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Wiki Selling TSLA Options - Be the House

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Not safe yet... Aftermarket could push it over 740 and they can still execute the option(s). (Though that isn't looking too likely.)

Yep. This is why I closed my 750 CC's today for 0.01. Given how a few times last year we got after hours news that sent TSLA through the roof, I don't want to chance those calls being executed.
 
Not debunked - it is fact. Sold options can be exercised after hours (usually just in the first 45-90 mins after hours depending on brokerage) if they are in the money or even out of the money in after hours trading - this has happened to me twice over the years, once when they were OTM! Always wise to close sold options before close Fridays if they are close to the money.

Yeap, it happened to me on the PUT side.
 
I've been lurking here for a few months and want to thank everyone for the not an advice...

Here are the results of my first few months trying the wheel.

The first month, March, one put and one call. The put was way in the money (my very first option trade, not too smart) and rolled forward twice as the stock price dropped and now resides in May with 765 strike, should be safe. The call could have been rolled down but I was just learning.

The second month, April, was four calls and a put. The put was rolled up when the stock price was down and generated much income, my best move that month. I rolled the calls down to Max Pain, and then Max Pain rose and all were assigned, which is OK, I need put money.

Results were $21,835 which purchased 32 stocks.

Screen Shot 2021-04-17 at 8.04.27 AM.png


For May I'm trying to sell to open calls on green days, puts on red days for proceeds equaling two stocks. Will again roll towards Max Pain starting 5/10. I still need more put money so will try to get assigned a few more calls.
 
4 wins today.

Sold CC 750.
- Moved to 740 this noon when SP was hovering in the 730s. Survived the sudden 749-740 scare this afternoon and the rush up to 739.78 in the closing minute. Won by 22 cents.

Sold IC 670/675/800/805.
- Minor scare during the runup to 780+ on Monday, but the 800 call wall was too high, so no panic there since Tuesday.

Sold -p720 to start my Wheel.
- Wheel started! Phase 2 may be 800 CC next week.

Sold IC 715/720/750/755 at noon today.
- SP was stuck in the 730's. Might as well get some shopping money.

Congratulations on multiple successful trades!

Question regarding the IC for anyone trading these - are you transacting each part of the IC separately or does your brokerage allow you to compile an IC to execute all at once? I have looked and don't appear to have the ability to do this through mine (ameritrade).
 
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Congratulations on multiple successful trades!

Question regarding the IC for anyone trading these - are you transacting each part of the IC separately or does your brokerage allow you to compile an IC to execute all at once? I have looked and don't appear to have the ability to do this through mine (ameritrade).
Ameritrade (at least with my options level, I’m margin enabled) has a custom choice that lets you build pretty anything as a single transaction.
 
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Congratulations on multiple successful trades!

Question regarding the IC for anyone trading these - are you transacting each part of the IC separately or does your brokerage allow you to compile an IC to execute all at once? I have looked and don't appear to have the ability to do this through mine (ameritrade).
Thanks... I use TD thinkorswim. It's 'one click' and i like it coz i'm lazy.
 
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I'm with IB and the commission to buy back options is less than 1USD each. In Belgium they charge 1.50EUR. Some other brokers let you close cheap calls for free.

You should really look at moving your trading portfolio from your bank to a cheaper broker. With the number of trades you're doing the commissions would add up to a significant sum. I used to be at a bank that charged similar for options but moved and haven't looked back.
Hi i am with IB too and was wondering if i could ask you some questions as i am just starting out with options trading. I have around 200 shares of tesla with IB and i intend to sell puts (with margin). My current available cash is $2K. Do you think it might be risky? I am just afraid of getting assigned. Will IB give me the option to quickly buy to close the contract if the price falls below strike price or will IB just automatically assign me if the buyer exercise the contract?
 
Hi i am with IB too and was wondering if i could ask you some questions as i am just starting out with options trading. I have around 200 shares of tesla with IB and i intend to sell puts (with margin). My current available cash is $2K. Do you think it might be risky? I am just afraid of getting assigned. Will IB give me the option to quickly buy to close the contract if the price falls below strike price or will IB just automatically assign me if the buyer exercise the contract?
If you sell puts on margin, and only have $2k cash, what's your plan when they get assigned?
 
Could i ask, what is the worst case scenario if i am assigned? I am new to option trading haha
You'll be put the shares on margin, with the shares you already have as collateral. Like if you borrowed money and bought the shares on margin.
With 200 shares and IB's high margin requirement for tsla, you can maybe sell 1 put.

Worst case scenario: shares are put to you on margin on friday, stock tanks before market opens on monday, share price drops, your maintenance margin goes negative and IB liquidates as much of your shares as needed to cover the margin deficit.
IB doesn't do margin calls.

Or stock tanks while your put is open, same thing can happen. Then you can buy a lower priced put and convert to spread to lower your margin.
 
Hi i am with IB too and was wondering if i could ask you some questions as i am just starting out with options trading. I have around 200 shares of tesla with IB and i intend to sell puts (with margin). My current available cash is $2K. Do you think it might be risky? I am just afraid of getting assigned. Will IB give me the option to quickly buy to close the contract if the price falls below strike price or will IB just automatically assign me if the buyer exercise the contract?
I've sent you a more detailed PM. Short version is I wouldn't do it, way too risky for me. There's no warning for exercise and you can have positions liquidated before you know it.
 
I plan to close the contract before i am assigned. like monitor daily or something
My not-advice...

One problem with this and $2k in cash - it's pretty easy for a large and fast enough drop to happen that you'll no longer have the cash to buy your way out of the position. I've had this happen to me and had to roll out of the position to retain the shares (for me it was a CC - same dynamic though with a short put). Rolling in a state where you can't continue rolling indefinitely is a good way to dig a deeper hole while hoping somebody comes along with a load of dirt to fill it in for you.

Adding margin on top of that and the setup you describe sounds like a reasonably high risk of your account value going to $0. Or at least turning into 100 shares and $20k in cash when your broker starts liquidating to handle margin calls.

A thought experiment for you to work through. We recently saw the shares up in the $850+ range followed by a $200 drop into the mid $600s over a 2-4 week window. Plan for at least that level of a move against you and be sure you're ready to handle it.


I'm not currently using any margin to back short puts. I AM willing to use a small amount of margin for backing short puts, but I do so in very small quantities. At your account size I wouldn't use any margin for backing a short put - the opportunity to have 100 shares and 1 covered call liquidated by your broker to pay for liquidating the short put is too high. You might not even need to see a $100 move against you, and $100 moves in either direction (sometimes daily - mostly over a couple or 3 days) are too regular to not plan for them.
 
I've been lurking here for a few months and want to thank everyone for the not an advice...

Here are the results of my first few months trying the wheel.

The first month, March, one put and one call. The put was way in the money (my very first option trade, not too smart) and rolled forward twice as the stock price dropped and now resides in May with 765 strike, should be safe. The call could have been rolled down but I was just learning.

The second month, April, was four calls and a put. The put was rolled up when the stock price was down and generated much income, my best move that month. I rolled the calls down to Max Pain, and then Max Pain rose and all were assigned, which is OK, I need put money.

Results were $21,835 which purchased 32 stocks.

View attachment 654494

For May I'm trying to sell to open calls on green days, puts on red days for proceeds equaling two stocks. Will again roll towards Max Pain starting 5/10. I still need more put money so will try to get assigned a few more calls.
Thanks for sharing, the data is very helpful.
Next time, do you mind sharing number of contracts in a column? That can make the information even more helpful.
 
I am considering selling -p700/-c800 short strangles Mon/Tue.

Is anyone else thinking the same thing? Or what range? Or too dangerous to sell due to the Apr 26 earnings?

Thanks in advance!

I'll be selling CC's Monday or Tuesday. I want to see the price action before selling, but I'm thinking about 805-810, since Max Pain right now is 720 (subject to change), but there are a mountain of calls at 800.

I won't be having any calls outstanding for earnings, as I suspect they are going to blow the top off and even the FUDsters will have trouble spinning it any way but positive.
 
I am considering selling -p700/-c800 short strangles Mon/Tue.

Is anyone else thinking the same thing? Or what range? Or too dangerous to sell due to the Apr 26 earnings?

Thanks in advance!
Sounds reasonable on the Put side. I sold 3 x 730P- on Friday for $21 (Friday is my preferred Put selling day as it often pops pre-market on a Monday). There's still a strong call wall at 800 but I'll wait and see what happens with any rise on Monday/Tuesday to maximise premiums.
 
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ITM LEAPs Or Shares?

Background:

  • In my portfolio, I have shares. Besides shares, I have several ITM LEAPS I "cashed out" of by selling the calls at next/higher strike. For example, for Sep2021 480C, I sold Sep2021 490C.
  • Later, as we get close those expiry dates, my plan is to as much as possible convert these to shares. That is, buy back the short calls, and exercise the long calls. These would be largely funded by selling long dated (2 years out from then) DITM covered calls against these shares, and relying on some margin on my existing shares.
  • The thinking is there might be a sharp drop in SP in those 2 years before the calls in "b". In such a case, buy back these calls to the extent my margin can afford at that time.

Current situation
Before Q1 earnings, I had ITM Calls, Sep-2021 480C.
I sold Sep-2021 490C against those, used the cash to purchase the stocks (SP was ~$865).

In Feb and March, as SP went down the calls went down, and I kept selling shares to buy back these short calls. What didn't go great was my timing.
Ultimately, now I am in a situation where for me to go back to the same number of shares by cashing out these calls, the SP this week will have to be close to 830-850, depending on where IV will be.
I need to prepare for the case of SP not getting close to 830 at any point of time this week.
The question is whether to stay in the calls, or "cash out" and buy whatever shares I get, and to some extent compensate by selling puts on the margin.

Advantages of staying in calls
  • I have been selling covered calls. One advantage with staying in calls, I can sell more covered calls. Also, at aggressive strikes because the ROI on these calls will be higher than shares. But, staying in calls instead of shares also mean, I loose the opportunity to sell puts using margin, because calls don't contribute to available margin amount unlike shares.
  • Another advantage with staying in these calls, if the SP by the expiry of these calls (Sep-2021) is above the strike + premium of these calls (Today, 490+270=760), I will be better off staying in calls. Also, exercising these calls using margin on my existing shares will be much simpler than selling DITM long dated LEAPS
Disadvantages of staying in calls
  • We might get another dip like in Feb-April this year, and might be uncertain if by Sep-2021 the SP will be at $760 at least (strike 490+ current premium of 270)
 
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