughts on this approach?

Does it even make any sense what I wrote?

Makes complete sense to me and I like the idea a lot

When doubling up you also aren't limited to an actual double of course. That initial 10 contract position that goes ITM - you could sell 10 additional cc's at roll time at whatever strike you would choose at the time and spend the credit on a debit roll of the original 10. You'd end up with 2 positions, but 1 of them would be a position of your choice, while the other would be the best remaining, and presumable a better overall position than simply rolling 10 contracts into 20.

With this as a component of your backup plan, it should be a lot easier to take on the extra risk from selling ATM cc. It's like a form of leverage.


This is something I'm doing with csp and bps right now. I've got some DITM csp I want to clear up. I started off thinking about rolling into BPS. I've landed on selling BPS that I actually want to sell (vs. the overly aggressive bps I'd have been able to roll into, even doubling contracts / $$ at risk). I don't use the credits from BPS sales - I use the realized gains at the end to buy out some of the DITM stuff I don't want around any more. Its slow going, just started, but I stay income positive througout and steadily reduce the risk exposure from having such a large unrealized loss on the books.

 

[Xepa777]

Clearly the target was to close below the 10/24 intraday low of $198.59. Mischief managed. So, I really, really, really, again, didn’t like today’s action so rolled out/down my straddles another $5 to 12/09 $215, thus freeing up more cash. Had enough to sell a 11/11 p197.50 for $5.40. Perhaps dumb, but can always roll or take the shares. Also. bought a few more shares, but accidentally sold some as well, so probably a trading violation. Hopefully, I’m not locked out of that account. Oops.

Still wondering where/when this will end, and like others, I’m frustrated, confused, and thinking seriously about getting out of TSLA all together. I think this is the whole point, to push everyone away from Tesla the car, the company, and the stock, so that the oil barons can return to glory. Well, $&#&#%&@& that you bastards, I’m staying, but only because of selling straddles. This definitely mitigates the pain of seeing the account balances dropping. Unfortunately, I also have shares purchased near the ATH and therefore would never try selling CCs at these levels without the corresponding short puts. GLTA.

You've been a TMC member since 2014. Why would you consider getting out of Tesla? This is nothing compared to the model 3 ramp pains and "going private at 420" remark. Seriously it's a different stratosphere. None of this should be stressful unless you're irresponsibly leveraged on options, which is more of a personal issue than a Tesla issue.

 

[MikeC]

Sold 210CC for this week and 220CC for next week and used the proceeds to roll down a -p225 to -p210. Would be very happy to regret doing that tomorrow.

 

[juanmedina]

I've quite a lot of TSLA shares with cost basis of $300, which I obviously don't want to sell down here

I have a weekly realised profit target of $10k, which can be achieved quite often selling 10x -cATM's, but with the inherent risk that they go ITM

Now I was thinking, if that were to happen, I could ratio roll, adding extra contracts to push the strike up much more than a straight roll, could be 10x -> 20x, then 20x -> 40x the week after, then 80x, after which I can't double-up any more, but could go 1.5x with 120 contracts

This would require a weekly relentless rise in the SP for almost a month, which we've seen before, but at then end the strike price would be substantially higher than now and probably close to the cost)basis, a few "free rolls" if needed would likely put them into profit

I don't know of any tool that could model it, anyone have thoughts on this approach?

Does it even make any sense what I wrote?

So even after the roll and doubling the contracts you still want the $10K weekly credit? when will you roll? I wonder how much of a strike improvement will you get by doing the ratio roll.

 

[adiggs]

not-advice

cash flow vs. income, in an option selling context


Something that I try to remain diligent and aware of is the difference between the credit received when opening a new short option position, and the realized gain/loss at the end. In accounting terms I see this as being the difference between the income statement and the cash flow statement. In the accounting world, each is tracking and reporting on a different idea. Both are important, and neither are sufficient for understanding the health and success of an entity.

For option buyers there is no difference - cash goes out when you open a position, and cash comes back when you close the position. Cash flow and realized gain/loss are effectively the same, so no particular special tracking is needed.

However for the option seller we get cash up front ALONG WITH a liability. If nothing changes then the liability matches the cash, and at some point in the future you give it back. You had positive cash flow up front, and matching negative cash flow later. The problem of course is that with cash in hand, we can go spend it on something. And then get to the end of the position and realize that we don't have the cash on hand to handle the negative cash flow.


I've tried a variety of methods for managing the dynamic for myself, while keeping it simple.

The first is a trading rule, that roll transactions are for net credits. I may be facing a steadily growing liability as a trade works against me, with some of that liability having been realized and some not, but at least my cash balance is steadily increasing. But if I focus on the credits exclusively then it can be easy to forget that it IS a losing position - I'm really just taking on a more and more risky position, with an expectation of reversal in the share price leading to a full reversal in the very bad losing position.

More recently, where possible, I am disaggregating DITM rolls. I'll open a new position with currently unused resources that I want to be in, and use the proceeds WHEN REALIZED (not the credits!) to close 1 or more of those DITM contracts. The net result is the same - I open a new position and use it to replace some or all of an old / losing position. The difference is that I'm ensuring a net realized gain and cash flow by using the realized gain at the end of the new position. Well - as long as the new position I'm opening are also winning.

Big picture its really the same as a roll or one of the multitude of other healing trades that we've talked about over the thread life.
a) we have a bad position we don't want to just realize the loss on
b) "roll" the position by realizing the loss on the bad position, and simultaneously opening a new trade that is big enough that the incoming cash offsets (plus a little bit - the credit) the cost of closing the bad position.

The net on these rolls is a new position that is, invariably, far far riskier than a position we would open as a starting point.

For me at least, thinking about rolls in this way makes it a lot easier to disaggregate the roll as long as I have the resources to have the new and old positions simultaneously.

Such as selling 10cc with backing for 100cc. When that goes bad, 10 additional cc can be sold at whatever desirable strike and price of the moment is, and then use that gain when realized to buy out some of the original 10cc. Or use the open of the additional 10cc to offset some debit on the original 10cc to get the original 10cc to a better strike.


Something else that I've noticed with roll, and other multi-leg tickets - though I haven't pursued deeply. As best I can tell a multi-leg ticket requires a limit price because the multi-leg ticket will either fill at the limit price or it won't fill. If you offer to sell at 2.00 on a multi-leg ticket, the market will provide a binary response in the form of a 2.00 fill, or an open transaction.

With single leg tickets your broker / market maker will sometimes improve on the limit you set. This is another reason I like to disaggregate roll and multi-leg tickets when its reasonable / easy to do so. I can come out the worse for it, but at least my market orders won't go 'bad' on my because of fast movements in the underlying that don't make it into the trade ticket info.

 

[Yoona]

We’re clearly getting capped beneath 200.
Thinking about selling 220 CC for friday, but just need a bit more premium.

same

 

[adiggs]

So even after the roll and doubling the contracts you still want the $10K weekly credit? when will you roll? I wonder how much of a strike improvement will you get by doing the ratio roll.

I've looked at something similar, but in a csp to bps roll type of situation. From what I've seen, rolling from somewhere DITM to roughly ATM isn't all that difficult. But rolling OTM is really difficult (expensive). I'm pretty sure that will apply here as well.

My internal explanation for why this is so is that when rolling from ITM you have to buy out intrinsic value $ for $, and you're using option contracts that go as high as .50 time value, and are mostly lower. You're using that .50 time value to buy out $ for $ intrinsic value. This notion is also why I really want my rolls to happen while still OTM - then all of the incremental time value / credit I get from the roll is buying out time value - none of it is also going to pay for intrinsic value.

 

[intelligator]

I had a lot of trouble getting fills as well. I had to go well under the midpoint which usually isn't the case. Seemed unusual.

I rolled my -245 and -250s out to Dec 2 as they went negative extrinsic today.

I called Fidelity, they said the positions were thinly traded, causing them to sit. They cancelled, sent in another order with more, that also didn't fill. If they are put to me, i eat 10x the roll cost. It so bothersome that the same strikes filled earlier in the day for many more contracts. The only upside, albeit at a significant cost, this one will be off my plate.