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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
We're looking at a smaller timeframe chart that assumes 194 was the bottom of this down leg. It cannot predict what comes after this rally because we still don't know what this rally is. It can be a new bull run or a dead cat. It's too early to tell.
Couple of things I do.
First is that I don't hold to .01, which is usually expiration day. Once I've reached 90% profit (and actually more like 67% profit), then I close it out. At 90% I've found there is very little money left to earn in one of these positions, but the risk of a big move against me is too high to keep the position and eek out the final few pennies.
The second thing I've done is on winning positions I disconnect the roll transaction. I do a close transaction (as described above) and then wait a day (or more) to open the replacement position. I reserve rolls for "losing" positions, which can include positions that aren't (yet) ITM.
For actual rolls (losing positions) I probably am too much in the "it depends" camp. The easy version is that when I've got a position where I like assignment (like the 200 strike puts I had for today, that were ITM a couple of days ago), then I just hold and let them assign.
I'd say that the further from a strike where I'd like to take assignment, then the earlier and more aggressive I am about rolling. The further from a desirable assignment strike, then the more likely I think I'll go DITM and that is what I'm really guarding against. I like to roll near / at the money, but before the option goes ITM. I also bias heavily towards rolling for a max strike improvement (or at least to a desirable strike), and treat any rolls as weeks (or months) break from earning income. I only roll for a credit.
Balancing this, the closer to expiration for the roll, the better. The roll starts by buying out the current / losing position and the further from expiration then the more time value that is being bought out. Everything else being equal buying out less time value is better than buying out more time value.
I've gone through a period in my trading strategy where I was trying to stay in the market full time with either puts, calls, or both. I would do this by rolling winning positions near expiration. I've evolved from there and I don't try to stay in the market all the time any longer. To stay in the market all the time means my BTC at a relatively good price necessarily means the STO is at a relatively bad price (and vice versa).
Nominated for posts of particular merit.
nice job
One thing I can say with certainty is once the gap has been tested, we'll see 240. A 5 waver not a one off. What really concerns me, though, is a lot of other prominent stocks are behaving erratically, much more so than TSLA if you can believe it. For example: NVDA. My feeling right now is, unfortunately, this is just a short squeeze and we'll be rejected at 240-245, but that's just a feeling. The chart says stay bullish until we've broken out of 230.
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This is my approach, too, since I can't predict movements, either. I keep around $80-100K in cash, and wait for these monster plummets, at least a sudden 10-15% move down in the SP within a week. I set a low buy order, then cash out after a $20 move up or so. I bought 100 shares at 211, another 100 at 201, and cashed both positions out today at $224.15. That's good enough for me. If TSLA would've dropped to 180 this week or last, I might have bought another 100, but maybe not, just depends on how I feel about things at the moment.I'm not expecting a dump or a rise: I'm bad at predicting stock movements. So I simply try to buy low and sell high.
I'd like to say that I'm a bright investor for buying near the low of the week and selling near the high of the week, but in reality it's a combination of luck and a bit of instinct.
These are my trading shares. In September I sold 750 shares at $276, after buying them earlier in the year for an average price of $215. I was flat from that moment on and planned to start accumulating again below $200. The 200 shares at $195 were the first buy. If the stock had continued down I would have bought a few hundred more after every $15-$20 drop. It never came to that.
If the stock then runs up $30 in just a few days, I already get some vertigo. And if I can then grab a quick $6k I'm not going to waste that opportunity. They are trading shares after all.
Other than keeping up with Teslarati, Electrek, this forum, Elon's twitter, and the investor roundtable, I don't consume any MSM, other than a cursory glance at my stock app to see what the Global Puppet Masters want us to believe/fear.
I'm also of the opinion that just because the markets are open doesn't mean one should trade. I don't trade most days, and I've found I lose money when I overtrade. Like tivoboy, I also don't chase the SP. This morning I set my sell order and went for an early morning hike. Glad it hit. If it wouldn't have, that would've been ok, too. I never make bets I can't afford to lose, and I don't care if my trading shares go underwater for a long while--I consider underwater trading shares a "time out," and for me to contemplate what I did wrong.
For now I'll think about buying again if the SP drops below 190. Or maybe not. Just depends how I feel. Like Buffet says, "Rule number one is don't lose money."
NVDA earnings are in a little more than 2 weeks (Nov 20th). I think it's more of a run up to earnings, like it had done last quarter.
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Don't know if this will impact next week. Elon is in Berlin and just said that the $25k car will also be built there. So next gen model in Austin, Mexico, and Berlin. When people realize they have been lied to by the media about weakening EV demand affecting Tesla, TSLA could bounce.
run up good, good for call selling and scalping..
I’m just waiting to hear this on their earnings call and forecast.
“It’s uncertain whether or not 25% of our projected sales will be impacted by China selling restrictions by the US Gov’t“
Honestly, what this tells me is that they have capacity in Berlin and will continue to put on HOLD the Mexico facility..just a thought.
I took it to mean that the $25k car will be in such demand, that the gigafactories on EACH continent will be building it. So Mexico will still proceed. Much like how the model Y is built in all sites. I think Elon's comment was just stating the obvious and it got blown up out of proportion by the media.
Sorry, leftover text from another post that didn't get deleted (that's why it showed up BEFORE your quoted text). I'll edit it out now.
EVNow
Well-Known Member
Thanks for writing this. I think as a group we should come up with "safe - be the house" strategies. Clearly my strategy is not safe-enough.
Couple of questions before we get to other things. What delta / % OTM do you write options ?
Yes, that makes sense. A lot of times the last couple of days, Theta is very low. If I sell 30 cent options, obviously 90% won't make sense (closing at just 0.03 and will be hit only in the last couple of hours, most weeks). So, 2/3rd or 3/4th would be more appropriate. Once we decide on the amount, we can also set a close limit order and let it ride. Ofcourse to get the same premium - we have to sell higher delta / lower % OTM options (since we'll only make 2/3rd or 3/4th earnings). So, higher chances of them going ITM and more rolls !
Yes, this follows from the first rule above. More importantly a lot of the statistics we have (like 10% OTM is "safe") are for Friday/Monday to Friday. We have to suitably modify those if selling for more days.
Sounds like a good plan. So, if the SP goes against you and comes close to strike (say with 1% or 2%), you would roll it. In this week's example, would you roll 220 calls on Thursday when we can to 218 / 217 or even 215 ?
Yes - but what do you do - say when you sell a call on Monday and on Tuesday SP has gone up already ? Do you roll or .... wait and roll the dice?
Difficult to say what the best time to STO or BTC is. This can only be said in hindsight. For eg - lets say we sell a call at 250. The SP is slowly raising but by expiration day only reaches 245. The best time to BTC would be end of Friday - and if the SP is slowly raising STO might also be Friday !
But in general I think the best time to sell might be early morning, when the IV tends to be high. Past couple of weeks I've been trying to enter limit orders to catch the early Monday morning volatile action. Ofcourse - won't work all the time. Like last week I had to sell 220 calls instead of 230 since SP went down on Monday. I'll checkout OptionStrat that @Max Plaid mentioned to set limit orders.
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all good. What I meant is NVDA is running up almost in a straight line, $60 in a week. For momentum trading this is great. Big picture, this is not a healthy start of a bull market. More like panic short covering and the structure is corrective. It might be counter intuitive but a healthy bull market should be tested early on which results in identifiable 1st and 2nd waves. These would then serve as the base on which the entire bull run is built. This rally in many stocks, although aggressive, has not been tested at all. There are no fundamental development to warrant it. I was hoping for a Santa Rally in SPY to new high but now it seems what we have might be a huge dead cat. SPY is still fine, within allowable boundaries but many components, NVDA included, are firmly in the dead cat category.
I have nailed TSLA, NFLX, MSFT, AMZN, META, GOOG and AAPL earnings this season. Only thing I got wrong was AMD. Shorted it to 93 but reversed AH. I posted my TSLA and AAPL calls well ahead of time so you just have to take my word for it: I bet on and profit from earnings almost daily. Up or down, there are differences between a well structured trend and a panic long / short squeeze. Squeeze happening at the end of a trend = good. Squeeze at the beginning of a "trend" = trap.
The good news is, for TSLA, this is not the case. The structure, although veering on the most extreme limits allowed, still shows the bulls have been tested and prevailed. Lets see if Tesla the company can turn this into a real bull before macro turns sharply down again.
I truly dont know what we are going to see first, 300 or 150, and you know how much I like to predict.
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Do you have any comments on 10 year treasure TA? If what you are saying is true, we should see huge dump in bonds that correspond to macro taking a sharp turn downwards with 10 y interest breaking 5%+?
That's @adiggs and @EVNow for covering safety! This week I netted .14 out of a target of .50; position totals aim to be in a range of .60 to .75 . Instead of % OTM (may need to add that dimension too) I've been choosing .05 or less delta for weeklies and found that most my trades can be closed early with 90% gains. I did exactly that with an IC, each leg at .05 delta, being close to 220, I had to move it up by $15 and out to 11/17 for credit. That will give me room this coming week to roll back and expire, giving back that roll credit if needed. With as much insight that we gain through our own sharing, what seems to be safe eventually fails to be. As has been said by many, close on sharp momentum shift, reset with another position or sit out.
at this point in the cycle, the next mk crash probably is not gonna be caused by yield. I dont follow US10Y that closely but it was peaking for sure. In recessions, mk bottoms *after* rate cuts, which means in the later stage, US10Y and SPY *both* go down at the same time. If we truly have a soft landing, then lets revisit.
Interesting. I feel like the current macro situation is tied to rates hand in hand. The longest bull run in history was tied to there being no good alternatives to equities and the availability of cheap money. The volatility introduced to the market for the past 2 years were tied directly to the fact that this is reversing in one of the most violent way possible. The actual economy is kicking a lot more ass than expected because this trauma of having one of the fastest rate hikes in history is not even bringing down gdp growth or the job market. There's a good portion of rates that is just speculation and bond shorting which would result in a short covering unwind if you truly feel that rate hikes are done. This actually is very bullish for the market as there's incredible pent up demand when real rates for mortgages/cars drop 2%.
So TA on treasures I feel is required for any future predictions on spy.
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