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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
According to Yoona, October is TSLA's best month.... https://x.com/lastadam/status/1708212424749257131?s=20
I don't mean to pick on you, and if I'm wrong, please tell me so I learn. But this seems like the type of trading I try to avoid. Pure gambling. You have no idea what is going to happen and you just put up half your shares. I would have at least sold 30X ATM Puts. So if the SP climbs, you use the premium to get back the shares at a higher SP. But you went all in on a drop by buying Puts in addition to selling shares. What am I missing?
Edit: I see that you also sold near the money calls, so you went 1000% in on a SP drop. You might be right and win THIS time, or not....
I think he and I share an expectation of high probability of an SP drop next week or sometime in the next month a la dl003’s work. Personally, I would never try to swing trade half my shares, but I’m fundamentally a HODL guy who does a limited amount of market timing gambling with options and rarely share sales and purchases.
I agree that is what he is betting on. And it may happen, but it is a huge gamble. I thought about buying back 150X end of October 220 Puts and selling them again after a drop, but I didn't want to risk losing $2+ dollars/contract if I was wrong, so I just held them. Now if we gap down on bad numbers, I may buy them back and sell them again after a bigger drop, but I'm going to confirm the action is happening before making the move.
Just 2000 TSLA shares right now and they're for trading. Looking to get back in if we get a substantial correction
No Ih have lots and lots of +LEAP calls and puts, lots of -c and -p against those, and lots of +p200's that I sell 50% against
My wish would to trade sideways either side of $250 for October, then slowly climb back to $300 by end of year, then consolidate there for 2024
I also have a dream scenario where TSLA repeats last year's drop to $100, then I could close out my +p200's, but 10000x TSLA with aggressive puts down there and pocket a bit wedge of cash in the process... but I really doubt that will happen, not without a black swan
Model Y in China has received a handful of changes, slightly better range, acceleration, ambient lighting, etc., that's a positive catalysts for Monday, as well as the M3 Highland being released for sale
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Quick recap: Perhaps the most important development over this last week was a full 5 wave was completed in TSLA. Why is this important? Like usual, the key question we ask ourselves at the end of an aggressive move down is whether this is it or there's going to be further downside and if there's going to be more downside, how bad is it going to be?
Well, a full 5 waver for the first move down is about as bad as it can get. The first move down can come in either 3 waves or 5 waves. If it comes in 3 waves, we can have a lot of options for the 2nd leg and it can even be debated whether there'll be a 2nd leg at all, since technically a correction can end in 3 waves. In case of the 1st 3 waves make up only the first leg of a correction, the 2nd leg down can far exceed the 1st leg, exceed it just a little bit or even end prematurely, resulting in a bull pennant like this:
And the takeaway here is all "benign" corrections require the first leg down to come in 3 waves.
Well, a full 5 waver for the first move down is about as bad as it can get. The first move down can come in either 3 waves or 5 waves. If it comes in 3 waves, we can have a lot of options for the 2nd leg and it can even be debated whether there'll be a 2nd leg at all, since technically a correction can end in 3 waves. In case of the 1st 3 waves make up only the first leg of a correction, the 2nd leg down can far exceed the 1st leg, exceed it just a little bit or even end prematurely, resulting in a bull pennant like this:
And the takeaway here is all "benign" corrections require the first leg down to come in 3 waves.
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That's not what happened in TSLA last week. We have 5 identifiable waves. Aggressive. When the 1st leg is a 5 waver, then there's only one option on the table: a zigzag correction. In a zigzag correction, the 2nd leg will also come in 5 waves and it will almost always end beyond the end of the 1st leg (234 in this case).
About the only thing up for negotiation at this point is how high the dead cat bounce is going to be and how far the 2nd leg will get to. In a zigzag, the dead cat can get up to anywhere between 251 and 269. Most will end below 256. However, P&D comes in tomorrow premarket and that can be fuel for a more aggressive dead cat, with 269 as the target. However, going by the book and probabilities, 256 would be it so that's why I made the call to short at 251-256 on Thursday.
About the only thing up for negotiation at this point is how high the dead cat bounce is going to be and how far the 2nd leg will get to. In a zigzag, the dead cat can get up to anywhere between 251 and 269. Most will end below 256. However, P&D comes in tomorrow premarket and that can be fuel for a more aggressive dead cat, with 269 as the target. However, going by the book and probabilities, 256 would be it so that's why I made the call to short at 251-256 on Thursday.
Now, let's start with plan B. If P&D comes in tomorrow hot, beating expectation by 20k again, then we may expect 269 to be reached, resulting in something like this.
That dead cat is, however, still going to fail, and head backdown going into and continue after ER. However, it's not going to be a disaster, with 225 as the target.
Big picture, the 279 - 225 down move is going to be the 2nd leg of a sideway correction that started at 298, like so.
From there, TSLA will either going up to make new ATH in 2024, or it will do another dead cat, before breaking out to new ATHs.
However, I call this plan B because its probability is extremely low, both on the lower and the higher timeframes.
That dead cat is, however, still going to fail, and head backdown going into and continue after ER. However, it's not going to be a disaster, with 225 as the target.
Big picture, the 279 - 225 down move is going to be the 2nd leg of a sideway correction that started at 298, like so.
From there, TSLA will either going up to make new ATH in 2024, or it will do another dead cat, before breaking out to new ATHs.
However, I call this plan B because its probability is extremely low, both on the lower and the higher timeframes.
Plan A, then, would be the more bearish one. 255 on Friday was it and the stock would drop immediately on Monday, or chop sideways for a week, before dropping as big banks start cutting ER estimates. It can end anywhere between 210 and 172, or even lower, but for the sake of having an actionable game plan, let's say 192.
This plan A is both more likely to happen and supported by price actions during the last 3 months.
This plan A is both more likely to happen and supported by price actions during the last 3 months.
According to Yahoo, Q3 earnings estimates are already down to 0.78. A lot lower than the 0.91 we had in Q2. I'm guessing Tesla Energy will bring in even more revenue in Q3, so estimates are probably too low.
Hard to estimate what kind of upside energy would provide (but I agree it will be better than Q2), but I do think Tesla might recognize a lot of the FSD deferred revenue as “autosteer on city streets” was delivered for pretty much anyone who has ever paid for FSD. However, that won’t be a quality earnings beat as investors might still focus on automotive gross margins excluding the recognition of deferred revenues.
I recognize and agree that how I positioned myself is risky and I may come to regret it. For me there was enough data especially with what @dl003 has been posting to lean to downside coming, even if not steep. Even if TSLA does race on Monday I'm counting on it retracing at some point at least to $250 where I can get back in. Part of my learning process.
Edit: Re your idea of selling 30x ATM puts instead of 3,000 shares that's something worth considering. Is there a downside, such as getting trapped in them if things tank? I'm definitely open to learning methods to make the bet I did in safer ways.
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Thank you for writing this up. Based on this scenario, if we retrace tomorrow it seems to get back in at $245-242 and watch if it bounces?
So another end of 2022 2.0
. At least this time I have zero margin but that would be horrible. And Elon is adding fuel to the fire on Twitter. Great!Im very light going into Monday, except monthly put spreads and naked short leap calls.
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