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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Where do you think the SP will end up this Friday? I assume some traders will start taking some profit soon. I think I am going to try to sell some call credit spreads at open for Tomorrow. Other than that I think I am going to be off line for the day so I don't make any irrational decisions
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jeewee3000
Active Member
Well that would be extremely agressive since your shares will not yet have been called away so you would need a large cash position to do so.
The point of this whole thread is "the wheel", i.e.:
1) sell CC's;
2a) if CC's expire worthless, repeat;
2b) if CC's don't expire worthless, let shares get called/option gets exercised;
3) your shares get called away and you receive the price of the sold shares;
4) sell puts against the cash received in step 3.
5a) put expires worthless, repeat;
5b) put doesn't expire worhtless, let option exercise/shares be assigned to you;
6) you receive shares and lose the cash equivalent at the strike price;
7) sell CC's ........
What strikes you pick for the puts depends on:
- your cash position;
- your read of the market (CC's are best sold at SP peaks, puts are best sold at dips)
- your risk aversion.
In theory you could set the put strike the same as your CC strike to make sure you'll end up with the same amount of shares after The Wheel turns fully, BUT if SP never goes down again to that level (in your case 660?) then you have less shares to profit from if TLSA were to go 2daMoon. You can of course keep selling puts against the freed up cash and use the put-premiums to pick a higher strike each time, edging closer and closer to the (rising?) SP.
Build a strategy, learn, adapt.
Open Interest has updated and there's still a lot of 650, 660, 670 calls, although the 650's have reduced a bit. I've tried looking at rolls for some IC's and CC's and they don't look great. I'll wait a bit and see if it can move down before making a decision as I'm reluctant to realise a loss early while realising it can soon ballon out.Where do you think the SP will end up this Friday? I assume some traders will start taking some profit soon. I think I am going to try to sell some call credit spreads at open for Tomorrow. Other than that I think I am going to be off line for the day so I don't make any irrational decisions
Covered Call Advice
I have some covered calls that are ATM and some that are ITM that expire this week. I would prefer not to have my shares called away. I'm not sure what all the fancy options are, however i see 2 alternatives. Do i roll when they are ATM? Or do i hold on until closer to expiry tomorrow hoping we get a pull back to Max Pain, and if we don't roll tomorrow when they may be much more ITM.
All non advice is welcomed.
I have some covered calls that are ATM and some that are ITM that expire this week. I would prefer not to have my shares called away. I'm not sure what all the fancy options are, however i see 2 alternatives. Do i roll when they are ATM? Or do i hold on until closer to expiry tomorrow hoping we get a pull back to Max Pain, and if we don't roll tomorrow when they may be much more ITM.
All non advice is welcomed.
jeewee3000
Active Member
The time value drops faster for calls expiring tomorrow than calls expiring next week or after that, so in theory holding until at least tomorrow afternoon is the better option, except if you're sure the stock price will surely keep rising today and tomorrow.
If you don't want to lose your shares, I would roll aggressively. You don't want the SP to run away from you and cause your ITM calls to go DITM, because at that point it will be tough to move the strike up much by rolling.
I'm going the other way - increasingly less aggressive. So yes - I'd go even further OTM than the 720 strike you've got there. I don't know where the calls land at .10, but that'd be what I mean. REALLY far OTM.
Note that as of last night I'm changing even that - I'll be sitting out covered calls for I don't know how long. I think that there is too strong of a likelihood that trading patterns changed yesterday, and that nobody will know what the new normal will be for awhile. I don't know if awhile is a week, a month, or a quarter. And I don't see my sitting out for a quarter.
I am closest to @MikeC on this one, and for precisely the reasons he listed. I've gotten DITM and this is how I avoid, or at least mitigate that (and get a better strike price when I do get assigned). My personal rule is that I roll when the option is ATM. I probably don't roll at $5 OTM and I definitely want to roll by $5 ITM.
For these rolls I add 1 week to the expiration and improve the strike by as much as possible while still receiving a net credit. I've been in a situation recently where I did 2 of these rolls on the same day. Today I'll do the second one of these rolls in 2 days as the 675's I rolled into yesterday are already ITM today.
It's moves like yesterday and today for this personal rule. When I did this before I got $25 on the first roll (strike improvement) and then rolling from 2 weeks to 3 weeks I got more like a $15 strike improvement. I'll keep doing this until the option is 4-5 weeks out and then its time to consider assignment and option sales on the other side (i.e. the wheel).
I got a chance yesterday to roll my 650cc and 660cc to next week but thought today SP would drop because yesterday rise like crazy.
Do you mean you roll to next week, or 2-3 weeks after?
Actually an addendum - I would also look at 2 week rolls when rolling for time and better strike. I've seen situations where the 2 week roll is significantly better than 2x the currently available 1 week roll.
It has the downside of losing weekly strike adjustment, but it may have the benefit of a significantly better strike improvement. And the strike improvement (governed by the net credit 'rule') is the real point. The incremental time is the necessary cost of the strike improvement. We're buying time for the shares to reverse or at least pause.
And if it just keeps going, then we improved the strike and will get to capture that improvement, $ for $, when we take assignment to work the other side of the wheel. (Be sure you are actually ready to run the other side of the wheel).
Mostly I roll out 1 week. But I also want to look at the 2 or even 3-4 week rolls. At $650 or 660 you are probably already enough ITM that you're looking at a $5 or maybe $10 strike improvement. And you might need to add 2 weeks to get those. Lower IV narrows the window where you can get a strike improvement, while higher IV expands that window.
I have previously (back in Feb) been able to add 1 week and gain a strike improvement while $80 ITM. That doesn't work right now.
I don't know what to make of this, but it sounds like it might reduce the ability of short sellers to manufacture shares and manipulate the share price.
New NSCC Rule Change Poised to End the Short Squeeze Saga - Tokenist
Despite having ties to regulatory bodies, it seems that some market makers have become too much of a headache.tokenist.com
This link comes from another thread elsewhere on the forum (New SEC Rules). Following a link inside that article takes me to:
Which sure sounds like this went into effect today, June 23.
Again I don't know what to make of it, but I'm thinking that I want to be extra careful to the upside until I have a better idea on whether trading patterns are going to change.
NOT-ADVICE.
MORE NOT-ADVICE.
I wanted to follow up on this. I still don't know what to make of this and more importantly form an opinion about what this will do to trading patterns in TSLA. This may well be a nothing-burger.
The point is that I don't know and from the point of view of selling covered calls, the possibility that this is a 'hidden' version of the 5 for 1 share split last summer that roughly doubled the share price (that's what I remember anyway) then I really don't want to be in the way of that.
My understanding of TSLA trading patterns has arisen from most of a decade following the company closely. More the strategy and execution side as a long term investor but I couldn't help but pick up some information about the short term movements as well. There are patterns that people talk about here and have some success trading - Monday morning pops. Early morning dips. Market makers pinning the shares to a share price that we can pick out sometimes a day or 2 in advance (some of us much better than others).
An important / integral component of that many year history of short term share movements has been the subset of market makers that have been pushing bad news and manipulating the share price downwards. It's been a constant pressure keeping the lid on. The pressure builds too high now and then and explodes but the pressure is steadily there.
This -might- change all of that. And it might mean nothing.
If it does change the functional ability of short sellers to manufacture shares and manipulate the share price downwards, then that change will have the effect of taking manufactured shares out of circulation. Worse for those short sellers, they have to buy those manufactured shares back at a constantly increasing share price right now. Net fewer shares in circulation (pushes share price upwards) that requires the manufacturers of those shares to take them out of circulation (buying pressure that also drives the share price upwards).
I've mentioned off and on my view that we needed something that would draw significant new buyers into TSLA in order for the share price to experience a large and sustained increase in the shares. IF this dynamic I just described is happening, then this is the source of significant new buyers I haven't seen showing up this year.
Again the point is that I don't know.
What I AM doing about this is acting on this. I've rolled all of my near term / near ATM calls out a week. I probably should have just eaten the losses on these but I'm sticking with my roll aggressively pattern for these and we'll see where they go.
I have closed all of my call spreads, mostly for 40-70% losses on the positions. I was seriously expecting a pull back to the 650ish range yesterday during trading. I think that if I'd have seen that note about changes then I'd have closed these yesterday during trading just in case. But I didn't, so I didn't, and I closed today. (Ouch). The put spreads that expire tomorrow I've left alone. They've got a spread value of maybe $0.30 left and I feel have little chance of going ITM. Little enough that I'll take the risk and leave them to expire worthless (hey - I've got to start earning back those losses somewhere!)
On the plus side those hell puts I've been pushing along are looking a lot better the last couple of days. And if what I'm concerned about and repositioning for comes to pass, then they'll be resolving in my favor soon!
I do have an addendum about this far OTM idea. It's a great way to skim a few bucks here and there ... until it isn't. As are most all of these different strategies.
The problem if you're not ready to take assignment is that if the shares DO move a long ways and that far OTM option goes ITM, then you collected very little premium along the way to offset that. In effect you go from OTM to ITM to net losses VERY quickly. If you are nicking $1 per week with these far OTM options and you do so for an entire quarter (13 weeks) and then you get a move that goes $20 ITM, then you've got a net -$7 to show for the quarter.
Every position has risks and rewards, costs and benefits, and if you can't identify those and their relative magnitude, then you need to keep looking.
RIP my sold CC's lol
Didn't want to post because a lot of people have ITM or DITM CC's this week but oh well.
As I have mentioned many times up thread - IV is low, it has spiked 10 points this week however under 60 for me is low and not worth selling CC's or CSP's until it goes up.
Buying options is just too good of a deal to pass up.
I have been buying calls and rolling them up and out a week as they double in value and getting a credit plus an additional week of time value.
Just something to think about.......
As I have mentioned many times up thread - IV is low, it has spiked 10 points this week however under 60 for me is low and not worth selling CC's or CSP's until it goes up.
Buying options is just too good of a deal to pass up.
I have been buying calls and rolling them up and out a week as they double in value and getting a credit plus an additional week of time value.
Just something to think about.......
Xepa777
Banned
Anyone holding -c700s expiring tomorrow? I feel like it should stay under 700 but I've been here before and I don't want to get run over by this steamroller again.
At the very least I suggest setting up a roll to see what it looks like. If you can get to say $725 for July 2 expiration do you like that better than $700 for tomorrow?
Or another possibility is to take the loss while its still small. The best I've come up with to avoid the steamroller is that when its close, the disciplined thing to do is get out of the way. Or at least as much out of the way as you can.
jeewee3000
Active Member
I've got some-c700s expiring tomorrow.
Currently I see a possibility to roll up and out to next week -c750's for the same money. Two weeks 780. Three weeks 800. Four weeks 820.
I'm going to hold on some more. If the call wall at 700 gets broken on volume I'll roll. But we're not there yet.
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