Wiki Selling TSLA Options - Be the House

[adiggs]

The money/shares *are* gone forever. You'll always be down by that $28 whether you make $1 or $100 in the future. Trying to "recoup" the loss by spending $2 to return an arbitrary $28 probably means losing $2 on top of everything else. If the $2 is meaningless, that's fine. But if $2 is material and you'd never invest without the prior loss, I don't understand why you'd make the trade now.

The job now is to make the best investment decision today, irrespective of what happened in the past.

They aren't gone forever until the loss is realized. Creating this replacement really high risk, really high reward position. If the new position stays at full loss, then an extra $2 has been thrown onto the fire. But if the share price comes back, then all of that leverage recreates the original position and recovering all (as much as you want) of that loss.

The key difference in this specific instance is that the spread relationship enables bringing the spread a LOT closer to the current share price, and doing so nearly for free. That's the edge that turns a big loss begging to take some more with it, to a position that has a reasonable chance of being OTM in a couple of months. That specific big "free" leverage is why you spend the $2.

 

[mrmage]

No, if the BPSs expire worthless, I keep the $28 currently sitting in cash to back them up. If I close them, the $28 is gone.

That $28 in cash is offset by a $28 liability right now, which means it's near 0. Unlike shares, which can be held indefinitely without any time decay in value, the time decay on the put spread has already happened and ends now. Rolling over is just creating a new transaction that pays 14x.

If you closed it now, and spent $2 to open a call spread like: Jan 2025 390c/420c which costs 2.20 and returns $30 if SP > $420, you're in exactly the same situation right?

 

[juanmedina]

What is the margin requirement on BPS vs puts in a portfolio margin account? On the regular margin account it was easy to model it with the margin calculator and understanding the requirement but with portfolio margin I am flying blindly.

For example if I have 3x Jan 2025 $340's worth $55,500 and they are $30,000 in red. Does it make sense to replace them by 10x Jan 2025 200/150p and get $30,000 in credit to try to only break even. Will that help my margin excess? I just think the $340's are going to get exercise sooner than later before I can roll them if the stock doesn't goes up; they only have an extrinsic value of $2.3. I just don't want to pay the margin interest on those if they get exercised.

 

[BornToFly]

That $28 in cash is offset by a $28 liability right now, which means it's near 0. Unlike shares, which can be held indefinitely without any time decay in value, the time decay on the put spread has already happened and ends now. Rolling over is just creating a new transaction that pays 14x.

If you closed it now, and spent $2 to open a call spread like: Jan 2025 390c/420c which costs 2.20 and returns $30 if SP > $420, you're in exactly the same situation right?

Intersting on the call spread. The BPS gives me the $28 at SP 330. Is there a call spread that does the same at 330? (Maybe 2024 +300/-330 for $3?)
>420 is not looking very likely right now, even in 2025....

 

[BornToFly]

Intersting on the call spread. The BPS gives me the $28 at SP 330. Is there a call spread that does the same at 330? (Maybe 2024 +300/-330 for $3?)
>420 is not looking very likely right now, even in 2025....

Ok, so here is something in favor of the cash secured ITM BPS over the call spread. As the SP rises, I can use the cash to buy shares back, and use the margin from the shares to back the BPS. I make even more money back as the shares increase in value. Right? I've had the BPSs for a while, and I had 20,000 more shares until recently when I sold them to make sure I don't get into margin trouble if the SP drops to 120.

 

[samppa]

Ok, so here is something in favor of the cash secured ITM BPS over the call spread. As the SP rises, I can use the cash to buy shares back, and use the margin from the shares to back the BPS. I make even more money back as the shares increase in value. Right? I've had the BPSs for a while, and I had 20,000 more shares until recently when I sold them to make sure I don't get into margin trouble if the SP drops to 120.

So what will you do when SP comes back down?
It's a rollercoaster..

 

[mrmage]

Intersting on the call spread. The BPS gives me the $28 at SP 330. Is there a call spread that does the same at 330? (Maybe 2024 +300/-330 for $3?)
>420 is not looking very likely right now, even in 2025....

Bull call and put spreads are nearly symmetric, so there shouldn't be much difference between the two. I was using that trade to make the point that rolling is no different than opening a new transaction.

The BCS and BPS for 300/330 are around $3, but that only returns 9x. What BPS are you rolling into that returns 14x?

I can easily envision TSLA hitting ATH of 400 in 2+ years, especially if Elon stops doing stuff. Big if though. But if it happens, there's a trade that returns 14-30x and a lot can happen in 2 years. I might give that a shot.

 

[OrthoSurg]

Bull call and put spreads are nearly symmetric, so there shouldn't be much difference between the two. I was using that trade to make the point that rolling is no different than opening a new transaction.

The BCS and BPS for 300/330 are around $3, but that only returns 9x. What BPS are you rolling into that returns 14x?

I can easily envision TSLA hitting ATH of 400 in 2+ years, especially if Elon stops doing stuff. Big if though. But if it happens, there's a trade that returns 14-30x and a lot can happen in 2 years. I might give that a shot.

to be worth it and hit ATH, we need the confluence of all the following factories: end of QT, return of bull market, share buyback to reduce float, perfect CT and semi delivery execution, strong demand for Model 3 and Y. I am pretty sure we return to ATH by 2030 but by 2025? Maybe 50% chances. Who knows.

 

[Max Plaid]

to be worth it and hit ATH, we need the confluence of all the following factories: end of QT, return of bull market, share buyback to reduce float, perfect CT and semi delivery execution, strong demand for Model 3 and Y. I am pretty sure we return to ATH by 2030 but by 2025? Maybe 50% chances. Who knows.

I honestly don't see the point of a share buy-back, I'd rather see the money deployed in new production faclities

Fore sure Elon needs to show a bit more maturity on Twitter, keep out of the politics, get a CEO in place and be seen to be interested in Tesla again

Tesla themselves seem to be bossing it, IRA should remote any US demand issues, hopefully the Russian war will end soon and lift the clouds over Europe, China's dropped the zero-covid, so their economy should start to recover

CT needs to come on time and I think we need the compact car to be announced. Obviously semi production ramping up will be great for optics, even if it doesn't contribute a lot to the bottom-line

Q4 P&D + Earnings need to come in, not sure they need to be super-amazing, because I think a "miss" has been priced-in already

The fundamentals all seem in place, it's just the negative sentiment that's killing it right now

 

[JustMe]

to be worth it and hit ATH, we need the confluence of all the following factories: end of QT, return of bull market, share buyback to reduce float, perfect CT and semi delivery execution, strong demand for Model 3 and Y. I am pretty sure we return to ATH by 2030 but by 2025? Maybe 50% chances. Who knows.

Reveal of $30k Tesla or regulatory approval of FSD could send us to ATH in a bull market. Both plausible in 2025 timeframe, I reckon.

 

[Yoona]

 

[mrmage]

to be worth it and hit ATH, we need the confluence of all the following factories: end of QT, return of bull market, share buyback to reduce float, perfect CT and semi delivery execution, strong demand for Model 3 and Y. I am pretty sure we return to ATH by 2030 but by 2025? Maybe 50% chances. Who knows.

Statistically speaking, anything that pays 15x with 50% chance is an outstanding investment. 15x50% = 750% roi in two years. Not saying all in, because 50% chance of losing everything, but it's a great investment.

However, 15x roi means mm give it only 1/15 chance of happening using their models, so it comes down to assessing risk.

 

[elasalle]

Jan 23 250 for .56 ... added a few.

I have sold 162 CC for today. Will decide in afternoon - if it needs a roll.

I have like 100 Jan 25 250 .. left untouched (because were from piggy bank shares) with jan 24 CC's against them - not sure how long to leave them or try something else
+the whole market is at discount, thinking whether I will be better off closing and buying Shares in GOOG, AAPL instead ...

 

[Max Plaid]

Well this sucks...

I got caught-out treating my 18x -p190's, I worked out that I could roll to 15x -p180 + 15x -c160, and only eat around $10k in losses, but the SP dumped just after the sell of the -p180's triggered and I had to rebuy the -p190's close to the daily low and only got half the expected premium for the calls

I got totally deceived by pre-market, thinking TSLA was going up today and set all my orders before open, started well, by then went south fast

What a mess!

 

[wnorris]

Well this sucks...

I got caught-out treating my 18x -p190's, I worked out that I could roll to 15x -p180 + 15x -c160, and only eat around $10k in losses, but the SP dumped just after the sell of the -p180's triggered and I had to rebut the -p190's close to the daily low and only got half the expected premium for the calls

I got totally deceived by pre-market, thinking TSLA was going up today and set all my orders before open, started well, by then went south fast

What a mess!

Similar...the pre-market head fake got me to sell off my protective puts as I planned to reset them on any move up. Now I know if I buy them back we will bounce.

Might Elon be selling today?

 

[jim0266]

I'm officially in F-it mode. Holding long term, but have always been unable to pull the trigger to sell CC's against the shares in my taxable account. I could sell 45 CC's, but for tax purposes I don't want to reset them from LT to ST shares by selling less than 30 days out. Not looking to make a killing. Simply sell $20-$30 lotto tickets to degenerate gamblers. I think macro will drag TSLA down to $125 in the coming months, but not willing to gamble my shares by going too close to ITM. Looking at strikes like 250 for 20Jan23 has a lot of volume and OI. What's the best way to enter? All at once or layer in 10 at a time?

 

[SpeedyEddy]

Similar...the pre-market head fake got me to sell off my protective puts as I planned to reset them on any move up. Now I know if I buy them back we will bounce.

Might Elon be selling today?

Market makers won't have a funny weekend and if this rolls down any further, next week 160 will be off the charts too, I fear, in Which case Yoona's theory above would fail. Hope that not to happen though. I myself have another theory, but will only unveil here if SP today will end between 155.50 and 159.5, which was my forecast since wednesday, based on option-trading too.

 

[intelligator]

Considering writing 6x CC against the highest cost basis recently assigned , convert to far out calls. I'd like to book some credit for the effort and close if we dip further. Tomorrow ATM credit is lousy, thinking using next week expiry, maybe 160 or 157.5 or 155... break even at 162.82, $7.8 credit?

I sold 12/23 -C155 yesterday for 7.50, bought them back at 4.15 to lock in the credit, will sell similar ATM 7DTE at most when we are back up, if at all.

It seems now the -146.67/+126.67 BPS expiring today may be in play? Crazy price action.

 

[BornToFly]

Wow. $1 away from triggering massive 150 stop losses.

 

[MaxPain]

Interesting comparison to max pain and current gamma exposure for today's expiration. I'm not great at interpreting this so take it with a grain of salt, but it looks like 150 strikes will cause a lot more delta hedging (selling) at this price.