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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
jeewee3000
Active Member
The possibilities are quite literally endless, given you have extra cash and/or shares on hand. This thread is full of examples of this (our member @Max Plaid is most known for strats like this) but beware: these strategies can be considered "throwing good money after bad money" by some more strict traders like @Yoona .
Personally I have evolved to carefully select the positions I open so that I don't feel bad in the worst possible case, i.e. all my sold options are executed.
That said, in my case I can:
- split a sold call into multiple calls with higher strike price (for example this week I had -255cc's that I turned into twice the amount of -260cc's for a credit. This was only possible since I had shares "unbound".
- the splitting can be extreme, for example you have 1000 shares and 5 sold cc's against them. Say the cc's (250's for example) go ITM and you don't want execution. You roll 4 of the 5 250's one or two weeks out and the fifth cc you split into six cc's at much higher strike, to have this expire worthless. Then you do the same the week after that (3 out of 4 you roll out, the fourth cc you split into seven cc's to let the expire worthless). Rinse and repeat. Only very DITM postions are unsolvable (think Hertz rally), or if you don't have enough free "cc slots".
What you can also do to very slowly get out of cc's is to unevenly split the cc's. For example you split one 250cc into one 260, one 270 and three 280's (of the top of my head, not tested with true premiums, but you get the point). Even if some of the resulting cc's end up ITM you have let some amount expire and you can split-roll again the next week.
- you can flip a cc into one or multiple puts, or into a straddle or strangle.
- ...
The resource you miss out on is time (and the possible income in this timeframe). If you need 6 weeks to "fix" a position that went bad you have 6 weeks without income and/or portfolio growth. If the SP however keeps rising then the rolling is a decent strategy, since you can increase the strike prices and therefore the value of the shares.
The "fixing" is not good when you waste time AND the SP crashes below the initial strike price so your portfolio/share value drops again.
Managing ITM positions is not always worth it. It all depends on your personal financial situation and outlook, tax liability etc.
Personally I don't need the income since I have a full time job. Any extra income gained is used to sell puts against to acquire more shares when the SP is at a (hopefully) local bottom. I prefer not to play the Wheel if I can help it due to tax reasons. Only when I'm quite sure the SP will reverse I let the options execute.
Of course sometimes an early execution happens with DITM positions but sugar happens. It's part of the game. I try to prevent this by not letting remaining theta drop too low so that , in case an early execution happens I welcome it since I have then gained the theta value "for free".
I'll end it here since this post is a repitition of many many earlier posts, but the TL;DR is that you can do so much with backup cash and shares. Always having some cash/shares available is my greatest personal risk mitigation strategy. It helps me sleep peacefully at night.
Almost did today.... But I'm waiting too see if we break 270 this week. I also think P&D is going to be good, so I might wait until next week. Definitely will sell them before earnings as people on X with a good track record are predicting lower EPS this quarter and very low free cash flow due to high Cap Ex, so I think we drop after earnings.
Edit: Total guess on my part. Not advice....
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This week I deliberately didn't roundtrip my 12/29 -C270's (@$1.10) saying let me ride them this time in case I don't get the chance to re-sell them at the same price of the first STO. Well, that didn't work out since I could have BTC yesterday at lows and STO this morning @$262. Oh well. Truth is though hindsight is a fallacy since only now do I know what happened to SP and it could have just as well stayed down.
Definitely keeps us on our toes!
thenewguy1979
"The" Dog
Crazy day isnt it. Up and up then down then up… which way shall end up (or down)
Seem up but Wicked did mentioned we have to close Friday above 262 for this to be a bull run.
Be careful as Macro is down and you know there’s always that one crazy guy with money to buy another $1m in SPY puts.
This market is *sugar*. No good pullbacks to get in. Entire market is extremely bloated.Crazy day isnt it. Up and up then down then up… which way shall end up (or down)
Seem up but Wicked did mentioned we have to close Friday above 262 for this to be a bull run.
Be careful as Macro is down and you know there’s always that one crazy guy with money to buy another $1m in SPY puts.
My opinion, this is pretty much all $DXY related for this week. Dollar down .6% just today alone and could soon break the stupid 100 numerical barrier in the index. That is bullish for stock PRICES, but doesn’t change any real underlying fundamentals, macro, other inputs.. at least not much.
There’s a LITTLE bit of maybe/possibly/might be P&D FOMO going on, and 1/2/24 could be a solid up day in the overall market, due again to $DXY falling, which could push things higher again.
Premiums on calls I sold for Feb 2/23/24 $265 are selling for EXACTLY what I paid for them eight days ago, and yet looks what happened in the past EIGHT days with the overall market, and even Tesla.
At this point I might buy them back at $0 debit, and look for even MORE premium somewhere a bit farther out, but overall the richness doesn’t seem to be there yet, which to me is telling.
There’s a LITTLE bit of maybe/possibly/might be P&D FOMO going on, and 1/2/24 could be a solid up day in the overall market, due again to $DXY falling, which could push things higher again.
Premiums on calls I sold for Feb 2/23/24 $265 are selling for EXACTLY what I paid for them eight days ago, and yet looks what happened in the past EIGHT days with the overall market, and even Tesla.
At this point I might buy them back at $0 debit, and look for even MORE premium somewhere a bit farther out, but overall the richness doesn’t seem to be there yet, which to me is telling.
I entered +250/-245P and -300C for 1/19.
Looking at history, TSLA often runs up in the last days leading up to P&D. However, the starting point of the run up can be a telling sign of what to come between P&D and ER.
If TSLA ran up near the very top, then the stock would go up after P&D
If TSLA ran up near the bottom, then the stock would also go up
If TSLA ran up near the top of a big dead cat, then the stock would drop after P&D
NTA.
You feel this may be option #3, a big DCB and we drop next week, maybe $240 and circle up?
I so badly want this 240 discount. Hope we go down.
I want to take it step by step at this point, so a drop first then we'll see.
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