Wiki Selling TSLA Options - Be the House

[juanmedina]

What a boring chop day for TSLA and anti-climactic close for the week. Here’s hoping we start to build next week towards $205–$210 and SPY/QQQ don’t take a dump before P&D and drag us with them.

I’m loaded with OTM -Cs ($243-$360 ranging June through Sept) and ready for any drop to $160’s or lower as everyone has been predicting, to BTC for gains.

Meanwhile a last run to $210 next week into P&D the following Monday would be welcome to add more -C and release some trapped shares at $210-215 area to free up cash to rebuy on retracement down.

Note: the following week markets are closed on Friday April 7, so options expire on that Thursday April 6. I assume the dump will come on April 4 if P&D is released April 3 (Monday).

Does anyone here know/remember if we always dump after production and delivery numbers are released?

If P&D is beat we will run until ER. IIRC that's what has happens before.

 

[ReddyLeaf]

If P&D is beat we will run until ER. IIRC that's what has happens before.

I’m not sure there is a “normal.” Looking back at Q1 results, I see several behaviors, though there always seems to be a small anticipatory rise into P/D. That rise can be only one day (2021), or longer. What does look predictable is a DROP after P/D, before earnings announcement, followed by another RISE right before the earnings announcement. This second rise can extend into and after EA. I’ve also included 2021 Q3 for comparison (steady rise into and after EA).

So, bottom line: We don’t know what will happen but should probably expect a short rise into March 31st, maybe through Monday 4/3, then dropping SP until about 4/14, and then likely rising into 4/21 (monthly), maybe past EA which is maybe the 25th???? As with all non-advice here, trade without betting everything. We need to remember the disaster that started Jan 2022.

Pretty good last week for me. Closed all weekly BCS & CCs for $0.02 (90+%), rolled BPS to next week +p160s/-p175s and +p160s/-p170s for 5%-10% yield credits. As it turned out all of my BPS (-p185s, and -p190s) would have expired worthless, but I got scared by the AM oscillations. Better safe than sorry. Raised enough cash to buy a few shares, a few 4/06 +c220s, and buyback two Jan 2025 -c230s. So a very profitable week. Unfortunately, still digging out of the hole from January 25th earnings, with plenty of January 2025 CCs to buyback.

 

[EVNow]

Still digging out of he hole from January 25th earnings.

This is why I try to not roll too far into the future. Max 2 weeks. Ofcourse, didn't work well last year with puts ... but then, I think even people who rolled into Leaps also got assigned.

BTW, with the examples above was P&D a beat ?

Looks like even Troy is raising forecast with strong European & China sales - beat is a clear possibility.

 

[dl003]

If P&D is beat we will run until ER. IIRC that's what has happens before.

IMO, even if P&D is a beat, max will see before ER is 230.

1. A delivery beat doesnt mean an ER beat. Price cuts here & there & everywhere.

2. Macros unsupportive.

230 is not just a random number. We corrected from 217 to 164. Technically, in a correction, the dead cat bounce can go HIGHER than the starting point of the decline, which is 217. How much HIGHER? 1.23x of the first leg down, which puts it around 230.

What does this all mean? Below 230, TSLA will still potentially be in a correction phase. Above 230 and we are officially in the third wave, the most impulsive of the rally with the first target at 275. So, whoever puts their money down above 230 would not just be buying 230, but 275 also. Will P&D be enough to provide enough incentive for such a bet? Unless we beat by 20k cars and up, my intuition says no.

 

[GrmMastrDoobie]

You don't want advice from me, esp regarding rolling.

It depends on personal situation, implications of selling the shares via contract assignment, fiscal goals(some weekly %, max gains, position preservation), expectation of share movement, etc... .
Rolling up and out for a credit improves your potential return vs current position, but only helps a little in a crash (better off selling shares now) or a to the moon run (better off buying back calls at a loss). Plus timing, even roll is now about 222.50 (225 last post)

My not advice is to ask yourself if the new position is one you would choose to have, independent of your current position (assuming circumstances allow a choice)

I'm mainly just trying to hold on to my shares for the long term, but add to my share count by selling relatively safe calls. I'm just kind of messing around to see if it's worth playing around with. I wanted to experience needing to roll calls, but with only one or two calls before I sold 20 or more at a time. I was thinking if maybe selling twice the number of calls for the following week, for the amount as i need to buy back the calls in the current week, would be a good strategy. Doing that to get a higher strike price. I'm going to try to stick with only selling weekly calls. Probably the best strategy is to be patient and wait for days with big gains like last Tuesday and that crazy week back late January. Wait for the big spikes and sell some conservative calls for .30 -.20 each. I think it would be pretty hard to lose with that strategy.

 

[ReddyLeaf]

I'm mainly just trying to hold on to my shares for the long term, but add to my share count by selling relatively safe calls. ……..Probably the best strategy is to be patient and wait for days with big gains like last Tuesday and that crazy week back late January. Wait for the big spikes and sell some conservative calls for .30 -.20 each. I think it would be pretty hard to lose with that strategy.

Absolutely! Patience is the key. IMHO this week is likely up into Friday, so not a great week to sell CCs, except maybe $20+ on Thursday or Friday. Next week will have P/D numbers out on Sunday or Monday, so expect a bit of a rise for that. Might be a good time again to sell $20+. Tough time the next two weeks. Be careful.

 

[Right_Said_Fred]

Macros aside I’m expecting a slight rise next week, then a P&D beat and more upside towards earnings, then disappointing earnings, followed by a substantial drop.

Tesla is earning about $7,000 less per car, or close to $2.5 billion less total profit, which cannot easily be compensated by cost savings. We are able to see the long-term goal but the market is shortsighted.

So It’s unlikely I will go into earnings holding a short put position. And I’ll probably avoid ATM positions for the next few weeks to avoid having my hands tied through earnings.

 

[EVNow]

Macros aside I’m expecting a slight rise next week, then a P&D beat and more upside towards earnings, then disappointing earnings, followed by a substantial drop.

Tesla is earning about $7,000 less per car, or close to $2.5 billion less total profit, which cannot easily be compensated by cost savings. We are able to see the long-term goal but the market is shortsighted.

So It’s unlikely I will go into earnings holding a short put position. And I’ll probably avoid ATM positions for the next few weeks to avoid having my hands tied through earnings.

That is an interesting point.

In general Tesla is able to control ER and beat expectations since they have control over how much credits to recognize etc. But P&D is what it is (beyond all the pricing/discounts etc they control) … and misses are common. At least in the last few quarters.

But this will be the first quarter after massive price cuts and not every analyst will use the lower end of 20%+ GM guidance. And of our we only have GM guidance and not revenue - so a miss on revenue will miss EPS as well.

 

[Right_Said_Fred]

That is an interesting point.

In general Tesla is able to control ER and beat expectations since they have control over how much credits to recognize etc. But P&D is what it is (beyond all the pricing/discounts etc they control) … and misses are common. At least in the last few quarters.

But this will be the first quarter after massive price cuts and not every analyst will use the lower end of 20%+ GM guidance. And of our we only have GM guidance and not revenue - so a miss on revenue will miss EPS as well.

In the US Q1 has less headwind than Q4, when people were holding out for the IRA credit. Europe looks to be heading for a record quarter and in China March feels much stronger than December, which saw an inventory build-up. That’s why I’m expecting a beat.

I’m skeptical however that Tesla has enough tools to mitigate for the much lower ASP. I don’t see how they can get to 20% GM. But I don’t want to dig into the details too much as it’s not the correct thread to do so.

I’m just saying that I’m wary of being exposed during earnings.

Disclaimer: fear has not always been my best advisor.

 

[mongo]

Tesla is earning about $7,000 less per car, or close to $3 billion less total profit, which cannot easily be compensated by cost savings.

Prices as of the start of Q1 were still higher than 2 years prior.

 

[juanmedina]

Prices as of the start of Q1 were still higher than 2 years prior.

But will the number look better than in Q4?

 

[Right_Said_Fred]

Prices as of the start of Q1 were still higher than 2 years prior.

Unfortunately costs have gone up too in those two years.

I take a more simplistic approach: in Q4 Tesla made $9,500 per car (profit divided by the number of cars). What happens if you take off $6,000-7,000 per car?

Anyway, I don’t want to clog up this thread any further with a subject that belongs in the main thread, so I’ll leave it at this.

 

[mongo]

Unfortunately costs have gone up too in those two years.

I take a more simplistic approach: in Q4 Tesla made $9,500 per car (profit divided by the number of cars). What happens if you take off $7,000 per car?

Anyway, I don’t want to clog up this thread any further with a subject that belongs in the main thread, so I’ll leave it at this.

Yeah, but I think that is oversimplified (though easy to calculate). The full version is harder to calculate, and I am lazy.
From a purely automotive perspective though, Tesla made $13k gross per non-leased car excluding credits in Q4 ($14k with credits). (5,522−467)÷(405,278−15,184)

 

[SpeedyEddy]

At least MSM is generally writing positively, so this week we indeed will go up, macro willing. Short interest rising too, so we could have an idea of who‘s behind the construct, further founded by a less-bad-bank-news-weekend, so ideal to push it to enhance momentum. Relatively very low OI for next Friday helps to manipulate SP. So yes, I will be selling puts 3/31 tomorrow (being out of stock, so even could let them be assigned)
FYI OPTIONS DEC 2025 HAVE OPENED, so I will keep some money aside for buying these calls on the dip, that the shorters are hoping for.after they pushed SP high enough. Maybe much later but now we have 4 gap-ups of which I think at least 185 but finally 140 will be filled. Short term the islandreversal (of which the gap-up 185 is part)could support even a sharp rise. I think @Right_Said_Fred is close to what might happen, BUT y’all forget the huge incline of the stationary battery-products with huge margins, that become weighing more and more. Not enough to make up for the falling GM on auto, but it might start to be affecting forward PE, thus valuation. So the drop on ER could be mild or non-existing. My concerns are purely macro, Russia, china, banking. If none of that has a bigger effect I might be sorry to be on cash (+ short NVDIA +short SPY) surely will not short Tesla, because of fundamentals and my belief in the company. (As stated earlier I excused “to Elon” temporarily for shorting $TSLA in an effort to buy more $TSLA later. )
now that cash is back to desired level, I will go back to
1. Never short Elon
2. (waiting a bit to) Buy TSLA stock whenever you can (and maybe buy some Leaps on a sharp drop, financed by far OTM -P as far out in time as I can sell)
3. Write weekly OTM options to generate extra share-buying opportunities (or withdrawals)
writing all the above made me think, why be out of stock, when you believe I’m fundamentals (like Dave Lee on investing’s multiple S-curves ..) why don’t you support the company now Eddy. Maybe the answer will drive me to cut the first part between brackets on 2. above and only execute on the second bracketed part of 2. on a dip and stop flipflopping.
a good nights sleep (daylightsavings having started today in Europe) and futures will maybe bring an answer)
A few things I want to add, having thought about current inflation.
a. a lot of SP rise will be absorbed by falling dollar, or better said devaluation of fiat currency in general, which is part of the ever-rising stock-market long-term. So $190 in stock (or bank-account) now will be the same VALUE as say $218 end of 2025 (using FED’s prognosis!) then even if nothing happens to the fundamentals and interest (that probably will be better for SP late 2025) a stock purchase by definition will at least compensate for inflation. -P 190 dec ‘25 now would be good if we would never see a big dip along the way like the one that caught us EOY 2022. but in that dip , that many predict, things would change for the better.
b. rising salaries will decreasingly apply to Tesla because of growing Teslabot-fleet, that will enter Gigafactories more and more, because of optimisation and real-life datacollection before selling into the wild, creating business-cases in the house and proving the enormous effect on workforce needed, lowering cost big time in the proces.
c. On the flipside Truth AI will have a negative impact, because of the investment needed (be it Tesla, Twitter or X, all negative) and lost attention of EM. This will be the next FUD if nothing else bad happens.

 

[SpeedyEddy]

2. (waiting a bit to) Buy TSLA stock whenever you can

3. Write weekly OTM options to generate extra share-buying opportunities (or withdrawals)

Waiting didn’t take long , premarket bought all shares it back even with a little discount, so no very risky -P later today but instead execute on 3. :Far OTM options.

 

[SpeedyEddy]

Waiting didn’t take long , premarket bought all shares it back even with a little discount, so no very risky -P later today but instead execute on 3. :Far OTM options.

That decision looks to have aged very well, looking at a 4 dollar gain premarket already

 

[intelligator]

What's a good expiry and strike to park 5x 4/6 -c190? At near $10 each, I'd rather not buy them back, instead use the earned credits past few months to buy back shares I had to sell during the deep plunge. Rolling $5 to the 14th is a debit, trying to chase isn't going to hold the next month.

 

[jeewee3000]

What's a good expiry and strike to park 5x 4/6 -c190? At near $10 each, I'd rather not buy them back, instead use the earned credits past few months to buy back shares I had to sell during the deep plunge. Rolling $5 to the 14th is a debit, trying to chase isn't going to hold the next month.

I wouldn't park those yet. Just keep an eye on the theta. We could drop after P&D in which case these calls end up OTM next week.

If P&D is positive I'd roll them out week by week (same strike) every Tuesday or so. When we drop after ER you can close them out. If we never drop, you'll have accumulated extra credit.

 

[intelligator]

I wouldn't park those yet. Just keep an eye on the theta.

Thanks for the suggest. I typically watch extrinsic when ITM/DITM... are we talking the same? In other words, what is an example trigger to roll based on theta?

 

[jeewee3000]

Thanks for the suggest. I typically watch extrinsic when ITM/DITM... are we talking the same? In other words, what is an example trigger to roll based on theta?

Yup, the extrinsic value is equal to the theta value. The moment there is little to no extrinsic value left your sold calls will be executed (normally).

But this close to the money they keep extrinsic value right till the very end.