Wiki Selling TSLA Options - Be the House

[Blue horseshoe]

@BornToFly Something i did when i wiped myself out in 2022 was conduct an autopsy of what went wrong. I listed what happened and why I took the positions and risks I did. I then analyzed what went wrong and most importantly I highlighted what steps I should take moving forward.

Attached below as a spoiler is my thoughts soon after I was wiped out. I've since had a year to learn in this thread and work out what strategies and risk management controls I will use going forward. It's interesting to reread this as I've changed my views and strategies since.

Hopefully this is helpful

Spoiler: Complete market loss notes

Stock market lessons learned


10/3/22

Lost everything.


Analysis:

Number one factor was margin use. Specifically as a percentage of net liquidity. Additionally no risk controls in place to manage portfolio risk. Relied on valuations and ignored that the market will decide where it prices everything despite what makes sense to me. The risk mitigation that is required with margin use was not implemented. This emotionless risk protection would have protected the portfolio from the disconnect between my analysis/valuation versus the markets pricing of Tesla.


Moving forward I will only create a position risking margin of no more than 10% of portfolio value. The second risk mitigation rule is that if margin goes from 10% of net value to 20% of net value this triggers an immediate risk off sale until margin is zeroed out.


Unclear is what a follow-up rule should be if this risk off margin elimination occurs. I believe there should be a time lock of no trading after this event in addition to a technical analysis of the technical trend turning back in teslas favor before a risk on margin trade is allowed again.


Must be wary of attempting to "makeup" losses after this type of event. Is 6 month margin block sufficient or drastic? No margin use is not a true detriment on the upside so more of a time penalty is more sensible.


Trying to swim against a bear market and incorrectly assessing how bad the downturn would be worked against me. Using technical analysis I should have been risk off. Don't try to time the market. Considering the decades long runway for Tesla I must let Tesla find its bottom and simply wait until it resumes its upward trend before making risk on trades.


I like the covered call sales strategy but moving forward this should only utilize 50% of available capacity. Based on the nature of assignment I favor covered call sales as a cash generation strategy over any kind of put sales. Considering the heavy downside risk of put sales I think they should not be a part of the portfolio strategy.


At some point it may, however, be beneficial to short the market with either spy or qqq short sales. This would mitigate some market risk and a corresponding sale of puts below the short sale price can provide some cash generation while slightly dampening the protection against market downturn. Unclear what the ongoing short strategy/hedge would be. Must think on this more.


Also contemplating worth of running two separate accounts to further decrease risk. If main account is net positive in the year then reallocate 5% of value to secondary fund. If main account is down for the year then no transfer to occur. After main account… [to be continued]

 

[Right_Said_Fred]

Sorry to read about another crushing loss with spreads/sold options. It's painful to see other forum members suffer. I read a lot here about succesful trades, less so about losses. I'm sure there have been more victims, but it's easier to report on the good trades than it is on the bad trades. I'm guilty of that too.

A few months ago I decided to stop writing options (with the exception of calls on shares I own and don't mind losing). After that I was MIA in this thread for a while. For good reason: I've spent weeks and weeks on finding and backtesting every possible option strategy I could think of that did not involve selling options.

I was looking for a strategy with:

- no big risks
- no wipe-out scenario (so no uncovered option selling)
- no chance of being stuck with positions for months or even years
- no margin requirement
- no need to correctly guess the market direction (very important, because hardly anyone is able to make the right guesses)
- easy to execute
- guaranteed to be profitable

The result is literally one hundred excel sheets with calculations and formulas. There were many strategies which did not work out. There were some which looked very promising, but when backtested against the last 290 trading days (since 1 Jan 2023) turned out to not be good enough. They were profitable, but not consistently in every quarter.

Last weekend I finally discovered one which ticks all the boxes. It would have resulted in a return of almost 1600% over those 290 trading days. It worked better in some quarters, the ones with a lot of stock movement, and less in other quarters. But even the quarter with the lowest return, the current unfinished quarter, stands at a 185% return.

I have now started testing this strategy live, with 10 positions first but hopefully with a few hundred positions in the future. Unfortunately I cannot disclose too much, as the strategy would become less effective if too many people start using it. And it still has to prove itself in real life anyway, which is what 2024 is for.

What I can say is that it is centered around buying options, not selling options. This means theta decay becomes my enemy instead of the friend it has been for the last few years. The stock moving sideways for a long time is not good, but those times are being more than compensated by periods of movement. I'm in the market all the time. If there ever is an overnight black swan, I catch that one too. I no longer have to be afraid of sudden events, but can welcome them.

My overall message is: selling options is cool, being the house is fun. But it can bite you in the butt, hard. There are also great opportunities out there for those just buying options. At least, that's what I'm hoping to prove this year.

 

[Max Plaid]

What we do is addicting. Selling options looks like easy money until it doesn't.

Sometimes this thread feels like a waste of time in the sense of how many people are really better off because selling options? There has been many accounts that have been completely wrecked through the years. I do it for a little income here and there but I don't think it will be life changing like the options that I bought in 2021-2020.

Yeah, I don't think we'll see a repeat of what happened in 2020/1, that was a perfect storm and in hindsight it's obvious TSLA was in a bubble, but in the heat of the moment, after years of the stock being manipulated down, it was very difficult to be objective, added that many of us had bought-in at very low price in the "dark years"

So my goal from here isn't looking for that big killer trade any more, although I had an opportunity on the run up from $170 to $300 last year, and missed it because I capped my LEAPS with calls - in hindsight I could have avoided that with having some shitcalls as an escape-route as I do now, but that's the game, eh, every day you learn something new

Capital preservation and growth is my target now, decided against buying TSLA, in fact thinking to sell a couple of hundred shares and convert to June 2026 +c200's - mostly to use for writing against though, but will take the profits if they come too

 

[Max Plaid]

This was my post at 12:08 PM today
View attachment 1025994

And this here is my post after an hour of observing what looked like weak PA to end the week on
View attachment 1025995
FYI, this is not a "room." This is pixels on my screen. A room has sounds, emotions, atmosphere, things that I can feel. As if I could have magically sensed someone posting a huge loss in the one hour between my posts, someone had the balls to tell me to "read the room" and that I was "kicking a man while he's down." The hell are you people thinking? And some people disagreed with a post saying that they were certain I was not targeting anyone. Have the decency to tell it to my face why you disagreed.

You don't get to say this stupid *sugar* to my face and walk away.

I'm one of the few who have repeatedly warned against the risk of leveraging with spreads and getting carried away by the huge returns on those high IV stocks. I KNEW something like this would happen and it would end in tears. These social justice warriors who disagreed with my posts, what have they done to prevent it? A big fat NOTHING.


Yeah, let's.

You got some disagrees from myself, but I can't recall to which posts, but I'll be straight and say that @sunhelm pretty much expressed what I was thinking at that time

I think it's fair to accept that your post had no connection to BTF's situation, but what I don't understand it this doubling-down now, why not just say "sorry guys, I missed that post" and move on?

Anyway, I don't want to start a big debate, PM me if you want to dicuss it

As for this "room", actually I see it more than just "pixels", many of us have been here for quite a few years now and have been through a lot together. We come here to share ideas and strategy together, to try and help each other make money, but I feel we've become quite close as a group too - "friends" is too strong a word, but "comrades" or "work colleagues" perhaps, so when things go well, we all cheers together, when they go bad we give a group hug

However, I do meet with people from TMC in the real world too, real physical meetings, with a few beers and good food

Spreads? Many of us have continually warned against them, I think BTF was very well aware of the risks he was taking, I won't touch them myself, way too risky, unless doing Yoona-style IC's, but still not my thing either, might evolve to that, but not there yet...

Anyway, peace dude

 

[thenewguy1979]

Sorry to read about another crushing loss with spreads/sold options. It's painful to see other forum members suffer. I read a lot here about succesful trades, less so about losses. I'm sure there have been more victims, but it's easier to report on the good trades than it is on the bad trades. I'm guilty of that too.

A few months ago I decided to stop writing options (with the exception of calls on shares I own and don't mind losing). After that I was MIA in this thread for a while. For good reason: I've spent weeks and weeks on finding and backtesting every possible option strategy I could think of that did not involve selling options.

I was looking for a strategy with:

- no big risks
- no wipe-out scenario (so no uncovered option selling)
- no chance of being stuck with positions for months or even years
- no margin requirement
- no need to correctly guess the market direction (very important, because hardly anyone is able to make the right guesses)
- easy to execute
- guaranteed to be profitable

The result is literally one hundred excel sheets with calculations and formulas. There were many strategies which did not work out. There were some which looked very promising, but when backtested against the last 290 trading days (since 1 Jan 2023) turned out to not be good enough. They were profitable, but not consistently in every quarter.

Last weekend I finally discovered one which ticks all the boxes. It would have resulted in a return of almost 1600% over those 290 trading days. It worked better in some quarters, the ones with a lot of stock movement, and less in other quarters. But even the quarter with the lowest return, the current unfinished quarter, stands at a 185% return.

I have now started testing this strategy live, with 10 positions first but hopefully with a few hundred positions in the future. Unfortunately I cannot disclose too much, as the strategy would become less effective if too many people start using it. And it still has to prove itself in real life anyway, which is what 2024 is for.

What I can say is that it is centered around buying options, not selling options. This means theta decay becomes my enemy instead of the friend it has been for the last few years. The strategy thrives on stock movement (so it does worst when the stock is dead in the water) and is a constant fight between stock movement on one side and theta decay on the other side. Up or down, any direction is good. The stock moving sideways for a long time is not good, but those times (30% of the time) are being more than compensated by periods of movement (70% of the time). I'm in the market all the time. If there ever is an overnight black or white swan, I catch that one too. I no longer have to be afraid of sudden events, but can welcome them.

My overall message is: selling options is cool, being the house is fun. But it can bite you in the butt, hard. There are also great opportunities out there for those just buying options. At least, that's what I'm hoping to prove this year.

Is this the long lost fabled holy grails of option buying? Where generally you can only make money with stock going one direction, up or down.

This is not straight Long I assumed but a combo of buying and selling wrap in something like a reversed iron condor or a low cost high gain iron butterfly?

Would love to hear more about the World Domination Plan when available.

 

[dl003]

PM me if you want to dicuss it

No I won't. This will continue here until I get banned or one of us ignores the other. Funny how one side dish out insults publicly and then asks the other to move on or take it private.

I think it's fair to accept that your post had no connection to BTF's situation, but what I don't understand it this doubling-down now, why not just say "sorry guys, I missed that post" and move on?

Move on? Perhaps you haven't thoroughly read what he wrote or really put yourself in my shoes.

Maybe this was not targeted to anyone in particular but please read the room when posting things like this as someone lost big today. Just sayin' cause I've been there too and the receiver of this message just kicks a man while he's down. No need to reply or defend. All I ask is for exercising discretion for these kinds of posts in the future.

Normally I would just leave a snarky comment and move on, but "no need to reply or defend"? If I didn't say anything, I'd have accepted this gross accusation. If I said anything, it would have been to "defend" myself. That's an explosive mix of arrogance and cowardice, saying *sugar* to an innocent man while putting yourself above him to a point where he has to "defend" himself for a crime he didn't commit. That why I asked just "the **** you think you are?"

As for this "room", actually I see it more than just "pixels", many of us have been here for quite a few years now and have been through a lot together. We come here to share ideas and strategy together, to try and help each other make money, but I feel we've become quite close as a group too - "friends" is too strong a word, but "comrades" or "work colleagues" perhaps, so when things go well, we all cheers together, when they go bad we give a group hug

Again, missing the point. When I said this is not a "room", I didn't mean figuratively. I meant physically. I could not have known what happened and I posted what I posted not because I didn't care about BTF but because I didn't know. So I'm furious that you and others acted all high and mighty just because you had the balls to assume I was an asshole.

 

[Yoona]

Spreads? Many of us have continually warned against them, I think BTF was very well aware of the risks he was taking, I won't touch them myself, way too risky, unless doing Yoona-style IC's, but still not my thing either, might evolve to that, but not there yet...

(i'm not referring to Max specifically, just speaking in general)

spreads is not for everyone, but it's my bread-and-butter weekly income; i didn't take a screenshot yesterday (lest it be misinterpreted as bragging in time of sadness) but here's TD closing it today as they expired worthless

NVDA +p740/-p840, opened 4Δ i think
SMCI +p800/-p890/-c1310/+c1400, opened 5Δ i think

i got my money on spreads, so spreads work; otherwise, we wouldn't have thousands of YouTube videos and Google articles about them

the issue is not the strategy per se

the issue is risk management; i know exactly what BTF's missteps were and what went wrong because he documented his trades, but it would be cruel to dissect and armchair quarterback the day after

last time i checked, since coming back from X, i wrote 562(?) posts and you all know me, i am risk-averse, too chicken, and always yakking about 'be careful.' Even my signature is about protecting capital. I keep saying it again and again and again: DO NOT TAKE UNNECESSARY RISKS.

whether you are doing spreads or cc or csp or straddles or strangles or anything, you must plan it the night before. You can't just open a position on the spot based on market conditions or based on the latest chatter, because that would be your emotions and not your brain trading. I'll say it AGAIN for the umpteenth time: Don't think of income and dollar signs. Think of your success rate. Success is more important than money. Then have an entry plan and an exit plan.

So you want large income and decide to fly close to the sun because you "feel" good about it. Market reversed on you and what do you do? You'll spend weeks and months fixing a problem. Why not avoid that situation in the first place and go DOTM? Yes, my "SMCI +p800/-p890/-c1310/+c1400" was so far out, it's probably ridiculed. But at 95% probability of success and 4.7 premium, what more do you want?

Perhaps i should say it again one more time for the hard of hearing:

• Don't 7dte unless you are really sure it will expire or you will cash out soon (ie at 50% profit). Weekend shenanigans are rare but real.
• Respect 1σ and 16Δ. The implied move is there for a reason. Majority of market participants are positioned there. The option chain tells you the expected move next week or tomorrow. Why insist on crossing the line based on "feelings"?
• Don't ignore historical %OTM ranges. I posted all of them 0dte to 7dte. They are there to help your backtesting.
• Closing a losing position and fixing a problem are 2 different animals. Don't confuse them to be the same thing. You close ASAP but need time to research a solution. You can't do both in quick succession.
• Follow your favorite lines (OI, gamma, vanna, EW, TA, fib, etc) and use them as your guide. Don't trade based on the latest "news" or trending chat (put them on the other thread). All TA is backward-facing but can predict future moves.
• Finally, don't gamble. Stop trading on feelings. Please. Just. Don't. If you didn't research your position before executing it, it's gambling.

 

[BornToFly]

I want to say thank you to my friends here who have been so supportive. It's been a rough 20 hours. Hopefully my account will be ok (I lost a lot of the cash that was providing margin support if TSLA drops a lot from here). I'm on Venmo....

In aviation, accidents are usually the result of multiple avoidable risk factors that were stacked up by poor decision making until it lead to the event. I see it all the time, but dead pilots are replaced by other pilots who don't seem to learn. I'm that way with trading. Mistakes I made:

1) Opened the initial NVDA IC on Thursday of the previous week for more premium. I did start very wide, and it would have expired OTM, although it went deep ITM for a while. I believe it started with +720/-750 -920/+950.

2) $30 wide instead of $100 wide gave me no roll options when the entire spread went ITM on the 10% intraday move.

3) I started with 1/3X of my available cash/margin and planned to keep it that way. But when the stock climbed on Monday, I tripled the number of contracts in order to pay for the debit of rolling the -920 up to -970/+1000

4) Everything looked great Thursday morning, but I started to get nervous on the run to 922. When the stock went to 940+ after the open Friday with a very strong market I shifted the IC up a little bit more, bringing the lower legs up to +900/+930 because all the danger appeared to be to the upside. Then as everyone knows, the entire market crashed and NVDA dropped 10% in about an hour. Premiums were very high on both sides at that point, and I didn't make any further corrections because I didn't believe the day was going straight down after such a strong open. The very definition of a rug pull. NVDA had more than 2X the normal trading volume.

99% of the time what I did would have worked. This time it didn't and I can't afford to have another one of these events. This is why I need to rethink doing spreads going forward. I'm not as smart as Yoona.

 

[mongo]

I could not have known what happened and I posted what I posted not because I didn't care about BTF but because I didn't know. So I'm furious that you and others acted all high and mighty just because you had the balls to assume I was an asshole for missing a post.

I get it. You're comment was about PA and "Maybe this was not targeted" still implies that maybe it was targeted and no one wants to be accused of anti-social actions that they did not commit.

Situationally, BtF posted at 2:05 and your post logged in at 2:09 after a reply to BtF. You've made clear that you had not read their post before posting, and you would have had no reason to do a post-posting refresh to see their post immediately.

That said,

I could not have known what happened

Is undermined by:

I didn't even read what people wrote today.

You could have known...

 

[BornToFly]

I get it. You're comment was about PA and "Maybe this was not targeted" still implies that maybe it was targeted and no one wants to be accused of anti-social actions that they did not commit.

Situationally, BtF posted at 2:05 and your post logged in at 2:09 after a reply to BtF. You've made clear that you had not read their post before posting, and you would have had no reason to do a post-posting refresh to see their post immediately.

That said,

Is undermined by:

You could have known...

Guys, it's ok. Clearly dl003 didn't read my posts before he posted. I read every post because I need help, and I'm here for the entertainment. dl003 is like a professor who is kind enough to share his knowledge, but he doesn't have time to read my (bad) jokes. I appreciate his TA and I certainly don't want him to stop sharing his knowledge, even if he is largely ignoring what the rest of us write.

 

[ChiefRollo]

I get it. You're comment was about PA and "Maybe this was not targeted" still implies that maybe it was targeted and no one wants to be accused of anti-social actions that they did not commit.

Situationally, BtF posted at 2:05 and your post logged in at 2:09 after a reply to BtF. You've made clear that you had not read their post before posting, and you would have had no reason to do a post-posting refresh to see their post immediately.

That said,

Is undermined by:

You could have known...

It seems quite clear to me that everyone who cares about this (and there are many who do and feel for BtF) know how things went down and what truly happened. That’s good enough for us all. I ask that we move on.

 

[ChiefRollo]

Is this the long lost fabled holy grails of option buying? Where generally you can only make money with stock going one direction, up or down.

This is not straight Long I assumed but a combo of buying and selling wrap in something like a reversed iron condor or a low cost high gain iron butterfly?

Would love to hear more about the World Domination Plan when available.

I’m curious if you have reflected on adiggs’ approach. RSF’s comment brought up thoughts I’ve had from adiggs’ sharing. I started to implement it with a decent chunk of +300C’s for 6/25 (he advocated as far out as possible, 2026) knowing it could be a bit too early (beginning of this last drop) as I thought could just ladder more in if it continues dropping. Ran out of funds to do so as my non-TSLA position also dropped.

I would buy more now if I could.

 

[Tachyon]

Deeply sorry to hear what happened to BTF’s account . I wish him a better tomorrow . Most important thing is he is safe and doing well. That’s what matters the most .
Money comes , money goes . Sometimes unexpectedly .

Pl don’t ascribe any false motivations to @dl003 . IIRC he mentioned more than once that he splits his time between multiple groups and has a very very busy trading schedule. I believe him . I don’t have that busy a schedule and I skip quite a few posts some days .

We are Al trying to learn from our collective wins and losses . Pl don’t lose focus . “Stay calm and carry on .”

 

[BornToFly]

Sorry to read about another crushing loss with spreads/sold options. It's painful to see other forum members suffer. I read a lot here about succesful trades, less so about losses. I'm sure there have been more victims, but it's easier to report on the good trades than it is on the bad trades. I'm guilty of that too.

A few months ago I decided to stop writing options (with the exception of calls on shares I own and don't mind losing). After that I was MIA in this thread for a while. For good reason: I've spent weeks and weeks on finding and backtesting every possible option strategy I could think of that did not involve selling options.

I was looking for a strategy with:

- no big risks
- no wipe-out scenario (so no uncovered option selling)
- no chance of being stuck with positions for months or even years
- no margin requirement
- no need to correctly guess the market direction (very important, because hardly anyone is able to make the right guesses)
- easy to execute
- guaranteed to be profitable

The result is literally one hundred excel sheets with calculations and formulas. There were many strategies which did not work out. There were some which looked very promising, but when backtested against the last 290 trading days (since 1 Jan 2023) turned out to not be good enough. They were profitable, but not consistently in every quarter.

Last weekend I finally discovered one which ticks all the boxes. It would have resulted in a return of almost 1600% over those 290 trading days. It worked better in some quarters, the ones with a lot of stock movement, and less in other quarters. But even the quarter with the lowest return, the current unfinished quarter, stands at a 185% return.

I have now started testing this strategy live, with 10 positions first but hopefully with a few hundred positions in the future. Unfortunately I cannot disclose too much, as the strategy would become less effective if too many people start using it. And it still has to prove itself in real life anyway, which is what 2024 is for.

What I can say is that it is centered around buying options, not selling options. This means theta decay becomes my enemy instead of the friend it has been for the last few years. The strategy thrives on stock movement (so it does worst when the stock is dead in the water) and is a constant fight between stock movement on one side and theta decay on the other side. Up or down, any direction is good. The stock moving sideways for a long time is not good, but those times (30% of the time) are being more than compensated by periods of movement (70% of the time). I'm in the market all the time. If there ever is an overnight black or white swan, I catch that one too. I no longer have to be afraid of sudden events, but can welcome them.

My overall message is: selling options is cool, being the house is fun. But it can bite you in the butt, hard. There are also great opportunities out there for those just buying options. At least, that's what I'm hoping to prove this year.

Good luck. I would love such a strategy. How many times do we write calls/puts for little money, and then watch them go deep ITM. The problem I have is spending money knowing that it might not pay off. Difficult problem for me being a very cheap person.

 

[EVNow]

conclusion: MP is not a reliable metric?

You mean it's just another conspiracy theory...

 

[juanmedina]

Yeah, I don't think we'll see a repeat of what happened in 2020/1, that was a perfect storm and in hindsight it's obvious TSLA was in a bubble, but in the heat of the moment, after years of the stock being manipulated down, it was very difficult to be objective, added that many of us had bought-in at very low price in the "dark years"

So my goal from here isn't looking for that big killer trade any more, although I had an opportunity on the run up from $170 to $300 last year, and missed it because I capped my LEAPS with calls - in hindsight I could have avoided that with having some shitcalls as an escape-route as I do now, but that's the game, eh, every day you learn something new

Capital preservation and growth is my target now, decided against buying TSLA, in fact thinking to sell a couple of hundred shares and convert to June 2026 +c200's - mostly to use for writing against though, but will take the profits if they come too

I am at the same point in my life; in capital preservation and trying to produce enough growth to be somewhat above my income needs. Tesla at $630 would have a $2T and I don't think that impossible if the other businesses and FSD start to work out but it will take time.

I bought a few 2026 Leaps recently and they are down 50% and I thought I got them at a good time , getting back that 50% back from selling calls seems really difficult. Leaps need to be bought in an uptrend and I don't think Tesla is there although we are closer to the bottom than not. Right now I am 95% in cash waiting for a market black swan event that might never happen or for a good indicator that is time to get back into Tesla. I am also planning to not go all in on Tesla like I was for many years because I need some diversification to preserve my capital.

 

[Max Plaid]

(i'm not referring to Max specifically, just speaking in general)

spreads is not for everyone, but it's my bread-and-butter weekly income; i didn't take a screenshot yesterday (lest it be misinterpreted as bragging in time of sadness) but here's TD closing it today as they expired worthless

View attachment 1026062

NVDA +p740/-p840, opened 4Δ i think
SMCI +p800/-p890/-c1310/+c1400, opened 5Δ i think

i got my money on spreads, so spreads work; otherwise, we wouldn't have thousands of YouTube videos and Google articles about them

the issue is not the strategy per se

the issue is risk management; i know exactly what BTF's missteps were and what went wrong because he documented his trades, but it would be cruel to dissect and armchair quarterback the day after

last time i checked, since coming back from X, i wrote 562(?) posts and you all know me, i am risk-averse, too chicken, and always yakking about 'be careful.' Even my signature is about protecting capital. I keep saying it again and again and again: DO NOT TAKE UNNECESSARY RISKS.

whether you are doing spreads or cc or csp or straddles or strangles or anything, you must plan it the night before. You can't just open a position on the spot based on market conditions or based on the latest chatter, because that would be your emotions and not your brain trading. I'll say it AGAIN for the umpteenth time: Don't think of income and dollar signs. Think of your success rate. Success is more important than money. Then have an entry plan and an exit plan.

So you want large income and decide to fly close to the sun because you "feel" good about it. Market reversed on you and what do you do? You'll spend weeks and months fixing a problem. Why not avoid that situation in the first place and go DOTM? Yes, my "SMCI +p800/-p890/-c1310/+c1400" was so far out, it's probably ridiculed. But at 95% probability of success and 4.7 premium, what more do you want?

Perhaps i should say it again one more time for the hard of hearing:

• Don't 7dte unless you are really sure it will expire or you will cash out soon (ie at 50% profit). Weekend shenanigans are rare but real.
• Respect 1σ and 16Δ. The implied move is there for a reason. Majority of market participants are positioned there. The option chain tells you the expected move next week or tomorrow. Why insist on crossing the line based on "feelings"?
• Don't ignore historical %OTM ranges. I posted all of them 0dte to 7dte. They are there to help your backtesting.
• Closing a losing position and fixing a problem are 2 different animals. Don't confuse them to be the same thing. You close ASAP but need time to research a solution. You can't do both in quick succession.
• Follow your favorite lines (OI, gamma, vanna, EW, TA, fib, etc) and use them as your guide. Don't trade based on the latest "news" or trending chat (put them on the other thread). All TA is backward-facing but can predict future moves.
• Finally, don't gamble. Stop trading on feelings. Please. Just. Don't. If you didn't research your position before executing it, it's gambling.

I feel that I'm essentially doing the same thing, just with longer-dated long side, which gives me the possibility to roll if it goes bad, ergo I can play close to the money. CSP's backed-up by July +p's and share/LEAP CC's protected by Jan 2025 +c's, so if any weeklies go ITM I always have that rolling safety-net, which I used when we gapped-up

I am intrigued by what you do, although my initial problem is how to identify the "1σ and 16Δ", where do I see that on the options chain? Delta is shown as an integer, how do I interpret that?

And what would be a ROIC on say $1m cash (no margin use)?

 

[dl003]

Lol. I meant when you called the bottom a few weeks ago at ~$220 and it dropped another $45 dollars. What are you seeing different now to suggest a bottom is what I’m asking. I’d like to learn what to look for.

Yes, on January 12th, I called the bottom at 217.
a. I wanted a lower low on the daily RSI, to set up a hidden bullish divergence that would go back to Nov 9th.
b. That lower low on the RSI would have put it in the oversold territory or close to it.

How was that different from today?
While I had repeatedly said the stock was as likely to go to 170 as it was to go to 300, my path to 170 looked a little like this, which would have been more consistent with the 2 legs down prior.

Therefore, I was not looking for a bullish divergence on a higher timeframes, but instead relied on a 2 month running hidden bullish setup. To be fair, the previous hidden bullish setup worked out so well which helped me call the spike to 265.

So this time around, I was willing to give it the benefit of the doubt, even after it's broken the 235 pivot. Now I used the previous 210 low as the anchor. Turned out I overstayed my welcome and paid for it. That was when I got really pissed off because TSLA was the only ticker that crashed on my screen while the entire market skyrocketed up.

This time around, the bullish divergence setup I'm seeing is much more cohesive, running from weekly down to the smaller timeframes. To take things further, back in January we were seeing only wave A in action. Now wave C has shown itself and my 4.618x extension support is hanging just right below us at 171 so I'm willing to bet for at least a bounce to 185 from here.

But be on your toes as things can change very quickly.

 

[dl003]

The last time we had a bullish divergence on the weekly was June 2022.

 

[dl003]

As futile as this may be, look at what happened last time when it broke below the AVWAP lower band, anchored from the SP 500 inclusion.

This time if it reaches and 235, gets rejected, re-tests the current AVWAP lower band around 170-180 and fails, it's going to get very ugly. Think low 100s again. So, while I'm not saying that will happen, if I see something like that developing, it might be the most important warning I will have given. Get your affairs in order starting from now would be smart. Be grateful if that doesn't happen again but if it does, a few accounts will be wiped out again.