Wiki Selling TSLA Options - Be the House

[thenewguy1979]

"Speaking for myself" that butterfly trade is interesting, I'll need to get more seat time before I try it on my own, seems to need oversight. I'll be selling the same call end of the IC, not sure I want to be so close to the put side but will look to open the put side first being we are slightly closer to it price wise, -p220 tops, most likely -p215 only if we get a good dip. Each side will be 30 wide.

Note to self: Last week I closed a position by not sticking to the plan. Much of it had to do with some time I needed for myself and family, no time to watch the ticker. Clearly, the spread was quite safe and as pointed out by several others, silly to have closed it at what I opened it when I could have clearly rolled it. Oh well, nothing earned, nothing lost.

I chooses 235 for the put since the consensus was it was base before we round up.

Maybe hot but the max profit to loss is quite good. I don't need 90% win. Some loss is accepted as long as I do the trade consistently and on an equal cost value each week.

 

[intelligator]

I chooses 235 for the put since the consensus was it was base before we round up.

Maybe hot but the max profit to loss is quite good. I don't need 90% win. Some loss is accepted as long as I do the trade consistently and on an equal cost value each week.

That's a good point. A $5-6 move up in SP, hop off for a clean 50-70% same day... hmmm.

 

[Jim Holder]

I've been thinking a lot about your strategy of scalping premium on longer dated Calls. This has probably worked well this week because the SP has been going down. I don't see it working well when the SP is rising, and for me, the premiums aren't good enough on something like a Jan 2025 350 Call. Am I wrong?

A few musings about what I find guides my trades based on my experimenting:

1) Laddering! Big time helpful to me. 10-15 CC contracts at a time at local daily pops, most often during opening 15 minutes (this past summer/fall this pattern of pop/fade was exceptionally reliable). And closing when I see decent green. It annoys me to see green disappear as SP recovers. While I definitely leave money on the table during times when SP keeps going down further, I’m pulling in gains consistently while also removing risk by closing the CCs (!) and by watching the SP movement I gain the freedom of choosing new better, sometimes higher strikes (and often higher premiums on the same CCs I already closed) based on the data the unfolding day and week presents (this edge is underrated IMO). I haven’t needed to roll much if at all in months. I don’t know if this means I am too risk-adverse or just lucky. The money is good so I don’t really care

2) I choose strikes/DTE not more than 0.10-0.13 delta +TA UNLESS I expect a TA/EW dump between now and expiration (thanks @dl003) then I’ll chance even 0.20-0.30 +TA (like -C300 3/2024, expecting a dump in or around Feb, but likely not exceeding $300 anyway if not and time to fix if yes). Always prepared to roll up and out if surprised. And since I’ve laddered, only some will be in peril. The rest I can close for whatever gains they have, big or small. Yes, this means sometimes what I got $1.50 for I could have gotten $8.00 had I sold later after a major pop, but that doesn’t happen very often and meanwhile the consistency of income wins out for me.

3) I only choose strikes I’m okay my shares getting called away at (I have a tranche at $298 CB and a tranche at $358 CB). I take a bit more chances on closer DTE (7-10 days) when I have higher conviction that SP won’t exceed a certain level (like $270 recently).

4) I remain hyper-aware of the waves and trends, so when we finish a run, congest, and come off highs (like $265 recently), I give myself permission to become a bit more aggressive in selling more contracts and choosing closer strikes when selling CC’s. Same for the inverse, when we carve out a seeming low (like $235 now) I’m more careful and go higher out on strikes and increase short puts. If I mess up and can’t roll for credit I just rebuy or sell the shares that get called away or put to me, hopefully with not too much damage.

5) I don’t have the guts or nerves yet to sell ITM+near expiry CCs (and never -P) and do so only on rare occasions, like when we approached $300 I sold a ton of CC’s for $310 and with the high IV then it was a great sale. I was okay to let the shares go at that price, and was even more thrilled too when it never hit and I kept the shares and the premium. @dl003 does this well and I hope to learn more and try this over time as my trend-spotting gets better.

6) Like a pot of hearty soup always on the stove in the winter, in addition to my weekly scalps I always have on decent-sized exposure for large sudden swings up (-P LEAPS) and down (-C LEAPS), leaning heavier on each side depending where we are, a trough or top. I like LEAPS since they offer time to fix things if I made a bad choice and they move quite strongly on wide SP movement too. While I used to use far out LEAPS for these (2025/2026), @Max Plaid taught me the value of having some closer-dated LEAPS (like September 2024) which open up rolling opportunities and I add some closer in like this as well to great effect.

I’m still learning and experimenting and I’m sure there’s more I can add to the above. And I’m really no expert. Credit really goes to the team here and really @MikeC who taught me how to extricate myself from a mess I made in June 2023 and I’ve been building on the foundations I’ve learned from him during that debacle, and the great ongoing education here from @Max Plaid and @dl003 and the rest of you.

Bottom line for me is the extreme importance of effective risk-management and keeping greed and impatience in check as it underpins the success of any strategy.

 

[blckdmp]

Wondering if we could get an informal survey of people's preferred time to roll a losing position? (When the SP hits your strike, a certain percentage ITM/OTM, depends on other factors, etc... ??) I'd be interested to see what works for everyone, especially paired with what we've gleaned of various posters' risk tolerance. I feel (perhaps wrongly) that this is probably something that stays pretty consistent from person to person, but if not, that would be interesting info also. Myself, I tend to panic pretty early and almost always regret my rolls. I find a lot of the time, I roll early, but the SP retraces and not only didn't I make my premium, but am exposed until the next position expires, often uncomfortably.

 

[Patrick66]

Would be great to hear what would be the best trading strategy to grow a small account. In other words based on what you know now, what would you do if you started with only $20k?

"It depends." With:

• $20k in a brokerage account for long term wealth and not a rainy day
• A steady income stream from a regular job that allows you to add money to your position every month
• A company (or commodity) that you are interested and can follow to understand the market, business, sentiment, competitors, risks and opportunities, and price trends at least 4 hours a week and
• A real interest beyond making money in doing it

then you can focus on one stock or ETF and work with leverage. You have to work harder with $20k than $200k or $2 million, and understand the risks...

Leverage can come many ways. Back in 2001 after I "lost everything" I was playing the channel switching between triple-long and triple-short oil ETFs. A painful way to try to make money back, but it worked out and I got about a 10x return on initial capital in ~4 months. I was curious about oil then so I could tolerate it. I could handle the risk because I had a reliable job and lived well within my means.

 

[Yoona]

this is the 11th week where 7DTE is below +/- 10% OTM (range -5% to +9%)

in dollar terms, that's -11 to +20 week over week

 

[Jim Holder]

this is the 11th week where 7DTE is below +/- 10% OTM (range -5% to +9%)

View attachment 1006708

in dollar terms, that's -11 to +20 week over week

View attachment 1006707

Good data! Curious what practical implications you take from this trading ahead

 

[Jim Holder]

@Max Plaid on the near-term strangle LEAP like -P290 9/20/24; -C300 9/20/24, when would you start looking to roll/close? Originally you wrote one side will be OTM at expiry then you can re-write at better strikes, or the SP moves decisively in one direction long before expiry and you can adjust appropriately, like if the SP marched up toward $300, you'd likely BTC the puts and roll the calls up and out, or roll the whole straddle for gains.

Are there other rules/considerations as time marches closer, like 6-month mark, etc.?

 

[Yoona]

Good data! Curious what practical implications you take from this trading ahead

it's not sustainable by law of averages, we're overdue for a rip (up or down)

perhaps Earnings Week is the trigger

(edit): my takeaways - laddering into positions is more important than ever, and probably 4DTE is better than 7DTE for now

 

[thenewguy1979]

it's not sustainable by law of averages, we're overdue for a rip (up or down)

perhaps Earnings Week is the trigger

(edit): my takeaways - laddering into positions is more important than ever, and probably 4DTE is better than 7DTE for now

View attachment 1006758

Dont see a bigger trigger then that in the short term.

Either set the path to sub 180 or pass 300. Should be big. Market is not making any big bet till they know the guidance.

 

[Jim Holder]

it's not sustainable by law of averages, we're overdue for a rip (up or down)

perhaps Earnings Week is the trigger

(edit): my takeaways - laddering into positions is more important than ever, and probably 4DTE is better than 7DTE for now

View attachment 1006758

If macro is any correlation TSLA might have a 1-2 week DCB starting this week aiming for $258, followed by a visit to $220-180 over a couple months along with rest of market, with recovery in Q3.

 

[Jim Holder]

https://twitter.com/x/status/1743601525992137187

 

[Max Plaid]

@Max Plaid on the near-term strangle LEAP like -P290 9/20/24; -C300 9/20/24, when would you start looking to roll/close? Originally you wrote one side will be OTM at expiry then you can re-write at better strikes, or the SP moves decisively in one direction long before expiry and you can adjust appropriately, like if the SP marched up toward $300, you'd likely BTC the puts and roll the calls up and out, or roll the whole straddle for gains.

Are there other rules/considerations as time marches closer, like 6-month mark, etc.?

I'll be honest that I don't have lot of rules, if any, mostly because something tends to work for a while, until it doesn't, so I'm continually re-evaluating everything

What I have found to be quite successful with these positions is to buy them back at 50% profits, often you get some instant regret on that as you end up leaving money on the table, but the SP always seems to reverse, then you can resell them at a profit

Obviously if the SP stays flat them you just let the Theta drain out

My primary goal with the Sep -270 straddles is to get the -p270 side to expire, or be OTM, giving me a free-run with the Dec 2025 +p270's I write them against

Right now I only have 6x -c270's straddled against the 65x -p270 and am looking to sell another 59x, but am waiting for a bit of a pop to do that - which might never come, granted... also prefer not to tie-up my Dec 2025 +c200's for those, but OK against $TSLA and the Jan 2026 +c270's, so looking to grab +2000 shares to write against

 

[Max Plaid]

Sunday morning blah blah blah... Regarding @dl003 and @BornToFly discussion on "bullishness"...

I can only speak for myself, but I suspect this holds true for some others too. The total sum of money I've ever put into my portfolio is around $120k, started in 2015 with 8 $TSLA shares, then added 400 in Feb 2016, which was the main investment, and after that bought a handful whenever I could up until mid 2019 - the split-adjusted cost-basis was something like $14 and I had around 600 shares before it all kicked-off

I didn't dare sell calls against my shares as I was terrified of losing them, but I did occasionally buy some weeklies, almost always losing my money

Then September 2019 I bought some low priced LEAPS - I didn't really know what I was doing TBH, but they were crazy low-priced, and started trading options seriously in 2020. I was lucky, the LEAPS went up fast, I rolled them further out to higher strikes, more contracts, they went up even more, it just didn't seem to stop, in the Feb 2020 crash ($900 -> $300 in a few weeks) I again bought a load of LEAPS at the bottom, which doubled in days, had I held them to expiry though, I would have been retired long ago, it was absolutely crazy times to get rich

So from the $120k starting point my account was $5.3million when we hit ATH in November 2021, that's pretty insane, I actually turned $1000 into $1.3million, yes, it happened, people think this is impossible, but it can be done, but it wasn't because I'm a trading genius - although at the time I though this was the case, obviously - but rather the stars just aligned, sure I was doing the trades and making decisions, but you could hardly do nothing wrong at that time, the main credit I would give myself is that I took some risk, where others did not, and it paid off

My point of writing all this is to say that I'd had zero previous experience of the markets, so my outlook and decisions have been totally coloured by that initial experience, TSLA "always goes up", @dl003 is 100% correct in this

Now a lot of folks, less here, but certainly in the "other" thread, are totally convinced that TSLA will do another crazy run in the future. Personally I don't see it happening. The events from 2016 to 2021 were unique IMO, a perfect storm, highly unlikely to happen again: low interest rates, FED printing money, years of TSLA being suppressed by the oil industry FUDsters, the first 5 for 1 split, the S&P inclusion, etc.

But it has taken me years to change my mind-set from where were were to now accepting that the stock price likely isn't going to 2x this year, why would it, what could possibly cause that, I don't think anything, even FSD being "solved" won't change much short term. Tesla is already at a high valuation implying a lot of future growth and perfect execution

But I do still think the company will become the most valuable, just that it will be a more measured rise from here, with a few roller-coaster rides from time to time, hence I'm looking to build my TSLA position back up to 10k shares

 

[Patrick66]

If macro is any correlation TSLA might have a 1-2 week DCB starting this week aiming for $258, followed by a visit to $220-180 over a couple months along with rest of market, with recovery in Q3.

Not my take, but we will see. Tesla seems to have laid the groundwork for significant production growth back in 2023H2 with capital prudence, and Q1 should show significant growth. I see the stock gapping up to 300 soon. The parts are all in place.

 

[Tachyon]

Sunday morning blah blah blah... Regarding @dl003 and @BornToFly discussion on "bullishness"...

I can only speak for myself, but I suspect this holds true for some others too. The total sum of money I've ever put into my portfolio is around $120k, started in 2015 with 8 $TSLA shares, then added 400 in Feb 2016, which was the main investment, and after that bought a handful whenever I could up until mid 2019 - the split-adjusted cost-basis was something like $14 and I had around 600 shares before it all kicked-off

I didn't dare sell calls against my shares as I was terrified of losing them, but I did occasionally buy some weeklies, almost always losing my money

Then September 2019 I bought some low priced LEAPS - I didn't really know what I was doing TBH, but they were crazy low-priced, and started trading options seriously in 2020. I was lucky, the LEAPS went up fast, I rolled them further out to higher strikes, more contracts, they went up even more, it just didn't seem to stop, in the Feb 2020 crash ($900 -> $300 in a few weeks) I again bought a load of LEAPS at the bottom, which doubled in days, had I held them to expiry though, I would have been retired long ago, it was absolutely crazy times to get rich

So from the $120k starting point my account was $5.3million when we hit ATH in November 2021, that's pretty insane, I actually turned $1000 into $1.3million, yes, it happened, people think this is impossible, but it can be done, but it wasn't because I'm a trading genius - although at the time I though this was the case, obviously - but rather the stars just aligned, sure I was doing the trades and making decisions, but you could hardly do nothing wrong at that time, the main credit I would give myself is that I took some risk, where others did not, and it paid off

My point of writing all this is to say that I'd had zero previous experience of the markets, so my outlook and decisions have been totally coloured by that initial experience, TSLA "always goes up", @dl003 is 100% correct in this

Now a lot of folks, less here, but certainly in the "other" thread, are totally convinced that TSLA will do another crazy run in the future. Personally I don't see it happening. The events from 2016 to 2021 were unique IMO, a perfect storm, highly unlikely to happen again: low interest rates, FED printing money, years of TSLA being suppressed by the oil industry FUDsters, the first 5 for 1 split, the S&P inclusion, etc.

But it has taken me years to change my mind-set from where were were to now accepting that the stock price likely isn't going to 2x this year, why would it, what could possibly cause that, I don't think anything, even FSD being "solved" won't change much short term. Tesla is already at a high valuation implying a lot of future growth and perfect execution

But I do still think the company will become the most valuable, just that it will be a more measured rise from here, with a few roller-coaster rides from time to time, hence I'm looking to build my TSLA position back up to 10k shares

You could be my twin , unbelievably exact same story . Have been holding tesla since 2015 and kept telling everyone that would listen to me to buy TSLA. Alas, no one listened . Got accidentally lucky with LEAPS in early 2020 not knowing much about them and then lost some in 2022. Also true that I turned 15000 to 1 million. Overall gained a tonne of knowledge in return .

 

[wooter]

But it has taken me years to change my mind-set from where were were to now accepting that the stock price likely isn't going to 2x this year, why would it, what could possibly cause that, I don't think anything, even FSD being "solved" won't change much short term.

And yet, the 2x is exactly what happened in 2023. If you timed it right.

 

[MikeC]

Wondering if we could get an informal survey of people's preferred time to roll a losing position? (When the SP hits your strike, a certain percentage ITM/OTM, depends on other factors, etc... ??) I'd be interested to see what works for everyone, especially paired with what we've gleaned of various posters' risk tolerance. I feel (perhaps wrongly) that this is probably something that stays pretty consistent from person to person, but if not, that would be interesting info also. Myself, I tend to panic pretty early and almost always regret my rolls. I find a lot of the time, I roll early, but the SP retraces and not only didn't I make my premium, but am exposed until the next position expires, often uncomfortably.

I used to panic roll when the strike was touched because I was terrified of losing the shares, but it seemed to reverse on me way more often than 50% of the time. So instead of allowing the option to expire like it usually would have, I would end up extending the risk another week for little to no gain.

I’m actually somewhat convinced that part of the TSLA price action volatility occurs to scare people into rolling. Otherwise, selling options would be too easy - everyone would do it and we’d all be rich. I think ultimately what we are actually being compensated for when we sell an option is the suffering (remember “patient” in Latin translates to “suffering”) that comes from the uncertainty of whether we will be able to keep (or have to buy) the shares or not.

My strategy to deal with this is to try to be zen by psychologically already considering the shares sold when I sell a call. This helps me to hold out until Thursday/Friday for any possible reversal without (most of) the second-guessing.

If the reversal doesn’t come, selling each share for $2.50 more the next week is better than letting them go this week, so I’m happy to roll for strike improvement. And if it’s too far OTM for strike improvement, then taking $1/share credit for rolling to the next week with the chance of expiration also sounds better than letting the shares exercise.

This obviously only works with covered calls and if you’re comfortable letting shares go. I don’t sell spreads and I’ve cut back a lot on selling puts.

 

[CHGolferJim]

And yet, the 2x is exactly what happened in 2023. If you timed it right.

+23% Nov 30 ‘22 to Nov 30 ‘23, so the calendar year comp has less meaning.

 

[Max Plaid]

And yet, the 2x is exactly what happened in 2023. If you timed it right.

Sure, but only because of the manipulated crash at the end of 2022, representative price of TSLA is 200 - 300, not 100