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Wiki Selling TSLA Options - Be the House

vikings123

Active Member
Supporting Member
May 27, 2019
1,754
12,180
MN
I closed half my -C190 for next week on this dip.
Hopefully that was a smart move....

Market just isn't paying attention. We are 4 weeks from the IRA kicking in for US sales.
Setting massive records in Europe and China.
I'm in the Twilight zone....

Playing devil's advocate, maybe the market is trying to price in a lower P/E because of the China price cuts and production cut rumors. Yes we are setting record sales but if you think about this objectively we reduced prices in China and US, there's rumors about a potential production cut(I trust Rob so wouldn't put it here if it did not come from his source).

Again this is short term noise and long term we will be fine but it's also important to look at the negatives since we use this information to trade short term.

IMO we will continue to drift lower or be range bound until Jan 2nd or 3rd when we expect to see P&D numbers. Even great numbers might not save us as the market will be worried about ASP and impact to margins. So really the earnings report could be the real catalyst if TSLA can show good margins despite the price cuts. I don't see any other catalyst on the near horizon.

BTW Dan thinks 183(10 day SMA) is a key level and if that breaks we could be looking at low 170s this week. I'm hedged with CCs and long puts.
 

BornToFly

Active Member
Supporting Member
May 8, 2013
3,827
32,862
Grounded
Playing devil's advocate, maybe the market is trying to price in a lower P/E because of the China price cuts and production cut rumors. Yes we are setting record sales but if you think about this objectively we reduced prices in China and US, there's rumors about a potential production cut(I trust Rob so wouldn't put it here if it did not come from his source).

Again this is short term noise and long term we will be fine but it's also important to look at the negatives since we use this information to trade short term.

IMO we will continue to drift lower or be range bound until Jan 2nd or 3rd when we expect to see P&D numbers. Even great numbers might not save us as the market will be worried about ASP and impact to margins. So really the earnings report could be the real catalyst if TSLA can show good margins despite the price cuts. I don't see any other catalyst on the near horizon.

BTW Dan thinks 183(10 day SMA) is a key level and if that breaks we could be looking at low 170s this week. I'm hedged with CCs and long puts.
Margins should improve in the US with IRA because Tesla gets money from the government for production (along with the car buyers getting credits).
 

vikings123

Active Member
Supporting Member
May 27, 2019
1,754
12,180
MN
Margins should improve in the US with IRA because Tesla gets money from the government for production (along with the car buyers getting credits).

I don't disagree. I'm just saying the market will want to see the impact of the price cuts to Q4 earnings first. Market has a tough time thinking beyond one quarter, apparently. Right now we are just trapped because of the Twitter noise etc and bears have full control.
 

EVNow

Well-Known Member
Sep 5, 2009
16,344
41,435
Seattle, WA
Margins should improve in the US with IRA because Tesla gets money from the government for production (along with the car buyers getting credits).
I think people here are focusing too much on US/IRA - but not enough on the China subsidy that is being removed this year.

The way I think about it - the margin & Price could be hiked up last year because of supply issues. Once the supply is not tight - both would naturally come down. If recession gets real / severe, ofcourse we should see softening of the demand. No surprise there.
 
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CHGolferJim

Active Member
Supporting Member
Jan 28, 2014
2,074
4,150
Chapel Hill NC
True, but I’m trying to sell at $195 and buy LEAPs at lower :)

Accomplished two goals with today’s dip:
  1. rolled primary position of 12/9-c$195 to 12/16-c$200 to reduce shares covered 20%, snag a $1.09 net credit, and return to the +10%OTM trading strategy (after a 12/1 aggressive roll made in anticipation of such a dip)
  2. adjusted tactics for shifting 300 shares to 6 LEAPs plus cash in a smaller account
  • rolled 12/9-c$180 ITM CC to 12/16-c$190 for a $2.16 debit to gain a $10 strike improvement (at half the btc of Friday when SP +$11) for shares to be held
  • bought 17Jan25+c$160 LEAPs at ~$80, 5% below Friday’s close; will buy more after GTC for 300 at $195 (may sell lower and buy lower if SP doesn’t rise later this week)
 

vikings123

Active Member
Supporting Member
May 27, 2019
1,754
12,180
MN
Something to consider as you have option positions going into overnight. China weekly insurance data is expected to be released overnight, I think 4:30 AM EST. IMO it can be a pretty big short term event.

1. If numbers come in lower than last week(15K) you will have all the doubters believe that the production cut rumor is indeed plausible.
2. If numbers come in around 16-17K we could have a short squeeze.

So whatever you do make sure you have a plan for this data.
 

ReddyLeaf

Vision without execution is hallucination
Mar 19, 2014
2,282
5,638
WA State
Question for you all. How do I "fix" an underwater Cash Covered / Secured Put (CSP) that is tying up most all my free coins?

6x Jan '24 -290p

It was a roll to safety which I felt I could roll back at some point or some other approach to flip to a better position.
FYI, earlier in the year I had a similar situation, not rolled out quite as far or as high, but…….. I sold short and a few longer term ATM CCs until I had enough cash to buyback ONE put. Then, with that freed cash, I bought back a few more. I didn’t buy them all back, but could have. Then, with the reduced cash, I sold weekly CSPs near ATM, and rolled out each week as needed. Eventually, I was able to pull back most CSPs, though a few got assigned. I don’t remember the exact numbers, but selling weekly one ATM CSP gave enough premium in about 10 wks to offset the premium needed to buyback one LEAP CSPs. I just figured that I would be lucky or good enough to continue winning for the 10 wks to earn enough for continued buybacks.

This worked because the SP kept dropping and the CCs expired worthless, while the near ATM puts could be rolled for additional premium without too much loss or difficulty. Today at near the 2-yr low, I would be VERY careful selling CCs to recover. It’s a bit like selling a straddle or Iron Condor. One side is guaranteed to win. Still, be careful because the losing side can lose big (>100%), while the winner only goes to zero (-100%).
 

ReddyLeaf

Vision without execution is hallucination
Mar 19, 2014
2,282
5,638
WA State
I’ve been watching AAPL in addition to the Nasdaq (macros) to help me understand daily TSLA movements. With my newfound understanding of TSLA options (put/call walls, weeklies, monthlies, etc), it is very apparent that the manipulation in AAPL is similar to TSLA. More importantly, we can use AAPL options as a predictor of the future macro direction. AAPL has a large impact on the indices because of its size. This “may” help predict TSLA’s short-term future SP.

So, today’s example: AAPL 12/09 call wall at $150 needs to be busted, so we see the typical Monday rise/test/entice above 150, followed by a day-long push down, probably all week to ensure that those calls expire worthless. Thus, expect the week to end at 149-150. Notice in the attached graph how AAPL initially stays up above 150 in the early AM hours, while TSLA and the Nasdaq begin the daily free fall. This behavior make perfect sense due to the weekly options, but not the bigger China news.

Furthermore, looking out to AAPL 12/16 monthly, the 150 strike is put-dominated, so expect the SP to rise to 150-155 next week. Classic behavior just like TSLA options controlling the short-term SP.

Do these AAPL options predict that next week’s macros will be positive? I don’t really know anymore than anyone else, but right now that’s my prediction: Down this week and up slightly next week. Hope this helps. GLTA.


04393625-940B-4CBF-9200-300159C4D2D7.jpeg

59E56A11-425F-4950-9275-7075AA31506F.jpeg


B7AE72F4-866B-4CD0-9D5D-C6720C71A7DF.jpeg
 

MikeC

Active Member
Supporting Member
Jul 9, 2012
3,531
13,594
Los Angeles
Question for you all. How do I "fix" an underwater Cash Covered / Secured Put (CSP) that is tying up most all my free coins?

6x Jan '24 -290p

It was a roll to safety which I felt I could roll back at some point or some other approach to flip to a better position.

Lots of ways to do it but they all involve more leverage. I'm using all 3 of the below and making some progress but it's slow.

-Flip one straight put into nearer-term BPS that will hopefully expire, then do it again with the next one, one by one.

-Flip to a call to either eliminate the put or at least roll it down to a put that's closer to the money. I don't like this because you're buying a put and selling a call at 2 year lows, but you gotta do what you gotta do.

-Buy a cheap put to turn it into a 290/140 spread and get 14k margin back. Might want to roll the 290 forward to get the long leg cheaper; the 290 won't move much because it's so far OTM.
 
Lots of ways to do it but they all involve more leverage. I'm using all 3 of the below and making some progress but it's slow.

-Flip one straight put into nearer-term BPS that will hopefully expire, then do it again with the next one, one by one.

-Flip to a call to either eliminate the put or at least roll it down to a put that's closer to the money. I don't like this because you're buying a put and selling a call at 2 year lows, but you gotta do what you gotta do.

-Buy a cheap put to turn it into a 290/140 spread and get 14k margin back. Might want to roll the 290 forward to get the long leg cheaper; the 290 won't move much because it's so far OTM.
Because he already has longterm contracts, I would do what follows:

Roll & double amount of contracts to 12x 200 jan 25.
This gives you about the same premium, but obviously way closer to stock price.
You’ll need 240K in stead of 174K, so if you don’t want to use the extra margin, you’ll have to buy 12x 50 (or 60) jan 25.
 

MikeC

Active Member
Supporting Member
Jul 9, 2012
3,531
13,594
Los Angeles
Because he already has longterm contracts, I would do what follows:

Roll & double amount of contracts to 12x 200 jan 25.
This gives you about the same premium, but obviously way closer to stock price.
You’ll need 240K in stead of 174K, so if you don’t want to use the extra margin, you’ll have to buy 12x 50 (or 60) jan 25.

What I don’t like about that is potentially adding another year to carry the short puts, plus paying so much for the 2025 long sugarputs.
 

ReddyLeaf

Vision without execution is hallucination
Mar 19, 2014
2,282
5,638
WA State
today's Close=182.45 is at the 50% fib 182.55 of the last 2 weeks, only 10 cents off

View attachment 881794

edit: i predicted ~182.55 by 10am but didn't post it for fear of being yelled at... 10:05am i BTC 12/9 -c210 and 10:06am STO 12/16 -p175
Do you think they will continue the push down the rest of the week and try to close the 170-171 gap? I don’t want to be right, but this may be their target, before 12/16 triple witching and rebalancing. Edit: Just put in limit order at $170.91. ;) :cool:🤣🎉

DEB44880-FF3E-450F-BB7D-DE920E6FDCD1.jpeg
 
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kabin

Active Member
Nov 23, 2021
1,019
1,257
Southwest
Question for you all. How do I "fix" an underwater Cash Covered / Secured Put (CSP) that is tying up most all my free coins?

6x Jan '24 -290p

It was a roll to safety which I felt I could roll back at some point or some other approach to flip to a better position.

Not a recommendation.

Volatility might be a bit on the low side for premium selling so I might want to close it especially if I think the market/TSLA will continue down.

One could keep the -P290 and short TSLA stock for a synthetic short call. Break even is around 301. It doesn't give as much premium (~$8.5) but at least you'd be protected to the downside.

One could consider selling a matching call -C 290 Jan 24 for $18 to offset long delta and pick up some premium. Break evens would be around 160 and 415 assuming the timing is right for Jan 24.

Of course buying power is needed to add to the original trade.
 
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