corduroy
Active Member
I know the feeling with my -p650. Luckily I have until 5/21 to sort it out. Past experience has shown me to wait and see what happens before making any rash adjustments.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
asburgers
Sell order in at $8008.5
I was able to sell a call against my LEAPS too on E-Trade. I called them and they said as long as you have 200 shares and ITM calls you can sell calls in the IRA or Traditional IRA.
I've done something like this though I was selling reasonably deep ITM puts at that time ($400s share price and the $600 Sept '21 put).
The difference is that I did that without using margin. While the long run price may make that inevitable, but what if the shares drop to $400 along the way? Will that trigger a margin call?
While unlikely I consider a drop to $400(ish) to be on the table, at least for the rest of this year, and maybe for the next couple of years. That is about where we were at before the S&P announcement and that created a big and sharp move up, even in a stock that was already up bigly over the year. The difficulty with TSLA is knowing when we've departed a trading range/level for a new range/level and are never going back.
I saw that in the move from $5 to $38 back in 2013, and we never went back to $5 (though we did briefly revisit $26, on the way up to $45). But we've also seen the shares bounce around between $60 and $80 for years, always thinking the shares were grossly underpriced at $80. Until they FINALLY broke through in fall a year and a half ago. I don't see us revisiting $80 ($400 pre-split) - I think we're permanently out of that trading range.
But the way I see it, we need a lot more time trading between say $500 and $900 before we can be confident that this is the new range and we're not going back to $400. This is, by the way, why I don't really see a big move up later this year. We've come a long way in a short time and the next significant source of buyers that I see will come from the financial metrics investors as they see big quarterly results. I don't see big enough quarterly results happening this year to be enticing for enough of those buyers.
(EDIT to add: not advice, and just because I think it doesn't make me right)
I would be fine if it goes to $400.
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If it helps - it's in their new trade ticket interface (I can also do this on the phone app, but tend not to).That's what I figured. I don't have "spread" in the trade ticket pulldown when I select my IRA as the account.
Guess I need to hit up customer support to figure out what I should do.
Do you have the L2 + Margin authorization on the IRA account? IRA margin is the function that allows you to make use of sale proceeds before they settle. That is the limit of what you can have in an IRA - maybe that is what makes the difference for me?
Yeah - customer support.
Yeah - if I can keep the put strikes up with the shares, I'd love a $400 share price
At least temporarily so I can buy MOAR!Actually even if the put strikes don't keep up, I can buy shares or LEAPs when the shares are down at that price, and then sell them later when the shares are back in this $600-700 range.
Thanks for the feedback from e-Trade. I don't use them any longer but having multiple brokerages allowing short calls against long ITM calls increases my confidence that there isn't something weird happening to my benefit. I like bank errors in my favor as much as the next Monopoly player, but in real life bank errors tend to get reversed.
After the dust has settled from all of my trades today (Fidelity is loving all the commissions I've generated - plus buying those leaps with the roughly $10 difference in bid/ask has to be nice for them as well), I find myself in:
760/655 inverted strangle in the big account. At least the 655 calls are still OTM, but the puts are getting much deeper ITM than I like. I also don't like the $105 strike difference in this inverted strangle. I've had that go to $150 and that is how I get into both legs deep ITM and no longer generating noticeable income. At $105 difference in the strikes I could theoretically end up $50 ITM on both legs and I'd prefer that not happen.
The balanced account (40-50% share value and 50-60% cash value) is proving out this income generation idea so well that I may be selling shares in the living expense / big account sometime over the summer to get it fully balanced. It has ended up with a 640/655 strangle (at least the put strike is lower than the call strike, even if its ITM) AND a 540/655 strangle. I would sure love a share price between 640 and 650 at the end of this week
By balanced what I'm really counter is # calls to # puts and that is around 7:11 today. 3 of those calls are against LEAPs, and today I think that I'm more likely to be buying LEAPs as shares go down to take advantage of that (rather than taking delivery on some puts). I would then sell off shares or leaps as shares go back up to maintain the nearly 1:1 ratio.
And as a bonus my account value has been moving at roughly 1/2 the rate of the share price movements.
A context reminder - I'm focused on income now rather than account value. A year ago that was reversed as I was badly wanting to retire and thinking that I finally had that choice. I believe that I can generate adequate to great income (and so far this is completely true) even if the shares go down a lot from here. I'm not afraid of a $400 share price and adequately positioned for the $4k share price I see coming.
760/655 inverted strangle in the big account. At least the 655 calls are still OTM, but the puts are getting much deeper ITM than I like. I also don't like the $105 strike difference in this inverted strangle. I've had that go to $150 and that is how I get into both legs deep ITM and no longer generating noticeable income. At $105 difference in the strikes I could theoretically end up $50 ITM on both legs and I'd prefer that not happen.
The balanced account (40-50% share value and 50-60% cash value) is proving out this income generation idea so well that I may be selling shares in the living expense / big account sometime over the summer to get it fully balanced. It has ended up with a 640/655 strangle (at least the put strike is lower than the call strike, even if its ITM) AND a 540/655 strangle. I would sure love a share price between 640 and 650 at the end of this week
By balanced what I'm really counter is # calls to # puts and that is around 7:11 today. 3 of those calls are against LEAPs, and today I think that I'm more likely to be buying LEAPs as shares go down to take advantage of that (rather than taking delivery on some puts). I would then sell off shares or leaps as shares go back up to maintain the nearly 1:1 ratio.
And as a bonus my account value has been moving at roughly 1/2 the rate of the share price movements.
A context reminder - I'm focused on income now rather than account value. A year ago that was reversed as I was badly wanting to retire and thinking that I finally had that choice. I believe that I can generate adequate to great income (and so far this is completely true) even if the shares go down a lot from here. I'm not afraid of a $400 share price and adequately positioned for the $4k share price I see coming.
Yes and yes. Doubled checked the web interface just in case (I use ATP almost exclusively) and no dice.
You want to apply for this How to Start Trading Options - FidelityYes and yes. Doubled checked the web interface just in case (I use ATP almost exclusively) and no dice.
Starting to realize on this thread, I’m the equivalent of the annoying kid in computer programming class that keeps asking the person next to me about the lesson. Can’t learn fast enough.
Don't worry. Give it a year of learning and experience ...
And you'll still feel the same
Ask me how I know.
Looking for a yolo this morning - probably going to BTO 5/21 $650 strike calls sometime during the MMD today - looking to double the premium and get out quick today or tomorrow - IV is rising again, back to 58
(if I lose it all that's okay for this YOLO)
(if I lose it all that's okay for this YOLO)
KTC Lurker
Member
Relatively new to options in a protracted downward environment with TSLA, what do you all find is the most efficient (and loss preventing) timing for rolling puts that are now ITM? Do it earlier in the week on first signs of weakness? Wait until Friday to give every opportunity to recover and burn theta? I have a few P's that are looking like I'll need to roll them this week and I'm wondering how you all think about this.
I am not through punching myself in the crotch for the ultimate execution fail of all time..... I'll sell to open once I get a few more punches in. Trying to simplify my brokerages and untangle.
I think this is largerly for @bxr140 but I think it'll be helpful all around. I've been thinking more about the flip roll. First thing I've found is that there isn't a bunch of quickly found articles talking about it on a simple google search.
My first question is around the mechanics. I think I understand them but am looking for confirmation, along with other stuff that I haven't thought to ask about (good chance I didn't know to ask about it).
Looks like on Fidelity I will need to use the Custom trade ticket - the standard roll ticket doesn't work (as rolls are always the same kind of option).
So I BTC the -760p with 5/21 expiration
and STO the -440c with 5/28 expiration and collect a roughly $1 credit.
The $160 ITM put is transformed into a $160 ITM call.
This is my first question - do I have this part right?
Assuming yes, then the first observation is that clearly I would make this flip as I expect the shares to keep moving down and I would rather be ITM in the direction the shares are going, rather than ITM and opposite the direction the shares are moving. Of course I could be wrong, but I do think we're more down than up for awhile.
Leading to my next observation, and how I think that I would actually set this up. All of my positions are fully backed by shares or cash (or long dated calls now). So if I do this flip then the cash backing the put turns into a need for shares to back the new position. I'll need to buy something for that backing.
OR I can do a flip on a call at the same time. All of my calls are OTM, so I would simultaneously flip a call to a put. As the call is $55 OTM right now (and expiring this week) and I roll to the same 5/28 expiration put that is $55 OTM then I land at a -545p for 5/28 expiration (no requirement that I do that, but it's convenient to get these two positions aligned).
The benefit of flipping one of each is that I am still using 100 shares to back 1 call, and am using cash to back 1 put. I actually lower the cash requirement to back the put as well. I don't end up using margin for backing or anything of that sort.
I've built this ticket and it shows a $16 net credit (the call flip generates $15). At this point I go back to the put flip and move the strike as much as I want / am able so that the overall ticket generates a net credit. By doing so I am effectively using the OTM option credit to buy a better ITM strike. Using my example ticket I've been building I can move the strike $10 and get a $6 credit (the next strike is $10 away and yields a small net debit. I might take the small net debit anyway for the extra $10 strike improvement.
I could also build something similar and roll both the put and same # of calls at the same time, using the OTM net credit to buy a better ITM put strike. This would just be a straight roll of each leg with intentional net debit on the ITM side that is slightly less than the OTM net credit. The difference is what I think the stock direction is headed in.
Anything I'm missing? If I'm wrong about direction then I have a deep ITM call - the thing I am most worried about. So I'd do this with a single put to try this out the first time, and even if I were practiced at this I would do this with a subset of the overall position.
Last question for you (or anybody). Given a $160 ITM put (5/21 expiration currently), outside of straight rolls that I've been doing, what other trade types / setups would you consider? At $160 ITM
My first question is around the mechanics. I think I understand them but am looking for confirmation, along with other stuff that I haven't thought to ask about (good chance I didn't know to ask about it
).Looks like on Fidelity I will need to use the Custom trade ticket - the standard roll ticket doesn't work (as rolls are always the same kind of option).
So I BTC the -760p with 5/21 expiration
and STO the -440c with 5/28 expiration and collect a roughly $1 credit.
The $160 ITM put is transformed into a $160 ITM call.
This is my first question - do I have this part right?
Assuming yes, then the first observation is that clearly I would make this flip as I expect the shares to keep moving down and I would rather be ITM in the direction the shares are going, rather than ITM and opposite the direction the shares are moving. Of course I could be wrong, but I do think we're more down than up for awhile.
Leading to my next observation, and how I think that I would actually set this up. All of my positions are fully backed by shares or cash (or long dated calls now). So if I do this flip then the cash backing the put turns into a need for shares to back the new position. I'll need to buy something for that backing.
OR I can do a flip on a call at the same time. All of my calls are OTM, so I would simultaneously flip a call to a put. As the call is $55 OTM right now (and expiring this week) and I roll to the same 5/28 expiration put that is $55 OTM then I land at a -545p for 5/28 expiration (no requirement that I do that, but it's convenient to get these two positions aligned).
The benefit of flipping one of each is that I am still using 100 shares to back 1 call, and am using cash to back 1 put. I actually lower the cash requirement to back the put as well. I don't end up using margin for backing or anything of that sort.
I've built this ticket and it shows a $16 net credit (the call flip generates $15). At this point I go back to the put flip and move the strike as much as I want / am able so that the overall ticket generates a net credit. By doing so I am effectively using the OTM option credit to buy a better ITM strike. Using my example ticket I've been building I can move the strike $10 and get a $6 credit (the next strike is $10 away and yields a small net debit. I might take the small net debit anyway for the extra $10 strike improvement.
I could also build something similar and roll both the put and same # of calls at the same time, using the OTM net credit to buy a better ITM put strike. This would just be a straight roll of each leg with intentional net debit on the ITM side that is slightly less than the OTM net credit. The difference is what I think the stock direction is headed in.
Anything I'm missing? If I'm wrong about direction then I have a deep ITM call - the thing I am most worried about. So I'd do this with a single put to try this out the first time, and even if I were practiced at this I would do this with a subset of the overall position.
Last question for you (or anybody). Given a $160 ITM put (5/21 expiration currently), outside of straight rolls that I've been doing, what other trade types / setups would you consider? At $160 ITM
I am extremely extremely interested in how that ITM P rolled into ITM C. Is there a technical term for this strategy so I can see if I can "one click" it instead of 2 trades? I want to research it as well.I think this is largerly for @bxr140 but I think it'll be helpful all around. I've been thinking more about the flip roll. First thing I've found is that there isn't a bunch of quickly found articles talking about it on a simple google search.
My first question is around the mechanics. I think I understand them but am looking for confirmation, along with other stuff that I haven't thought to ask about (good chance I didn't know to ask about it
Looks like on Fidelity I will need to use the Custom trade ticket - the standard roll ticket doesn't work (as rolls are always the same kind of option).
So I BTC the -760p with 5/21 expiration
and STO the -440c with 5/28 expiration and collect a roughly $1 credit.
The $160 ITM put is transformed into a $160 ITM call.
This is my first question - do I have this part right?
Assuming yes, then the first observation is that clearly I would make this flip as I expect the shares to keep moving down and I would rather be ITM in the direction the shares are going, rather than ITM and opposite the direction the shares are moving. Of course I could be wrong, but I do think we're more down than up for awhile.
Leading to my next observation, and how I think that I would actually set this up. All of my positions are fully backed by shares or cash (or long dated calls now). So if I do this flip then the cash backing the put turns into a need for shares to back the new position. I'll need to buy something for that backing.
OR I can do a flip on a call at the same time. All of my calls are OTM, so I would simultaneously flip a call to a put. As the call is $55 OTM right now (and expiring this week) and I roll to the same 5/28 expiration put that is $55 OTM then I land at a -545p for 5/28 expiration (no requirement that I do that, but it's convenient to get these two positions aligned).
The benefit of flipping one of each is that I am still using 100 shares to back 1 call, and am using cash to back 1 put. I actually lower the cash requirement to back the put as well. I don't end up using margin for backing or anything of that sort.
I've built this ticket and it shows a $16 net credit (the call flip generates $15). At this point I go back to the put flip and move the strike as much as I want / am able so that the overall ticket generates a net credit. By doing so I am effectively using the OTM option credit to buy a better ITM strike. Using my example ticket I've been building I can move the strike $10 and get a $6 credit (the next strike is $10 away and yields a small net debit. I might take the small net debit anyway for the extra $10 strike improvement.
I could also build something similar and roll both the put and same # of calls at the same time, using the OTM net credit to buy a better ITM put strike. This would just be a straight roll of each leg with intentional net debit on the ITM side that is slightly less than the OTM net credit. The difference is what I think the stock direction is headed in.
Anything I'm missing? If I'm wrong about direction then I have a deep ITM call - the thing I am most worried about. So I'd do this with a single put to try this out the first time, and even if I were practiced at this I would do this with a subset of the overall position.
Last question for you (or anybody). Given a $160 ITM put (5/21 expiration currently), outside of straight rolls that I've been doing, what other trade types / setups would you consider? At $160 ITM
Thanks in advance!
asburgers
Sell order in at $8008.5
I'm sticking to the .20 (ish) delta for the calls I'm selling, even with the premium dropping. Turns out that $5 per week on the call premium is plenty for me. Now I just need the puts to catch up - if they can contribute another $5 per week then I'll be stylin' in a big way
I also consider 2 week options - not only the weeklies. Actually I just started doing weeklies again in April for the legs that are OTM. The ITM legs are continuing to be 2-4 week rolls. I think my 2 deep ITM put positions are about to get a 3 or 4 week roll tomorrow, even though they have 1 week to expiration. They're getting too deep ITM for a 1 or 2 week roll to move the strike much, and I want to improve the strike while I'm also buying time.
For the puts I have that ARE OTM I'm thinking I'll use more like the .30 delta. My thinking is that I'd like a particularly high level of income from the put side so that if the shares take off upwards, then I'll have that incremental premium available to keep the call strike in range of the share price.
I've learned one especially important lesson from this idea of using more aggressive delta option sales as an additional hedge against moves against. Well two I suppose, though the second was something I'd already planned for, but is worth emphasizing.
#2 is that if the put and call strike get too close together then you'll find that the week to week (or every other week to every other week) cash flow will come from 1 leg, while the other leg is really just rolling for time and minimal credits. Make sure that 1 leg is sufficient (given that my other constraints and context are reasonably similar to your own).
#1 and something I've learned from the big move down (that I'm stilling digging my way out of). It is relatively easy to get into an inverted strangle from the strangle. An inverted strangle is where the put strike is higher than the call strike. When the strike to strike difference is small enough then the weekly (or every other week) rolls will still get back into a strangle and from my experience, ok. Small enough window is something like $50 for an absolute number and best measured by whether at least one of the legs will roll to the OTM target delta.
HOWEVER as that window grows larger you want to be cognizant of the possibility of landing deeply ITM on both legs (which is what's happened to me). In my case the put leg got something like $150 or $200 ITM and I chased too aggressively on the call side. I received some really nice premiums on the call leg, and then the shares reversed and I found myself about $100 ITM on both sides.
Not advice of course, but an education that I've received that hopefully you can avoid
Nah - he's always been this bold. Possibly slightly more bold recently, but only in a minor way. He's been one of the original contributors from the beginning. I think it was last summer where I was having approximately your reaction
I can also cheerfully say that his example is one thing that inspired me to consider higher delta options, especially on the put side. I'm still leery on the call side (always managing for the big move upwards) but I'm taking on more delta on the put side (in the one position that is current ATM / OTM).
In that spirit I've rolled my one remaining 5/7 position, a 680 put, out to 5/14 and 655 strike with a $3 net credit this morning. The previous position was still profitable though not by a lot. I chose the 655 strike as its the .35 delta.
I think I'll be using .20 or .25 delta on the call side - much less aggressive and skews my strangle so its above the share price somewhat.
Are you really able to get $5 per contract a week? I remember back in the day in this thread we used to talk that getting $2 per week was good.
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