Wiki Selling TSLA Options - Be the House

[Yoona]

Indeed, as long as you can keep your puts out of assignment range they usually go OTM at some point, calls, not necessarily - I have a friend, used to post here sold -c135's against everything early 2023 and that was that, don't think he even got out of them in the last sub-140, problem is that you're always thinking "it's going to go lower", as indeed it should haven but didn't, then it reverses and the moment is gone

yeap, i have stress-tested and backtested this to death (since 2021)

assuming no early assignment, 100% of rolled -p will eventually go OTM

-c is much more dangerous when ITM (higher chance of 'max' loss)

TSLA Rolling - does it work? Part 3

Compared to puts, calls take longer to OTM if rolled

if my 7DTE short call is breached, (for ex 2023-06-09 i have a 10% OTM bet -c235.36 but it closed at 244.39):

• if i roll with no strike improvement (assuming no early assignment), i can close it in 10 weeks; this means rolling to the same strike 10 times
• if i roll with 5-strike improvement every week, it will go OTM in 3 weeks (week 1 -c240.36, week 2 -c245.36, week 3 -c250.36); this means rolling 3 times and going up total 15
• if i roll with 10-strike improvement every week, it will go OTM in 1 week (week 1 -p245.36); this means rolling 1 time and going up total 10

if one is selling 10% or 12% OTM calls, any breached call will take at most 6 rolls before it goes OTM (5-strike improvement every week, total $30 improvement) ie move -c200 into -c205 into -c210 into -c215 into -c220 into -c225 into -c230

if one is selling 15% OTM calls, any breached call will take at most 2 rolls before it goes OTM (10-strike improvement every week, total $20 improvement) ie move -c200 into -c210 into -c220

if one is selling 8% OTM calls, there is a 15.82% chance that it will go ITM.

summary:

• rolled puts go OTM faster than rolled calls, especially if there is a 5- or 10- strike improvement every week
• assuming no early assignment, there is no "max loss" when rolling puts - 100% will eventually go OTM (since 2021)
• assuming no early assignment, "max loss" is possible when rolling calls
• "max loss" means you can roll up to today or for a long time, and it will still be ITM (might as well take the loss)
• translation: i should be more afraid of rolling calls than puts

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[thenewguy1979]

When we hit 140, had bad earnings and the stock goes up 30% lol.

Yer case in point when we hit 140. I wanted to get back in with shares but I just wanted to see 120. But to be fair the earnings were terrible. I'm still scratching my head on how this thing trades lol.

Got it thanks, seem for now

Low 140
High 254

 

[thenewguy1979]

yeap, i have stress-tested and backtested this to death (since 2021)

assuming no early assignment, 100% of rolled -p will eventually go OTM

-c is much more dangerous when ITM (higher chance of 'max' loss)

Only truly dangerous if you're naked? If those C are covered you can just keep rolling up and out till out of money? Worse case sell them at a lower price then ideal.

Let see if TSLA obey law of gravity and fall back down from upper BB today.

 

[Max Plaid]

Righty-ho, got all my trades done while at graduation - as we go for dinner after and I sure need a couple of good after this week!!

STO 100x 7/12 -p250
BTC 40x 7/5 -c230
BTC 15x Jan 25 -c200
STO 55x 7/12 -c250
BTC 100x 7/12 -p225 -> probably "safe", but they were chewing up my cash-reserve and if the stock did crater would be nasty situation

So altogether a much more comfortable set of positions

No need to buy any extra +p150's yet as I still have the 100x 7/19 +p150 available, will see how it goes over the next few days

My mantra with all this is to retain my cash position, but get the calls rolled up as fast as possible... at least from -c250, September -c300's become rollable for free, which neutralises the risk as I have the Jan +c300's, but the "hope" is that the short calls expire, free up loads of contracts which I then use to roll down some more of the Jan -c200's

And so on and so on...

I have a STO 50x NVDA -p120.5 open and waiting for a bit more dip

 

[Max Plaid]

Only truly dangerous if you're naked? If those C are covered you can just keep rolling up and out till out of money? Worse case sell them at a lower price then ideal.

Let see if TSLA obey law of gravity and fall back down from upper BB today.

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No, with calls there comes a point where they are so far ITM that there's no roll available for profit or strike improvement, so you're stuck in limbo... only way out would be to take the loss or make other profitable trades to close them out

 

[Yoona]

Only truly dangerous if you're naked? If those C are covered you can just keep rolling up and out till out of money? Worse case sell them at a lower price then ideal.

Let see if TSLA obey law of gravity and fall back down from upper BB today.

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agree, and this brings up an important point

i am puzzled why there seems to be widespread panic among CC sellers

as long as your cost basis is below strike, you had profit and you didn't really lose money

even if the P&D was a Hertz moment and you got steamrolled, it's still profit cash in the bank

all you lost was "opportunity lost" due to higher sp

but stocks don't go linear up forever, there is always correction/retest coming

 

[Jim Holder]

i am puzzled why there seems to be widespread panic among CC sellers

all you lost was "opportunity lost" due to higher sp

Two reasons come to mind:
1) Someone w/ a few CC's below CB but was a semi-reasonable risk when opened (i.e., -C250 7/5 opened when TSLA was at $197 just five days ago).
2) Chance of missed profits does mess with the brain and can cause panic (not that it's a good reason).

 

[Discoducky]

Only truly dangerous if you're naked? If those C are covered you can just keep rolling up and out till out of money? Worse case sell them at a lower price then ideal.

Yep, I've been doing this for 5+ years. Right now, very underwater on $707.50 expiry today, but going to roll and see how long it takes for these to be back OTM. These are at ~$40 right now and I sold them at $2 about 10 days ago.

 

[thenewguy1979]

Two reasons come to mind:
1) Someone w/ a few CC's below CB but was a semi-reasonable risk when opened (i.e., -C250 7/5 opened when TSLA was at $197 just five days ago).
2) Chance of missed profits does mess with the brain and can cause panic (not that it's a good reason).

maybe this explain why the professor @tivoboy always seem so calm. He never go naked if I remember.

Professor sold -230C for August. Naked me would be scared with those move.

 

[Yoona]

Someone w/ a few CC's below CB but was a semi-reasonable risk when opened

LOL, please kindly see the title of this thread!

if one wants to preserve capital: don't gamble, don't speculate, don't 'tempt' MM, don't listen to news, don't do nothing

so let's cross the aisle and be the gambler be the House that writes all the rules

 

[Jim Holder]

LOL, please kindly see the title of this thread!

if one wants to preserve capital: don't gamble, don't speculate, don't 'tempt' MM, don't listen to news, don't do nothing

so let's cross the aisle and be the gambler be the House that writes all the rules

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100%

Those of us that follow this rule never get burned!

 

[tivoboy]

maybe this explain why the professor @tivoboy always seem so calm. He never go naked if I remember.

Professor sold -230C for August. Naked me would be scared with those move.

Only VERY limited beaches, sometimes Big Island or Canaries.

 

[Right_Said_Fred]

An update on my positions:

- 1500 shares with 15 covered short calls at 270 and 330 for mid 2025. May roll those up.
- 10 naked short calls 420 for mid 2025. I'm looking to buy 1000 shares to get those covered. The cash is there. For this purpose I sold:
- 10 puts 250 7/19 for $25 when we were at 228. Depending on what the stock does I will let those expire and pocket the 25k, roll them to a later date or let them get assigned. If they expire I will agressively write new puts.

The last few weeks I've been trying to come up with a new strategy which does not involve daily monitoring. I had a profitable strategy with daily positions, but it required so much attention and became so time-consuming and stressful that I had to stop using it.

Since then I've been searching for a new strategy and I think I found one: it revolves around buying both put spreads and call spreads right before the quarterly earnings of 11 volatile stocks, and selling them within a few days or on expiry day, whichever is more prudent. I buy the spreads for 10k per stock (but I may start smaller with 5k), which means it requires 50k max when 5 stocks are having earnings in the same week. Plus a lot of buying power in case the short legs of some spreads get assigned early. Assignment itself is not a problem, because it's covered by the long legs.

I backtested the strategy, using historical stock movements and option prices provided by Market Chameleon, against the 12 last earnings seasons of the 11 stocks and it would have produced 11 winning earnings seasons (of 60k on average) and 1 loss (of 20k). So it looks very, very good. But you know what they say about past performance...

So my plan is to start trying it out this month. The big plus: it's just a few weeks of 'work' every three months. Another plus: it doesn't matter which direction the stocks move, as long as they move (a lot).

 

[Jim Holder]

What we have here is a good old fashioned short squeeze...nothing more nothing less. I focus on P, which was low and indicates where the NEXT D most likely will be...or below.

Good inference. Could energy make up for any Q3 Auto Delivery softness, and thus keep this range ($240-$275) going?

 

[Yoona]

alrighty, let's shut down and pay the guy his 5 cents

as usual, do NOT roll no matter how safe it looks coz next week is ...

it's movie timeeeeeeeee

 

[Jim Holder]

TSLA setting up for an up week next week (at least on the surface):

7/12:

Massive positive Delta (bullish):

 

[Jim Holder]

Maybe it's respecting the old RS at $250.69 going back to October and December 2023

 

[dl003]

CB was $8.61 on the -C$230 9/20s... I'd been selling weekly "seems safe enough" CCs on them for several months now and if we'd stayed under 200 would've been "free" calls within a few more weeks... currently (well, close Wed.) they're at $35.10, with the -C$200 7/12s at $46.19.

The only thing I can think of, is to close them both at a $13 debit.
Then short a 9/20 190/310 strangle for $13

 

[thenewguy1979]

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Maybe it's respecting the old RS at $250.69 going back to October and December 2023

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Big Bull Trap.....

That's how it get people. Everyone and their mom keep on buying dips. Most everyone on you tube and x are Bullish.

This week the M&M squeezed the nuts out of the shorts. Next week they squeeze the bulls. Got everyone where they want them. 1 billion in call is temping.

This make 7 days above upper BB. Per Yoona max has been 8. If followed - rug pull Monday or Tuesday.

 

[AM21]

I would personally be acting with more urgency to close those 18 remaining short calls. One of my basic rules is to never have naked shorts and be exposed to unlimited risk. I would not be sleeping well with those positions still open. Hoping for a downturn is never a good strategy and runs like this just have a way of waiting until you’re forced to cover until they reverse.

We will hopefully be down tomorrow to give you a chance but if we keep going up it will get increasingly painful and nerve-wracking. I think most of us doing this long enough have been there at some point and it can get really bad. There is a specific point at which your portfolio could be liquidated and literally go to zero - it’s not worth finding out if that will or won’t happen.

I would specifically BTC the 240s and maybe the 220s, and use any extra money to close more short calls or buy long calls. I’d sell shares to buy more long calls if you run out of cash. Also, I would not be rolling for strike improvement - if you keep the strike low, you can consolidate into a lower number of farther-dated contracts.

This morning I took @MikeC's advice: BTC 5x C240 and 2x C220; consolidated 9 other short calls into -3x C200 Sep 24 and -3x C210 Mar25; BTO 5x C415 Sep24 to cover -5x C370 Dec26 in the short term.

Short calls:
-4x C210 19Jul24
-3x C210 2Aug24
-3x C200 20Sep24
-3x C210 Mar25
-5x C370 Dec26

Long calls:
+5x C415 20Sep24

Short puts:
-3x P200 Dec26
-1x P150 Dec26

Long puts:
+3x P175 20Sep

1000 shares
$66k cash
Some margin

Now I'm still having 3 naked ITM short calls, and the -5x C370 is only partly covered, though I can keep buying cheap short-term far OTM calls to keep this coverage. My cash is only enough to either back the -P's that I have, or buy more share/calls to cover the short calls, so if the stock keeps going up, I will have to take the -P's off at some points to avoid being caught in the reverse. I have magin to use, but prefer not to use it unless I have to.

I'm debating consolidating the -4x C210 19Jul and -3x C210 2Aug into -4x C220 Mar25. Is it a good idea to do it right now? Or is it worth waiting for 1-2 more weeks given that the risk is more contained now? In addition, I'm looking for ideas to deal with the -5x C370 Dec26 eventually. If we ever roll back to $170-190 range, I could BTC them or BTO new LEAPs to cover them, just not sure it's the optimal way to handle those.