Wiki Selling TSLA Options - Be the House

[EVNow]

I'm not sure what you are saying here. You are not closing an ITM -C172.5/+C182.5 for a credit. You are losing dollars to close a spread that gave you a small premium. To make money on spreads, they need to stay OTM. Basically you need to do weeklies that are 15-20% OTM, which gives little premium unless you do 10X the number of CC you would have done more aggressively because they are easier to roll. At 10X the number, you are now using leverage, and your total possible loss just went up 10X.

Sorry if it is confusing. I was just showing some back-of-the-napkin math.

Yes, we need to sell OTM call spreads to make money. But what happens if SP runs up and those calls in the OTM spreads become deep ITM ? That is the scenario I'm exploring.

 

[BornToFly]

Sorry if it is confusing. I was just showing some back-of-the-napkin math.

Yes, we need to sell OTM call spreads to make money. But what happens if SP runs up and those calls in the OTM spreads become deep ITM ? That is the scenario I'm exploring.

Sorry, I understand better what you are saying now. You will make a lot less premium on a spread. If you are doing the same number, are you better off if the SP moves a little vs a lot with a spread instead of a straight CC? Let us know what you determine. I used spreads to increase leverage and have paid a very stiff price for my error.

Edit: My guess I that with small moves of the SP you are better off with CC. If there is a massive rally, the spread might be better, but that is a rarer event, so which one comes out ahead will probably depend on if it happens in the first few weeks of trading vs 6 months down the road.

 

[ZeApelido]

My personal opinion is that you’re totally to sell covered calls or spreads at these levels. At least wait for a pump to $200.

 

[dl003]

My personal opinion is that you’re totally to sell covered calls or spreads at these levels. At least wait for a pump to $200.

I would really appreciate not getting reminded what a degenerate gambler I am while trying to get philosophical over here.

 

[EVNow]

Edit: My guess I that with small moves of the SP you are better off with CC. If there is a massive rally, the spread might be better, but that is a rarer event, so which one comes out ahead will probably depend on if it happens in the first few weeks of trading vs 6 months down the road.

Doesn't really matter. You can make nice profits for 6 months but one big event can wipe out your profits in a week.

ps : In '18 I made 7 figure profits trading. Lost all of it (minus tax) in '19 when Tesla had a near death event

 

[EVNow]

My personal opinion is that you’re totally to sell covered calls or spreads at these levels. At least wait for a pump to $200.

LOL. I had already sold 182.5 11/25 CC that I rolled to 200 12/02 on Friday. If end of next week SP is below 200, I get to decide what to do

In general I've done ok - except for "black swan" events that happen apparently every 3 months with Tesla. Mind you, I don't sell anything around earnings or prod number release !

ps : If the SP really runs up next week, I'll just sell LEAPs to cover losses and preserve the stock. I've time on my side ... but I'd rather start hedging for this.

 

[treb]

Has Tesla said when they plan on releasing Q4 P&D numbers? I assume it's the first week of January, which would necessitate being careful with Jan 6 expirations.

 

[mongo]

Has Tesla said when they plan on releasing Q4 P&D numbers? I assume it's the first week of January, which would necessitate being careful with Jan 6 expirations.

They don't pre-announce a P&D date, but they have all been been the 2nd day of the new quarter since Q4 2019 which was released January 3rd, 2020.

 

[saniflash]

1. You have enough money to short 500s of TSLA but decide not to, instead selling 5x $10 call spreads. This is fine as worst case scenario you just close the long leg and roll the short leg out for a while as you can afford to short 500s

Agreed with that and I want to qualify my previous absolute statement : As long as you don't use spreads to overleverage (i.e., achieve more leverage than attainable for you by writing just the short leg / buying just the long leg), they are not as catastrophic as I pictured them to be in my previous post.

 

[BornToFly]

Futures are down. Protests are picking up steam in China, including Shanghai. I'm afraid tomorrow is going to be ugly.

 

[Cherry Wine]

I’ve got my money on a gap down tomorrow on China unrest / COVID lockdown fears.

 

[Jim Holder]

Futures are down. Protests are picking up steam in China, including Shanghai. I'm afraid tomorrow is going to be ugly.

This is good news for my 59x +C 12/2 195 sold covered calls. I may be able to BTC tomorrow at the 173-175 dip for 100% gains and reposition on pop for 200 strike same 12/2. Phew! Less worry all week.

(This is what Dl003 predicted will happen anyway based on EWT and his keen magic insight. Funny how EWT didn’t even know about China riots but somehow it all works together in some spooky action from a distance ;-))

 

[CrunchyJello]

Futures are down. Protests are picking up steam in China, including Shanghai. I'm afraid tomorrow is going to be ugly.

Request for rolling advice:

Having being assigned @ 167.50 last week and planning for a potential drop to the $160's,
I wrote a 175c for this Friday for $6.00. Foolish in hindsight, but ready for my first TSLA roll.

The $175 is in the $11 range, and I was thinking of rolling it either to
$185 Dec 23 (nominal credit) or $190 Dec 30 (nominal debit).

The Futures markets are making me think twice;
any suggestions on the ways to manage the call this week?

 

[Chenkers]

Request for rolling advice:

Having being assigned @ 167.50 last week and planning for a potential drop to the $160's,
I wrote a 175c for this Friday for $6.00. Foolish in hindsight, but ready for my first TSLA roll.

The $175 is in the $11 range, and I was thinking of rolling it either to
$185 Dec 23 (nominal credit) or $190 Dec 30 (nominal debit).

The Futures markets are making me think twice;
any suggestions on the ways to manage the call this week?

Decent chance it can get to a profitable position sometime early this week. I have 177.5CC for this friday sold for $5 early last week that I'm expecting to close on Monday or Tuesday for a profit. I'd rather not leave them too long hoping for a Friday close near the strike price and am leaving a roll as a last resort.

 

[jeewee3000]

STO some 12/2 $195cc's @ $2, don't mind if they exercise to sell puts again.

 

[OrthoSurg]

It wasn't just MMs buying puts at the bottom - it was us buying back sold puts and buying protective puts. Not because the risk/reward made them a good idea but because we were squeezed by leverage. Then once the cycle exhausts itself, it goes back the other way and we get a good old gamma squeeze.

So tempted to sell more CCs on this initial recovery to buy back OTM BPS after what we've been through this year but I'm really, really trying not to get run over by the steamroller this time. Right now I feel like the meme with the monk and the prostitute is covered calls.

Yes, tell that to my CCs expiring Friday with a strike price of 190. They look to be steamrolled. Either I close tuen for a 2$ loss now or I roll then 2 weeks out for a strike improvement and hope for the best. I am still complementing my options by searching for the right thing to do reading tea leaves.

 

[Oil4AsphaultOnly]

wow. rest of the market's going down and TSLA's rising. I guess it's about time!

 

[SebastienBonny]

Yes, tell that to my CCs expiring Friday with a strike price of 190. They look to be steamrolled. Either I close tuen for a 2$ loss now or I roll then 2 weeks out for a strike improvement and hope for the best. I am still complementing my options by searching for the right thing to do reading tea leaves.

I had 185 CC for friday and just didn't feel comfortable with the Model 3 news and current SP action.
I rolled this to 12/16 195 CC (one week roll for credit was limited to a 5 dollar strike improvement) for .50 premium.
Will add another CC for next week should we "moon" somewhere this week.

 

[CHGolferJim]

Yes, tell that to my CCs expiring Friday with a strike price of 190. They look to be steamrolled. Either I close tuen for a 2$ loss now or I roll then 2 weeks out for a strike improvement and hope for the best. I am still complementing my options by searching for the right thing to do reading tea leaves.

Another example, if you don’t mind selling the shares and expect SP to rise further: roll from $190 to $200 on 12/2 — debit cost is currently $2.15, but you capture $10 in capital gains. Change the new strike price according to your SP prediction and needs.

 

[bingoz]

I am not following up the news over the weekend. Is there any particular reason for this unexpected strength this morning? I am tempting for 12/2 200cc.