SP the previous day got close to 760, there were two more days left (this was on Wednesday), and the strike (775) was within 5% of then SP.
I thought it was worth loosing premium for one week by rolling into a much higher strike price a week out.
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
I thought it was worth loosing premium for one week by rolling into a much higher strike price a week out.
Considering the crash/fire/AP FUD in tonight’s news and the potential run up to next week’s earnings, I will not be selling CCs tomorrow, and probably not at all this week unless something really obvious happens. I expect IV and the SP to rise by week’s end. Selling CCs early in the week is a recipe for some sleepless nights and losing shares or money. I’ll wait until Friday to see what max pain says, and then might try for 905s or 955s, just to pick some spare change. If lucky, I might try to eek out $1-$2/sh. Otherwise, things just seem too risky. I do have a couple bought 4/30 790c that I hope to sell for a nice profit. Good luck to all.
Edit: I tried to help out @Lycanthrope on Friday by putting in lower and lower purchases. I picked up one share at $737.01 around 3:30, and even watched the SP drop down to hit my buy order.
Sorry it didn’t drop below 735 for you. Apparently, I’m not a big dog.
Edit: I tried to help out @Lycanthrope on Friday by putting in lower and lower purchases. I picked up one share at $737.01 around 3:30, and even watched the SP drop down to hit my buy order.
Sorry it didn’t drop below 735 for you. Apparently, I’m not a big dog.
Last edited by a moderator:
Another option you have is to convert your LEAPS into vertical spreads and use the extra cash to hold some shares. A vertical LEAP spread (eg say 480/680) will have a better return on investment than a straight LEAP. You can also rollup the strikes to closer to ITM and widen the spread to increase the return on the same premium. The main drawback with a LEAP spread over a straight LEAP is the value takes longer to appreciate so you normally need to hold them until close to expiry.
Thank you. I was thinking about 480/900 if SP this week gets close to 800. I guess, what you are referring to is a better play in terms of risk management.
Here's the math:
- If I cash out by selling 490C, with the premium at $275, I will get 37 shares per contract. Let's say, against these shares I sell Sep-2021 1100 calls, I will get ~2 shares. So, in total 37+2 = 39 shares. 39 shares if I sell 490C, use the money to buy shares, and on those shares sell Sep-2021 1100C.
- Going with the spread you suggested:
- 680C are at $151. Per call I will get 20 shares (15100/737). If I sell Sep-2021 1100C against these, I will get 1 additional share. Total shares: 20+1. Difference in shares from above case: 39-21=18
- And at expiry, I will have $200 (from 680-480 spread). As long as the share price at expiry (Sep-17-2021) is below 20000/18 = $1111, I will have at least as many shares as I would have today.
I am not sure if I am following this part correctly. Are you suggesting moving the short call to higher strike price opportunistically when the premium is low?
Thanks for the support, it's the taking-part that countsConsidering the crash/fire/AP FUD in tonight’s news and the potential run up to next week’s earnings, I will not be selling CCs tomorrow, and probably not at all this week unless something really obvious happens. I expect IV and the SP to rise by week’s end. Selling CCs early in the week is a recipe for some sleepless nights and losing shares or money. I’ll wait until Friday to see what max pain says, and then might try for 905s or 955s, just to pick some spare change. If lucky, I might try to eek out $1-$2/sh. Otherwise, things just seem too risky. I do have a couple bought 4/30 790c that I hope to sell for a nice profit. Good luck to all.
Edit: I tried to help out @Lycanthrope on Friday by putting in lower and lower purchases. I picked up one share at $737.01 around 3:30, and even watched the SP drop down to hit my buy order.
With vertical spreads the payout amount is the difference in strikes x100. So a 480/680 spread will pay $20,000 on expiry if the share price is anywhere above $680. When setting call spread strikes I try to conservativelty predict where the share price will be at expiry and set the upper strike around this. So if you think TSLA will be above $1100 at expiry you can roll the 480/680 up to say a 750/1100 and return $35,000 for similar initial cost. When you do this is up to you, either when initially setting the spread or by rolling the 480/680 up at sometime in the future depending on long vs short CGT and share price considerations. Another approach is to roll the spread up or down to maintain leverage as the share price rises or falls, this is what @KarenRai used to do.
corduroy
Active Member
I'm planning to use this FUD drop to sell some puts this morning. I expect we will resume our trend upwards towards earnings on Tuesday or Wednesday.
bkp_duke
Well-Known Member
I had some dry powder from selling calls from last week and used the FUD drop this AM to pick up more shares.
When the price is up-trending, I'm aiming to sell more calls for expiry on 4/23. Eyeing 805 (something just past the large wall of calls at 800), or 810.
That IV spike was amazing. When the price hit around 692 I sold a few 4/23 637.5p for 10.95 premium, now they are at 1.75
FWIW, in this scenario I wouldn't go vertical:
--Calendars will enable you to much more efficiently capture volatility on the sold side, and will also allow you to much more efficiently manage the position relative to underlying
--Rolling OTM is a great idea as it puts the longs on the "good side" of delta/gamma/Vega. This can be done as a big split or as a partial cash out. Calendars can be layered on this concept.
--Stop losses on the longs can protect against a big underlying drop
Just to be clear, are you suggesting going for Calendar spread, instead of me "cashing out" and buying shares with the proceeds?
Selling weekly or monthly calls against my Sep-2021 480C also is a form of Calendar spread, technically. What duration would you suggest in this case for the short calls, Jun-2021 calls?
Yeah it was a nice spike to 70.7. I sold some credit put spreads and already closed them.
FYI some guy on twitter said that E-trade is raising the Tesla margin requirement to 60%.
As described in the quote it sounded like you basically 'froze' the September long P/L with a very tight vertical spread. That's definitely the most conservative way to protect profit without STC'ing the contracts, but FWIW at that point I'd prefer to just close out [at least some of] the position.
Keeping the +C's open, yea something like a 1-3week -C will pay off quite a bit more than the vertical. You can also keep its strike close to the money to maximize Vega and better adjust relative to underlying movement. If you want slightly less management 4-6 weeks out will work too. I don't like selling any farther than that because it really locks you into the position, reduces your maintenance flexibility, and reduces your return on capital.
alterac000
Member
Sold 4/23 650 put for 2.4. Missed yesterday's big IV spike and sp drop to 690s due to meetings.
I have not been able to bring myself to create a wheel this week due to the price action yesterday and today. Was so convinced there would be a run-up towards earnings. That said, there appears to be a moderate call wall at 750 and a really big call wall at 800, so if we get another IV spike I may sell covered calls at 800 or so.
I have not been able to bring myself to create a wheel this week due to the price action yesterday and today. Was so convinced there would be a run-up towards earnings. That said, there appears to be a moderate call wall at 750 and a really big call wall at 800, so if we get another IV spike I may sell covered calls at 800 or so.
corduroy
Active Member
I sold some 4/23 825 -Cs during the pop this morning. Already up 55%.
Earlier today I sold 40 x 4/23 -Cs at $1.95. Missed the peak and it was dropping (along with TSLA and the QQQ) as I got the order in. I'll have to decide whether to hold or sell before close today (and re-sell tomorrow) as I do expect (hope) for a pop that will hold at some point this week. Although when I buy-to-close early with the thought I can re-sell on a pop, I usually make out worse than if I just held to expiration. I'm an eternal optimist, I guess.
bkp_duke
Well-Known Member
I sold 775 CC exp 4/23 during the pop this AM. My reasoning was that max pain was $720 as of this AM, and there is a decent call wall at $750 (though not as impressive as the one at $800).
I will close these out on Friday, and will not roll them. I do not want to be holding any calls for earnings on Monday.
I will close these out on Friday, and will not roll them. I do not want to be holding any calls for earnings on Monday.
Similar threads
