Wiki Selling TSLA Options - Be the House

[Right_Said_Fred]

Well, whatdayaknow - first time ever decided to follow your example and see a call - sold 2 for tomorrow 1035 - was happy I got 0.5.
And then, the stock decides to spike to 985!!!

100 bucks... I don’t think I would ever take the risk for such a small reward. This is TSLA after all.

 

[vikings123]

50 bucks... I don’t think I would ever take a risk for such a small reward. This is TSLA after all.

Agreed, not going to mess around with a stock like TSLA for 50$.

 

[adiggs]

Well, whatdayaknow - first time ever decided to follow your example and see a call - sold 2 for tomorrow 1035 - was happy I got 0.5.
And then, the stock decides to spike to 985!!!

And it expires tomorrow, so it's got another $50 to go. AND it has to not only get THROUGH $1000, it's gotta get a lot further with ever $ costing option sellers.

The pattern is one I see frequently (sell option today, price moves against me - frequently a lot). That just tells me that I'm not selling at the peak for the day.

When it moves against me a lot, I don't view that as missed premium - I remind myself that if I'd have been selling the option at $985 instead of $960, then I'd have been selling a different option in order to sell like for like risk (based on delta).


On day 2 though (which in this case is also the last day), the options mostly move in my direction because of theta (time decay). Especially on the last day for the option.

Good luck to us both

 

[EV forever]

And it expires tomorrow, so it's got another $50 to go. AND it has to not only get THROUGH $1000, it's gotta get a lot further with ever $ costing option sellers.

The pattern is one I see frequently (sell option today, price moves against me - frequently a lot). That just tells me that I'm not selling at the peak for the day.

When it moves against me a lot, I don't view that as missed premium - I remind myself that if I'd have been selling the option at $985 instead of $960, then I'd have been selling a different option in order to sell like for like risk (based on delta).


On day 2 though (which in this case is also the last day), the options mostly move in my direction because of theta (time decay). Especially on the last day for the option.

Good luck to us both

Yep. If the stock moves up by >$82 tomorrow, I figure my portfolio will be happy overall and I don’t mind closing out at a loss.

 

[pz1975]

Yep. If the stock moves up by >$82 tomorrow, I figure my portfolio will be happy overall and I don’t mind closing out at a loss.

This is exactly how I see it. I do lots of option sales where I make $30-100 per contract (I usually sell 3-5). If the SP jumps and I have to take a $300-500 loss, the number of times I make the profit far outnumbers the rare times I take the loss. Also, on sold calls, my overall portfolio goes up way more than whatever minuscule loss I take on closing the calls. And, they can always be rolled out to eventually break even.

 

[mongo]

Thanks to the spike, I unloaded a 980c for today I bought at the wrong time earlier this week.
Looks like I should have dumped next weeks 965p also. Oh well, time is on my side.
Picked up a July 10 call spread for P&D fun.

 

[juanmedina]

Thanks to the spike, I unloaded a 980c for today I bought at the wrong time earlier this week.
Looks like I should have dumped next weeks 965p also. Oh well, time is on my side.
Picked up a July 10 call spread for P&D fun.

what strikes if you don't mind?

 

[mongo]

what strikes if you don't mind?

Warning: There is no rational basis for these numbers other than cost.
985,1045
so 3.8k max upside on 2.2k at risk, need stock at 1,007 to break even.

Edit: Whelp, my timing is bad.. rolled the 985 down to 970. break even now at 999.

 

[adiggs]

I finally acted as well on calls expiring tomorrow - 1020's and 1035s, both for under $1 ($.40 and $.90 I think it was).

Closed the 1020's netting about .70 each. Interestingly, due to the short duration of the trade, in $/day/contract, this is about my best covered call sale yet. That's partly an indicator of how low the premiums have been on the calls I'm willing to sell

Then decided to follow in @Lycanthrope shoes by selling the 1005 calls for today for .30.


I think @pz1975 is having an influence, at least on me - I'm doing some smaller dollar trades and liking the results so far.

 

[pz1975]

Closed the 1020's netting about .70 each. Interestingly, due to the short duration of the trade, in $/day/contract, this is about my best covered call sale yet. That's partly an indicator of how low the premiums have been on the calls I'm willing to sell

Then decided to follow in @Lycanthrope shoes by selling the 1005 calls for today for .30. I think the 1000's are equally out of reach, but I wanted the 1 extra strike, even though I lost about .15 premium for the extra strike.


I think @pz1975 is having an influence, at least on me - I'm doing some smaller dollar trades and liking the results so far.

Low stress, low profit trades add up. I'm over $9,000 profit this week so far if we stay between 950-1,020 at close, and that is despite being "wrong" on a couple of them (buying back 950 puts on Wednesday for a 1,100 loss and buying back 990 puts on Tuesday for a $4,000 (50%) profit that I thought were going to be 99% profit since I was expecting a jump this week). I'm not done yet as well - eyeing the $1,005 calls and more 950 puts.

 

[adiggs]

Low stress, low profit trades add up. I'm over $9,000 profit this week so far if we stay between 950-1,020 at close, and that is despite being "wrong" on a couple of them (buying back 950 puts on Wednesday for a 1,100 loss and buying back 990 puts on Tuesday for a $4,000 (50%) profit that I thought were going to be 99% profit since I was expecting a jump this week). I'm not done yet as well - eyeing the $1,005 calls and more 950 puts.

Do you do any option buys, or primarily sales? After a few painful experiences, I've settled on exclusively sales, at least so far. If I were to see 30% IV or something, then I might start looking at buys - at least thinking about them. Something really extreme like we had last fall

But anything short of that, I'm sticking to option sales.

 

[pz1975]

Do you do any option buys, or primarily sales? After a few painful experiences, I've settled on exclusively sales, at least so far. If I were to see 30% IV or something, then I might start looking at buys - at least thinking about them. Something really extreme like we had last fall

But anything short of that, I'm sticking to option sales.

I only do buys if I feel strongly about a possible move. I used to only buy options and eventually realized that I was essentially breaking even or losing money even the general trend of the TSLA SP was going up. Now my baseline is to sell options. I was waiting for a short squeeze for 7 years, and fortunately recognized it happening in January when the SP was in the 500s. I ended up with a pretty big 40 bagger after buying a crapton of way OTM calls.

 

[adiggs]

This is funny - that 1005 strike call I sold for today is STILL stubbornly holding onto a .02 to .04 premium. I've got a .01 close order in, and it keeps not quite filling.

I decided to milk this one for every penny (but the last - I'm going with the definite close, over allowing to expire, mostly on principle). That last penny is taking. f o r e v e r.

 

[riverFox]

This is funny - that 1005 strike call I sold for today is STILL stubbornly holding onto a .02 to .04 premium. I've got a .01 close order in, and it keeps not quite filling.

I decided to milk this one for every penny (but the last - I'm going with the definite close, over allowing to expire, mostly on principle). That last penny is taking. f o r e v e r.

Hmm...1005 calls were bought back for 1c about 5 minutes ago.

 

[adiggs]

Hmm...1005 calls were bought back for 1c about 5 minutes ago.

Yeah - mine finally filled as well.

My approach on this one - I'm making a point of closing positions before expiration, rather than allowing any of them to expire worthless. I'm not really worried about being assigned on a 1005 call, with shares at 970s. It's more about a discipline to ever avoid problems there.

But that last penny, or even the last 10 pennies - why bother? Mostly I don't, but another bit of my increasingly mechanistic trading, is I milk current positions for all I can when I don't have another position I'd like to be in. In the case of these calls, I decided I'm not going to sell new call positions today - I'll take smaller premium and sell any new positions next week. The extra few days will trade me premium for information.

And therefore, since I'm not going to get into a new position, get all I can from this one (subject to that 1 penny rule I have for myself).

And ooh! I got that last $1 / contract. Big money there

 

[ggr]

Hmm...1005 calls were bought back for 1c about 5 minutes ago.

Most brokers charge commission for even the smallest options trades. It's even possible that you paid them to do this.

 

[Tslynk67]

Most brokers charge commission for even the smallest options trades. It's even possible that you paid them to do this.

Indeed, I pay $19.95 for these trades. Nevertheless, I closed my c1005 for $0.01 as well (yes, it took a while to execute), so cost $20.95 - however, this frees up the 100 shares for AH/Monday PM trading, otherwise they're held in resave until around 30 minutes prior to market opening.

 

[riverFox]

Most brokers charge commission for even the smallest options trades. It's even possible that you paid them to do this.

My brokerage is Fidelity and they don't charge commission if it's under a certain amount(can't remember threshold). These buybacks were commission free. I did notice that my after tax account was triggered a few minutes earlier than my Roth.

Maybe there's just a big backlog of 1c buybacks? Form an orderly queue....

 

[EV forever]

Well, whatdayaknow - first time ever decided to follow your example and see a call - sold 2 for tomorrow 1035 - was happy I got 0.5.
And then, the stock decides to spike to 985!!!

Well, the position closed for 0.01 as well, although I had offered a limit order of 0.02. Not sure if I will do another trade like this risking some of my long term hold stock for small reward - but it is learning.

Also, Fidelity does not charge a commission for trades like these for pennies. So I paid a commission of 1.30 when I sold the calls, but nothing when it was closed with a buy to close.

 

[adiggs]

My brokerage is Fidelity and they don't charge commission if it's under a certain amount(can't remember threshold). These buybacks were commission free. I did notice that my after tax account was triggered a few minutes earlier than my Roth.

Maybe there's just a big backlog of 1c buybacks? Form an orderly queue....

Ditto on this (Fidelity and free Buy to Close orders under .65). Except today I thought I saw the message saying that commission free option trades are .10 and under.

The commission free trades are, I think, not unique to Fidelity. Here's eTrade's page:
Dime Buyback Program | E*TRADE

Here's Fidelity:
Trading Commissions and Margin Rates - Fidelity

Where we do have free Buy to Close on .65 options and down.


If I were in @Lycanthrope shoes, I'd have allowed today's options to expire worthless rather than spend the $20 for a trade. But we might also have different constraints on when resources covering 1 trade are freed up for another trade - I would expect them to be ready to go first thing on Monday (I don't bother trading the after or pre market), so expiring worthless is worth avoiding the $20 commission (I paid $4.16 all in for the 4 contracts I bought back at .01, so paying $20 commission on a $4 trade would make me crazy ).

And I'm sure we DO have differing details, not just the commissions, as we're on different continents with different constraints on how we access the US market.