Wiki Selling TSLA Options - Be the House

[Vova]

That was a very late roll. Weren't you afraid of the calls being exercised early?

As long as there is still some premium in the opposite 135 put, usually you don't need to be afraid of exercising. Except with shares that pay dividend and the share is about to go ex.

 

[SpeedyEddy]

BTW, I just checked the Put Call ratio's and they seem to indicate a turn of all markets soon, at least, such a peak is normally indicating overbought markets, waiting for something like a black swan to take a dive. I am an optimistic guy normally, but the last half year, things I encounter are all indicating that financially things can go south easily. So I keep a bit of money on the sideline this time around to not make the same mistake. At least so I can sell some P without being afraid of assignment.

 

[UltradoomY]

Quick update -
STO July $220's for $8.05 each just now
STO - $170P's for $3 this morning (this week)
STO - $190C's for $3.75 a few minutes ago (this week)

Leaving these through earnings for IV crush (not the July calls, those will be unaffected by that)

Now I have some "skin" in the game for tonight besides the long term shares and leaps.

July Calls above are against my December 2025 $200 leaps - so there is plenty of room to roll out and up for profit or let them waste away.

 

[adiggs]

What is interesting is that I have 233.33 strike CCs I sold previously that refuse to completely die. How are they still worth 0.08?

(not-advice)
My thought - how much potential earnings are left in those .08 positions? That's $8/contract. Maybe if they are expiring this Friday I'd let that incremental amount decay, but you are open to 2 risks in order to earn that $8/contract. If they're expiring even further out in time, then you've got a great opportunity to lay claim to virtually all of the available gains, and be ready for the next good opportunity to start a new position.


One risk in hanging onto this position is that investors are shocked, to the good side, by the earnings result, and we actually go challenge that share price this week. I'm totally on board with the idea that is a vanishingly small risk, unlikely even then to go very far ITM, and very very likely to see a retracement to come back under a simple roll. But why bother with that incremental risk for $8/contract?

The second risk is that the shares jump up but don't go ITM. You see a share price you would like to use to sell incremental calls against, but you either don't have that choice because the shares are backing these calls, or you do have enough shares to back the incremental position but are reluctant to do so due to concentration and size of that new position (calls against these shares, plus new calls against additional shares). To make up an example - investors are shocked to the good side, share price jumps rapidly to $210, and you realize that you've got a good $250 strike call you'd like to sell (good income, much better strike should it get challenged).


This is just intended to be another way of thinking about the position.

 

[adiggs]

My reaction to the price cuts is really bullish. I'm not in the camp that price cuts are indicative that Tesla is struggling with demand, at least not in the sense that I believe most people interpret that idea. I believe that most people interpret "struggling with demand" as Tesla is struggling to sell cars (unstated) relative to the rest of the car industry. That competition is either not struggling, or not struggling as much. Many articles imply that.

It may well be that Tesla is struggling in the sense that 40-50% year over year growth in units is difficult to hit despite having plenty of available manufacturing capacity.

My sense of things more broadly, which does not make me right, is that the price cuts are a combination of keeping the mission going at full speed (50% growth in units), within a larger context of total units slowing down so Tesla needs to be more aggressive to continue growing just as fast (while still maintaining industry leading margins).


TSLA hat (short term) - I expect investors and market to use this / react to this in a negative way (share price down) for a few days or week. So at this moment wishing I had closed my 160/150s yesterday for 2/3rds gain. I'd use the drop today to open next week's put spread; maybe 150/140s are selling for a decent price.


Tesla hat (long term) -- even more bullish now than a day or 2 ago. Tesla is going to keep growing, even if the market as a whole is shrinking. Arguably the market is shrinking BECAUSE Tesla is growing so aggressively as to Osbourne the rest of the car industry.

Worth noting that I have >10 years of following Tesla closely. In that 10 years Tesla has never been other than production constrained, and I don't see this price cut as indicating that we are, finally, no longer production constrained. Only that the backlog (that, MHO is a net negative) is maybe not so long that it is a net negative, or at least not much of one.

 

[juanmedina]

I have covered calls on all my shares from $210-205 for this Friday and next Friday. Please make me roll them. Good luck to everyone.

 

[Max Plaid]

You have a much higher risk tolerance, probably the highest here. And that’s paying off.

Nah, this is a pretty low-risk position, any<here between 160 and 215 gives profits, that's a wide range, but of course I'm looking to hang around 185 a bit longer still

If the SP does dump them I'm fine to take 1000 trading shares with the net cost ~160, but in case of a pop I don't want to let any core shares go, so would roll, most likely to my preferred "parking lot" July 21st...

My preference is for TSLA to pop, of course...

 

[Cherry Wine]

The omission of automotive margin ex-RC from the company-compiled consensus did give me reason for pause. I would not be surprised if we see that metric take a dip in the short term as the price cuts temporarily outweigh cost savings in terms of impact.

I have covered calls at the $210 level and a handful at the $170 level. Good luck, everyone.

 

[BornToFly]

(not-advice)
My thought - how much potential earnings are left in those .08 positions? That's $8/contract. Maybe if they are expiring this Friday I'd let that incremental amount decay, but you are open to 2 risks in order to earn that $8/contract. If they're expiring even further out in time, then you've got a great opportunity to lay claim to virtually all of the available gains, and be ready for the next good opportunity to start a new position.


One risk in hanging onto this position is that investors are shocked, to the good side, by the earnings result, and we actually go challenge that share price this week. I'm totally on board with the idea that is a vanishingly small risk, unlikely even then to go very far ITM, and very very likely to see a retracement to come back under a simple roll. But why bother with that incremental risk for $8/contract?

The second risk is that the shares jump up but don't go ITM. You see a share price you would like to use to sell incremental calls against, but you either don't have that choice because the shares are backing these calls, or you do have enough shares to back the incremental position but are reluctant to do so due to concentration and size of that new position (calls against these shares, plus new calls against additional shares). To make up an example - investors are shocked to the good side, share price jumps rapidly to $210, and you realize that you've got a good $250 strike call you'd like to sell (good income, much better strike should it get challenged).


This is just intended to be another way of thinking about the position.

They are for this Friday, and I sold them for 0.15, so I will try to harvest the remaining 0.08.

 

[Max Plaid]

That's some big shorty bear attack underway the last half an hour... They've been desperate to keep it below $183 all day to close below the recent support, and now they're making sure given that it was heading up a bit too fast...

And trying to set a narrative for the earnings already, I guess

 

[Max Plaid]

They are for this Friday, and I sold them for 0.15, so I will try to harvest the remaining 0.08.

I'd have to sell 20x of those just to cover my broker fees

 

[SpeedyEddy]

So a heartbeat it was (but not as high as I thought)
I will be left overnight with
only 1/3 of -P 172.5 I originally had
all -C 200
Some shares sold (half of that covered bij -P)
So on both sides some skin in the game, Room to buy stock aftermarket, maybe between ER and conference call if we drop to 160. That could be the key to all problems left. back to 160, and tomorrow open @ 174....
No room to sell aftermarket (which is not a problem, because I don't see SP open >200 tomorrow)

 

[intelligator]

I closed other half of IC @ 3:58pm for .45 -c205/+c215 , that's 62.5% for holding it 3 days. I am thrilled to be out of the IC while popping the corn

I'll setup again tomorrow for Friday or target next week. GLTA !

EDIT: Apparently I left money on table ... nonetheless, we've captured our average weekly credit !

 

[SpeedyEddy]

So far so good aftermarket. The Call will be crucial (most of the times spoiled by Elon, he really is the best party-crasher, apart from being brilliant and the reason I could retire early, so he can break an egg with me)

 

[BornToFly]

Looks like I did ok today. I sold 4,000 shares at 183 to make sure I'm ok on Margin down to SP 100. It looks like I will be able to buy the shares back cheaper. I do think the SP is holding up well AH considering the report, which is worse than I expected.

 

[SpeedyEddy]

Already used all the room to buy shares between 172.13 and 178. No real bad news I can discover. Stronger than many (even of us) would have expected. I think answers to the questions I saw on Say plus good outlook will keep SP afloat tomorrow. Maybe ERP overall can send us down with the market finally believing rates to stay higher for longer (as I posted a few weeks ago), So no specific TSLA risk BUT Nasdaq-wide risk.

 

[bingoz]

My -c195 and -c200 this week seems to be fine. As of right now, I have no complaint with the 3-4% drop AH at all. TSLA might drop more tomorrow morning but I dont have any short put, so I'll be opening some tomorrow if seeing 16x.

 

[Max Plaid]

I think it's "OK"; many indeed expected worse... FCF is a bit low, but I expect that to improve over the coming quarters, EPS and revenue close enough to consensus not to matter

Good to see CT is on target and see a photo of the pilot production line

Interesting that the SP held quite firm around 179; then a $7 drop in 5 minutes

Some soothing words from Zack would help...

 

[EVNow]

18% GM (vs 20% guidance for the year). That is why the SP is down, IMO.

 

[Max Plaid]

18% GM (vs 20% guidance for the year). That is why the SP is down, IMO.

It's still a very decent number!