Wiki Selling TSLA Options - Be the House

[SebastienBonny]

Keep in mind that rolls, even if for debits, can still pay for themselves by capturing capital gains through strike improvements. If you have the cash. Perhaps at some point selling shares to raise the cash could be needed. Keep rolling and eventually dip(s) will allow you to get out whole.

Well I think there is one big difference between premium and strike improvement.
I now have a 225 CC, which I prefer to roll for credit and not for strike improvement, as long as it's worth it.
I could also get some small weekly strike improvement, but the big difference between the two is the premium is in the pocket (shares can be called away anytime, premium stays in the pocket), while strike improvement is gone when the SP tanks and let's your contract expire worthless.

Actually, when you roll with strike improvement, you have to let the contract expire ITM to get your gains, while rolling for premium nets your gains whatever happens to the SP and your contract.

On the other hand, I'm also covered now for most of my long shares, which isn't the best position to be in, but I do have a 270 strike right now for the end of the year. Obviously that's not a strike I would sell them for.
Not really looking to gain premium here, but rather looking for a strike I'm willing to sell for at a certain point (of course, it would've been better letting these uncovered, but that's the way it is now). EOY 23 270 CC can be rolled higher than 400 somewhere in 25, which would be okay to let those shares go at that time. Meantime I can add long shares again when there's an opportunity.

So, yeah, think the big difference is what you want to do with the shares that are covered and what you want to get for them. This is a big run, but I do think we will see new opportunities to close CC's, buy cheaper shares,... I know history is what it is, but stocks always go up and down. Who thought we would ever see low 100s again? Why wouldn't we see low 200s again this year? Just don't make decisions too quickly here:

- Watch out flipping calls to puts
- Don't overreact by rolling sold puts higher to finance rolling sold calls higher
- ...

 

[Max Plaid]

Yeah, I lost track the number of times I sold calls or puts, had them go DITM fast, flipped to the other side only for the SP top reverse, I've said it many times, and I'll keep repeating it! Doesn't mean it will happen again this time, but I'm not prepared to find out

Of course if one is philosophical about these things, it was just 6 months ago that we were plunging to $100 and I was thinking to sell all my shares at that moment to salvage something before we dropped to $60, didn't do it, didn't happen, so to find myself in a situation where I "only" make $600k profit from the 150x LEAPS I bought back at $167 and $173, well it's a much rosier situation regardless of how you look at it. What's annoying is that there's a potential $600k left on the table thanks to the -c200's I wrote capping the gains

So what to do? I could roll them all up to December -c250's, but then indeed the SP might tank... I could close out the lot and wait for a dip to reload on LEAPS, but the SP might go to $400, we really don't know

So I'm inclined to just close-out a handful of the LEAPS each week by selling ATM puts, was a straddle this week 20x -250, but the call side got bulldozed, however each of those call contracts at -c250 nets +$5k more than the -c200's I closed, but yes indeed, if the SP dumps back down to $200 then it would all have been fruitless, although the initial premium from the -c200 has remained intact

Looking afresh this morning, I think straddles isn't the best approach and I'm going to roll the -c250's from this week out to December -c300's, honestly don't mind to sell LEAPS at that strike. Will continue to write ATM puts and Dec -c300's

Is this the best approach? I have no idea, the SP rising higher from here doesn't really change the profits on the LEAP/call spread, a little as the Delta on the short-side is higher, but it's not much, any -c200's I have left at expiry in July I'll start to roll, monthly, weekly, quarterly, don't know yet, will see

 

[Jim Holder]

TSLA is going semi parabolic purely on call inflows. Right now I am still pushing my put strikes up to offset the growing loss on my -190C but when we see 265 that will be it for me. I’ll just use profits from the puts to roll them calls out to 1/2024, hopefully getting -300C for the money, then wait and see. By wait snd see I mean Im not going ITM with the puts anymore but rather $10 OTM. First we need to see a clear rejection to the downside, then a few down days before spiking again. Judging by the strength of that spike, we can then tell if its the last spike or not. Im still pushing my put strikes up because the initial rejection still has not happened yet. Crossing 260 will be an exception - too high for me to chase.

And here we are $265 is knocking at the door
Parking everything @ -C300 1/24? That’s just $35 dollars away over 6-7 months, seems very risky(?).

 

[Max Plaid]

And here we are $265 is knocking at the door
Parking everything @ -C300 1/24? That’s just $35 dollars away over 6-7 months, seems very risky(?).

Depends on the the cost-basis of what you're writing against... plus it gives a little breathing space

For me, having bought my LEAPS around SP ~170, -c300 is an attractive selling price, plus the premium of +$26 seems pretty generous too

And if you're writing against LEAPS, unless you intend to allow them to exercise (which I would quite like for the c140's I'm holding), at some time you'll need to sell them before Father Time takes his toll. Shares are another matter, of course

Like everyone else with DITM calls, I'm messing about furiously with various calculators, tools, options ladders and my creaky old brain. I've worked out that I can roll 5x -c200's to Dec -c300's by selling 20x weekly -pATM, furthermore, if I roll this week's 20x -c250 to Dec -c300, I'll get 2x the premium which will facilitate the roll of 2x -c200 as well (which includes the +$26 for the writing of 2x -c300)

And if I can eventually roll the lot, and the SP stays up, on 150x contracts that's +$1.5m, so may seem tedious, but well worth the effort!!

If the SP dumps, I will have retained the original premiums and just need to deal with 20x ITM puts and can resell safe calls to hit my annual profit target

Main thing isn't to take losses on the -c200's, always rolling them for break-even to cover a reversal

Sorry for the verbose posts, I'm writing these in the case that it may help others coming with creative strategies

 

[vikings123]

Those of us that were making a killing on spreads a couple years ago have largely sworn to never touch them again. It cost one member his life, others their entire portfolio, and a massive 2/3 share loss for me. Stick with CC and CSP, and worse case scenario, let them get assigned.

I remember I had checked into this thread when terms like BPS and BCS were being thrown around. I had no idea what those meant and I wish I never found out how to execute a BPS or BCS. It sure led to some sleepless nights and ever since I have stuck to plain old CC and CSP. The saddest part was someone taking their life. It's just money guys, it's ok if you lost the opportunity to make more money or lost money.

Spreads are for the extremely sophisticated investors. better to stay away from them unless you know how to manage them when the position goes red. Hoping the stock comes down or goes up is not a strategy.

People talking about blow off the top need to realize that we need a huge gap up first. That is historically how a TSLA blow off the top has materialized. Could that be today or tomorrow? Who knows but until the trend reverses take the small wins(sell way OTM on a green day) and watch the positions like a hawk or set a stop loss.

 

[Jim Holder]

Thinking of rolling the 19x 6/16 -C255 (w/$5.87 premium) on shares with $243CB out two months to -C300 8/18 @$9.54 premium (=$309.54/share), which improves strike by $48.67 (=$92k gains vs $33k), but I'm reading some saying not to necessarily roll for strike improvement since the share price may never hit and I may never see the extra gains.

Does that thinking apply to a short duration roll like above (i.e., 60 days out vs. 6-7 months)?

 

[Max Plaid]

Thinking of rolling the 19x 6/16 -C255 (w/$5.87 premium) on shares with $243CB out two months to -C300 8/18 @$9.54 premium (=$309.54/share), which improves strike by $48.67 (=$92k gains vs $33k), but I'm reading some saying not to necessarily roll for strike improvement since the share price may never hit and I may never see the extra gains.

Does that thinking apply to a short duration roll like above (i.e., 60 days out vs. 6-7 months)?

The price may never hit or it might go to ATH and stay above, we have no idea, it's a guessing-game

But the roll you suggest looks attractive as it's both more premium and strike, plus not too far in the future

If in doubt you could roll half weekly and half further out...?

Again, my strategy is to preserve the premium I already took and just roll up break-even, if possible keep the LEAPS as they still have 2.5 years to run

 

[OrthoSurg]

Ok folks, it’s the retro-cocktail hour. I remembered Paydirt’s thread from June 2020 and decided to do a little rereading. Also, we’re all probably having problems similar to the Hertz blow off, so time to review, regroup, and relearn some things. Lots of great learning available in some of those old options threads, a few current (and greener) posters. Anyway, here’s my point: where is today’s record green 13 day run as compared to other epic SP rises? I didn’t do an exhaustive search (but please feel free to correct me or add your more in-depth analysis), but decided to pull up the chart and annotate with guesses.

Notice the initial quick drop (just like EOY 2022), and quick rebound, followed by relatively flat. Then, another jump, flat, jump, flat, etc. Some jumps are 70%, similar to the past two weeks. Sow where are we now, the 1st or 2nd question mark? Are we really in the beginning spurt of another 4-10x run by EOY 2023? Yikes. If so, it’s way past time to convert everything into LEAPS just like @OrthoSurg (who probably quite happy with his family and servants on his own private island).

Edit: scale is logarithmic and today’s volume looks much more significant (about the same as 2020). Definitely whales feeding now, probably mutual funds.
View attachment 946767

Yeah the money for the servants are tied down to CCs 370 Jan2025. But I am pretty happy with the Jan2025 110 LEAPs I converted all my shares to on Dec 28th when stock price was 110.

I will have to sell my TSLA for $370 in 18 months. Unless I find the perfect time to roll them back in just before Elon start selling more TSLA for Twitter or for his next venture.

Sorry I haven’t been there lately, I have 0 trade on my account since Jan 2023 and have been working a lot starting my private practice and training my 4 boys playing hockey/soccer/ski and training myself for 5 bikes races this season. I still come lurk here to see your trades by I am pretty much locked out.

With the new money I make I have been buying shares of private companies to reduce volatility in my portfolio. Different type of investing where I know the CEOs, their the founders and they post less on Twitter.

Hope everyone is doing well!

 

[CHGolferJim]

With the recent comments about LEAPs, I’ll add my terrible and cautionary experience FYI:

• In Nov’21, converted about half of shares into Jan’24 LEAPs (at $407 SP ) pocketing cash at that frothy level from the difference between SP realized and LEAPs cost (in retrospect, the share sale was a good move, but not the LEAPs purchase at close to ATH)
• Strategy was to increase leverage on a lower amount invested
• In comparison to SP decline from $407 to $259 as of yesterday (-36%), the Jan’24 LEAPs $333-$467 declined >90% (strikes were equal portions 15% ITM, ATM, and 15% OTM)
• With impending expiration in Jan’24, in late-Feb’23 began looking for opportunities to roll to Jun’25$250 (SP was ~$200)
• Despite raising questions on several TMC threads, got limited input about how to roll (which I had never done before), so I took Papafox’s approach and bought more LEAPs (SP $180-$203) and booked limit orders to sell the Jan’24 netting out to zero cost — these GTC finally closed this week 3 months later after riding the YTD roller coaster (and requiring this last month’s extraordinary spurt to accomplish)
• Had to reduce total number of contracts ~80% to roll Jan’24$333-$467 to Jun’25$250, but the total $ value is equal — escaping the near-expiry contracts and gaining ATM’s 2 years out which should be very responsive to SP gains
• Now I sit with a pretty huge realized loss (non-taxable account!), slightly offset by the gains on the LEAPs purchased since Sep’22
• Appears I need a 4x on the LEAP current values to recover the loss, and have about half as many contracts in play

Any comments would be welcomed, and good luck to all.

 

[intelligator]

I have one more block of contracts to close out this morning -c242.5/+c262.5 for 6/16. Thankfully I have margin to work with which I can pay back with sale of low cost basis shares, which the loss helps offset capital gains. Nonetheless, it doesn't make this any easier to absorb. Meanwhile I'll pay the interest until I sell shares, block out this event, move on with a different strategy.

Here's the OI change from 13th to 14th. Some softening at 270, more put action below 262.5 ... a nice MMD would save me a couple K in closing costs. Good luck all!

EDIT: MMD is priming well, retraced to 260, just beautiful! Yes, I am being selfish ... just for this one trade. Thereafter, let this baby fly!

 

[elasalle]

Thinking of rolling the 19x 6/16 -C255 (w/$5.87 premium) on shares with $243CB out two months to -C300 8/18 @$9.54 premium (=$309.54/share), which improves strike by $48.67 (=$92k gains vs $33k), but I'm reading some saying not to necessarily roll for strike improvement since the share price may never hit and I may never see the extra gains.

Does that thinking apply to a short duration roll like above (i.e., 60 days out vs. 6-7 months)?

92K gains better than 32K right?
If you had sold the CCs to make money while the stock stayed stagnant, then roll is better option. If you had sold the CC as a desired exit point then letting the calls execute would be the better option.

if you roll, it is just a OPM (Other People Money) trade. You buy more time. Once it gets to 300 you can go through the whole process again. Technically you could keep doing until you reach the end of line last set of options traded, now Dec 25. In each step you can wait for pull back.
If SP pulls back hard, then you can lose and thats a chance we need to take....

cheers!!

 

[SebastienBonny]

Thinking of rolling the 19x 6/16 -C255 (w/$5.87 premium) on shares with $243CB out two months to -C300 8/18 @$9.54 premium (=$309.54/share), which improves strike by $48.67 (=$92k gains vs $33k), but I'm reading some saying not to necessarily roll for strike improvement since the share price may never hit and I may never see the extra gains.

Does that thinking apply to a short duration roll like above (i.e., 60 days out vs. 6-7 months)?

Share price may never hit before expiration date or it may be below on expiration date.
In those cases: no capital gains.
But like @Max Plaid says, this roll gives you premium as well, so as long you're okay with the received premium AND the possibility to lose the shares for 300, why not?

But if you're happy with 255 as well, I would roll those every week to the same strike and never let it expire until rolling isn't giving you enough premium anymore.
C255 for friday is about 8 right now.
Rolling it to next week is giving you 3.5/contract. (11.50).
6/30 is giving you 14.35 or 6.35/contract for two weeks.
Should the SP sort of stay in this range, a weekly roll to the same strike will give you 3 every week or 27/contract. Of course, there is no certainty about that as well.

Maybe doing both is your best bet, like @Max Plaid says.

Edit: premarket gains are fading quickly.

 

[Max Plaid]

With the recent comments about LEAPs, I’ll add my terrible and cautionary experience FYI:

• In Nov’21, converted about half of shares into Jan’24 LEAPs (at $407 SP ) pocketing cash at that frothy level from the difference between SP realized and LEAPs cost (in retrospect, the share sale was a good move, but not the LEAPs purchase at close to ATH)
• Strategy was to increase leverage on a lower amount invested
• In comparison to SP decline from $407 to $259 as of yesterday (-36%), the Jan’24 LEAPs $333-$467 declined >90% (strikes were equal portions 15% ITM, ATM, and 15% OTM)
• With impending expiration in Jan’24, in late-Feb’23 began looking for opportunities to roll to Jun’25$250 (SP was ~$200)
• Despite raising questions on several TMC threads, got limited input about how to roll (which I had never done before), so I took Papafox’s approach and bought more LEAPs (SP $180-$203) and booked limit orders to sell the Jan’24 netting out to zero cost — these GTC finally closed this week 3 months later after riding the YTD roller coaster (and requiring this last month’s extraordinary spurt to accomplish)
• Had to reduce total number of contracts ~80% to roll Jan’24$333-$467 to Jun’25$250, but the total $ value is equal — escaping the near-expiry contracts and gaining ATM’s 2 years out which should be very responsive to SP gains
• Now I sit with a pretty huge realized loss (non-taxable account!), slightly offset by the gains on the LEAPs purchased since Sep’22
• Appears I need a 4x on the LEAP current values to recover the loss, and have about half as many contracts in play

Any comments would be welcomed, and good luck to all.

Yeah, I did this when SP was at a local low of ~$800: 27/01/2022 16:26 Buy an option TSLA C 19/01/2024 700.00

It popped back to $315 a few days later, but I held and that was that, all downhill since then... these became 15x -233's after the split and were almost worthless at the beginning of this year. But I held onto them and now they recovered to 50% of initial cost, but I don't expect to recover the lot, who knows!

Where they are being useful is as a mechanism to write calls against, helping me to get out of the pile of DITM's I wrote

But indeed, the time to convert to LEAPS isn't at ATH, but at the bottom - the leverage works in both directions

Worth noting that when I did a historical analysis of 2021, my put and call trades were almost break-even, all the profits came from buying LEAPS low, selling on a pop, rinse/repeat...

 

[jeewee3000]

Thinking of rolling the 19x 6/16 -C255 (w/$5.87 premium) on shares with $243CB out two months to -C300 8/18 @$9.54 premium (=$309.54/share), which improves strike by $48.67 (=$92k gains vs $33k), but I'm reading some saying not to necessarily roll for strike improvement since the share price may never hit and I may never see the extra gains.

Does that thinking apply to a short duration roll like above (i.e., 60 days out vs. 6-7 months)?

The discussion regarding rolling for premium or higher strike price depends on your personal goals/financial situation.

Personally I'd rather roll up in strike for $0 premium to keep my shares (after the DITM cc finally expires OTM) and live to fight another day. Reasoning: options income is a bonus for me. All things considered I'm a TSLA long-term investor and I want to be in shares by the 2030's-2040's.

If your personal goal is income, then taking premium is the more suitable approach.

Is one better than the other? Not really. It all depends. We should be mindful of this when examining each others trades/plays.

Know what your personal goals are and have a plan BEFORE you enter a position what you will do if the option goes (deeply) OTM/ITM.

My personal stance since personal capitulation last November is I only sell calls backed by shares and only sell puts backed by cash, no margin. That way worst case scenario my cash becomes shares and my shares become cash.

And I also try not to sell against all shares/cash, unless when I'm in fix-mode in which case I might turn sold cc's (ITM) into straddles to benefit from the fact that one side always wins.

I'm slowly but surely climbing out of the (cc) hole, but I'll be without options income for months at best. Oh well. My day job provides me sufficient financial security, so I don't have to touch my TSLA investments.

 

[SebastienBonny]

The discussion regarding rolling for premium or higher strike price depends on your personal goals/financial situation.

Personally I'd rather roll up in strike for $0 premium to keep my shares (after the DITM cc finally expires OTM) and live to fight another day. Reasoning: options income is a bonus for me. All things considered I'm a TSLA long-term investor and I want to be in shares by the 2030's-2040's.

If your personal goal is income, then taking premium is the more suitable approach.

Is one better than the other? Not really. It all depends. We should be mindful of this when examining each others trades/plays.

Know what your personal goals are and have a plan BEFORE you enter a position what you will do if the option goes (deeply) OTM/ITM.

My personal stance since personal capitulation last November is I only sell calls backed by shares and only sell puts backed by cash, no margin. That way worst case scenario my cash becomes shares and my shares become cash.

And I also try not to sell against all shares/cash, unless when I'm in fix-mode in which case I might turn sold cc's (ITM) into straddles to benefit from the fact that one side always wins.

I'm slowly but surely climbing out of the (cc) hole, but I'll be without options income for months at best. Oh well. My day job provides me sufficient financial security, so I don't have to touch my TSLA investments.

Actually you gave the perfect explanation.
If you sold cc's against a lot of shares you don't mind selling, then go for the premium.
If you actually want to keep them (for the current strike), then go for strike improvement.

 

[CHGolferJim]

Started biting the bullet on DITM CC: rolled half my contracts prior to FOMC announcement just in case of a positive market reaction beyond what we’ve just had (16Jun$185 —> 17Nov$210, $11k cash debit and $42k unrealized strike improvement). Will probably do same roll later this week for 16Jun$180 and $200, and add some 14July$310 ($50 OTM/mo.).

Delaying these rolls from last week (at $218 SP vs. current $258) cost several extra months’ duration…….maybe I’ll get some of that back with a post-FOMC “sell the news” dip.

 

[walkrunflyy]

well, I bought back my CCs yesterday.
The price is surely gonna go down now.

 

[intelligator]

^^^ finished my buyback this morning, could have done better if I hit it at 255 ish. Happy to be out nonetheless.

 

[Jim Holder]

If SP pulls back hard, then you can lose and thats a chance we need to take....

Isn’t it better if it pulls back hard and then we can BTC the short calls for 95%-100% gains and still have the shares to sell against?

 

[elasalle]

Isn’t it better if it pulls back hard and then we can BTC the short calls for 95%-100% gains and still have the shares to sell against?

Pull back above your stock purchase price, you win. For this yes. close or let CCs expire for gains, rinse and repeat.
Pull back below your purchase price, you lose.(is what I meant, you need time to again turn positive)