Wiki Selling TSLA Options - Be the House

[InTheShadows]

I have one IC open, rolled the call side down from 800/870 to 780/850, still for this week. I don’t have any calls sold.

rolled a set of 670/730 puts to next week when the short leg was atm for 2.5.

I sold my first ever set of I dare you put spread on Friday 655/755. Haven’t done anything with it yet.

 

[BornToFly]

Rolled my 10 Sept 24 700 Puts for October 29 and pocked $30k.

 

[ZeApelido]

Thoughts on Jan 24 LEAP bull vertical call spreads?

I sold the TSLA stock in my IRAs in January near peak (kept the other 55% of stock in taxable account), but thinking about getting back in.

I could buy the stock, which I think at best could bring back a 3x by Jan 2024 (IMO). Or I could do some variant of a call spread somewhere in the $700-$1000 range or narrower which could also yield a 2x-3x. Benefits are that could yield a 3x even if TSLA only goes up say 25% from current price in 2 years. I think this is very likely.

Downside if obviously major loss if share price stays below $800. Other downside is if stock goes above say $2000, then profit has been limited. Both of these I don't see as likely, but who knows.

Thoughts?

 

[ReddyLeaf]

My contribution this week is rudimentary technical analysis in the form of this graph. 780 high, 750 low (circles) and the possibility of a bear raid (arrow). I really can’t believe there will be another raid down to 720, but it’s on the graph too. If I was trading ICs I’d probably go with 670/720-800/850s, but I’m very risk averse this week. We’ve seen much more green in the past month than since the beginning of the year and I hope that continues, but just stay below $765 on this Friday.
View attachment 710959

So much for “I really can’t believe“. I really should start trading the technical channel a bit more. Edit: wow, I forgot that I had set a buy of one share at $719.61 and actually guessed right this time, and hit today’s low so far.

My not advice (and I won’t because I can’t trade spreads on margin) would be to sell that 670/720 BPS right about now. Too much risk for me now, but maybe 650/700 for those with more guts.

 

[adiggs]

So much for “I really can’t believe“. I really should start trading the technical channel a bit more. My not advice (and I won’t because I can’t trade spreads on margin) would be to sell that 670/720 BPS right about now. Too much risk for me now, but maybe 650/700 for those with more guts.

I added some 680/730s earlier this morning when the shares were at 730. I'm feeling highly confident in (a) a rebound tomorrow or this week back above 730 or (b) the shares to stay close enough to 730 for an effective(*) 1 or 2 week roll.


(*) Effective. Bare minimum is a roll for a net credit. Highly preferable - a net credit roll that also improves the strike and makes the overall position <<5 weeks to expiration, preferably only adds 1 week.

 

[ChefBoyardee]

Some good tankage today - I didn't think we'd get an opportunity like this with all the catalysts coming up . I'm averaging into a 720/710 put spread for Oct 1 as we drop.

Both TSLA and Nasdaq are at support and near the bottom of their channels. I think we'll rebound tomorrow but I'm saving a bit of buying power in case we retest the channel at 710 tomorrow

 

[corduroy]

Some good tankage today - I didn't think we'd get an opportunity like this with all the catalysts coming up . I'm averaging into a 720/710 put spread for Oct 1 as we drop.

Both TSLA and Nasdaq are at support and near the bottom of their channels. I think we'll rebound tomorrow but I'm saving a bit of buying power in case we retest the channel at 710 tomorrow

Same here. It's hard to stop going back to the BPS well today with premiums so juicy. I'm at 70% of my total margin, so holding off to see what tomorrow brings.

 

[juanmedina]

All green here. I haven't sold any calls yet. Bought 25 shares and a Jan 24th 600 for $270 low of the day haha.

 

[Yoona]

after daily nagging by teenage son, i surrendered...

 

[EV forever]

Thoughts on Jan 24 LEAP bull vertical call spreads?

I sold the TSLA stock in my IRAs in January near peak (kept the other 55% of stock in taxable account), but thinking about getting back in.

I could buy the stock, which I think at best could bring back a 3x by Jan 2024 (IMO). Or I could do some variant of a call spread somewhere in the $700-$1000 range or narrower which could also yield a 2x-3x. Benefits are that could yield a 3x even if TSLA only goes up say 25% from current price in 2 years. I think this is very likely.

Downside if obviously major loss if share price stays below $800. Other downside is if stock goes above say $2000, then profit has been limited. Both of these I don't see as likely, but who knows.

Thoughts?

Never done vertical spreads, but I did initiate my LEAPS position for Jan 24 LEAPS on Friday and added more today. Decided to go with 690 strike - bought 10 with an overall average cost basis of $240. According to Fidelity this has dropped to 225, but that is the bid price - still a big gap between bid and ask. The last transaction was at 238 - its a long term hold, so no worries there.

If you think the stock will 3X by Jan 24, then LEAPS is the way to go - see below. I believe the stock will at least 2X, so 690 strike is a good balance. Sharing my calculation sheet for comments if anyone has some insights. What is interesting looking at my calculations from earlier in the month, the June 23 prices seem to have dropped even further - considering the stock price is about the same.

Options Analysis ROI

Jan'24 Options
Strike Price	Cost Contract	Number	ROI	Profit
500	324	309	522	421605
690	238	420	630	530252
840	180	556	750	650000
1000	137	730	869	768613
1200	99	1010	1000	900000
Date today	9/20/2021
Stock Price today	730	137	300	200000
Investment	100000
Stock Price at Exp	2190

Edit: I meant - never did LEAPS bull vertical call spreads in the first line

 

[adiggs]

after daily nagging by teenage son, i surrendered...

That's an important component of an investment thesis in Tesla, or at least it is for me. Your son is on to something there (MHO)

 

[adiggs]

Same here. It's hard to stop going back to the BPS well today with premiums so juicy. I'm at 70% of my total margin, so holding off to see what tomorrow brings.

I've got my 630/730s from last week that I rode through the day; a lot happier with the $730 ending price than the $720 low price I saw along the way.

I added some 680/730s when the shares were around $730 (which then went down to 720 - also much happier now at $730). This position is even ahead slightly at the end of the day. That gets me pretty much all-in on the put spread side.

No lcc open, nor have I had for a week or so; I'll need to see a jump back to the high 700s this week to give those a whirl. The thinking behind those sales continues to the same - reasonably aggressive, courting assignment on a sharp up move, while collecting good premium (for calls anyway) when I miss. These are only lcc at this point - I no longer sell cc against my shares (though I have reduced the share count somewhat in retirement, my net delta is up significantly due to all the leaps I've purchased).


NOT-ADVICE (really for real)
And my conviction is so strong in a recovery this week, I want to take advantage of this aggressive sell off. I've purchased a pile of 770 and 780 calls for .80 and 1.50 each for expiration this Friday. Not-advice because I pretty consistently lose ~100% of purchase price when I buy options.

My thesis is we'll see a strong rebound tomorrow before or after we get the Fed minutes. That rebound might wait until Wednesday but I'll need to at least some see signs of life tomorrow. I entered the week thinking that 790+ was coming this week and I haven't read or seen anything suggesting this is a TSLA specific move today.

And with p/d and then earnings coming, and with them going to be as good as I think they'll be, I anticipate that tomorrow will be roughly as much up, as today was down. Therefore I'm taking this big sell off to go for something that'll move the needle. In effect the earnings from put sales that I'd be collecting this week are going into call purchases instead of the income side of the ledger. I figure if we snap back to the 770ish range, then those 770 calls will be priced more like $5 - something like 6x what I bought them for.

I don't really think the 780s will get ITM tomorrow or Wednesday but I'm using a week of options income to swing for the fences; we'll see what happens.

 

[buttershrimp]

I think I will start taking your predictions more seriously.

I know I said 690 and that’s where my spread is anchored currently, but I personally hope it pops back to 750….

It’s nearly impossible to predict which way we go each week, but it’s a fun game to play. Pulled a list of data this weekend as an exercise, not much to be gleaned except it makes realize how much a reasonable cushion is and to be wary of multiple consecutive weeks of red or green (far right Scribble in the margin shows the streaks)….

 

[vikings123]

Well, you were correct. I didn't think we would test 720 support level, but we did. After I saw you post this morning, I closed out my BPS 620/720 for this Friday at a small loss. Didn't want to take chances with the macros tanking.

I would be looking to close some of my positions if we gap up tomorrow including some short term calls I bought around 724. I’m not convinced we have seen the low for this week as that end of day bounce was just alright, not great. 708 is potentially in play tomorrow. That’s my prediction anyway. Let’s see how I do tomorrow haha.

I believe exercising caution on a day like today is smart. It is OK to sit out until the market picks a direction.

 

[EV forever]

Question for @adiggs or anyone else familiar with Fidelity:

Recently, I applied for adding the Spread options trading to my Rollover IRA account which was at Level 2 for options. First, Fidelity rejected the request because my core cash position was in the wrong money market fund. So I changed that, waited for it to clear and reapplied. The new core position is in SPAXX. Well, since this change, I have started getting all kinds of warnings regarding margin and cash requirements in the account. Initially I thought this was because I had a bunch of 17Sept LEAPS expiring, so it was just to ensure I had cash to cover. I sold most of those last week Wednesday, so now there is plenty of cash and no calls expiring in next couple of months.

This morning I realized they have approved the Level 2+ for this account, so I immediately opened some BPS in that account today. I got the standard warning about no day trading allowed in the account and the BPS went through. Now aftermarket close I got another warning in the communications "Transactions occurring on 09/20/2021 created a margin debit of $229,658.31. Please note that your core account and non-core money market positions will automatically liquidate to pay down this debt before you begin accruing margin interest charges."

The BPS opened were 25x p590/-p690 for 09/24 for $4.5. Also bought LEAPS for about 140K today. I had about 490K settled cash in the core account - should have been sufficient to cover both of these. So how are they coming up with this margin debit?

First time trading spreads in the IRA account - so getting concerned with these warnings!

 

[kcveins]

The price drop this morning allowed me to BTC my 10/01 800C at a 65% profit and STO 10/01 730P
I got to keep things simple for me..

 

[riverFox]

Question for @adiggs or anyone else familiar with Fidelity:

Recently, I applied for adding the Spread options trading to my Rollover IRA account which was at Level 2 for options. First, Fidelity rejected the request because my core cash position was in the wrong money market fund. So I changed that, waited for it to clear and reapplied. The new core position is in SPAXX. Well, since this change, I have started getting all kinds of warnings regarding margin and cash requirements in the account. Initially I thought this was because I had a bunch of 17Sept LEAPS expiring, so it was just to ensure I had cash to cover. I sold most of those last week Wednesday, so now there is plenty of cash and no calls expiring in next couple of months.

This morning I realized they have approved the Level 2+ for this account, so I immediately opened some BPS in that account today. I got the standard warning about no day trading allowed in the account and the BPS went through. Now aftermarket close I got another warning in the communications "Transactions occurring on 09/20/2021 created a margin debit of $229,658.31. Please note that your core account and non-core money market positions will automatically liquidate to pay down this debt before you begin accruing margin interest charges."

The BPS opened were 25x p590/-p690 for 09/24 for $4.5. Also bought LEAPS for about 140K today. I had about 490K settled cash in the core account - should have been sufficient to cover both of these. So how are they coming up with this margin debit?

First time trading spreads in the IRA account - so getting concerned with these warnings!

Make sure you're enrolled in Limited Margin. It will allow you to trade on unsettled funds in your IRA.

 

[adiggs]

Question for @adiggs or anyone else familiar with Fidelity:

Recently, I applied for adding the Spread options trading to my Rollover IRA account which was at Level 2 for options. First, Fidelity rejected the request because my core cash position was in the wrong money market fund. So I changed that, waited for it to clear and reapplied. The new core position is in SPAXX. Well, since this change, I have started getting all kinds of warnings regarding margin and cash requirements in the account. Initially I thought this was because I had a bunch of 17Sept LEAPS expiring, so it was just to ensure I had cash to cover. I sold most of those last week Wednesday, so now there is plenty of cash and no calls expiring in next couple of months.

This morning I realized they have approved the Level 2+ for this account, so I immediately opened some BPS in that account today. I got the standard warning about no day trading allowed in the account and the BPS went through. Now aftermarket close I got another warning in the communications "Transactions occurring on 09/20/2021 created a margin debit of $229,658.31. Please note that your core account and non-core money market positions will automatically liquidate to pay down this debt before you begin accruing margin interest charges."

The BPS opened were 25x p590/-p690 for 09/24 for $4.5. Also bought LEAPS for about 140K today. I had about 490K settled cash in the core account - should have been sufficient to cover both of these. So how are they coming up with this margin debit?

First time trading spreads in the IRA account - so getting concerned with these warnings!

I don't know for sure of course - I am doign these trades constantly in my 2 IRAs with none of the extra warnings you're getting. I do get the day trading warning.

That being said - my only cash position is that SPAXX core position. There isn't some other cash type thingy.

I don't get any margin warnings in my IRA. What I do see is a "Pending Activity" in the account equal to the size of the margin required for the defined risk position. In the case of that 25x ($100 spread size) position that'll be $250k. It will be subtracted from the SPAXX position and held in Pending Activity until the position resolves. The Pending Activity shows up during after hours of the day that I open the position. It goes away the night, or the night after the night, after the position resolves. "Go away" means that it gets added / deposited back into the SPAXX position.

Cash is always found in SPAXX or Pending Activity.


Maybe that "margin debt" message is because you opened enough BPS AND purchased enough LEAPs to overshoot your cash by that amount? I haven't tried it but expect that would fail.


Alternatively if you have cash in something other than SPAXX, then I expect that'll be 'sold off' to pay that margin debt. Or even if you have that much in SPAXX then that'll be used to finish paying for your purchases.

If it's not making sense (and it's not making sense to me) I suggest a phone call to Fidelity is in order

 

[MikeC]

Question for @adiggs or anyone else familiar with Fidelity:

Recently, I applied for adding the Spread options trading to my Rollover IRA account which was at Level 2 for options. First, Fidelity rejected the request because my core cash position was in the wrong money market fund. So I changed that, waited for it to clear and reapplied. The new core position is in SPAXX. Well, since this change, I have started getting all kinds of warnings regarding margin and cash requirements in the account. Initially I thought this was because I had a bunch of 17Sept LEAPS expiring, so it was just to ensure I had cash to cover. I sold most of those last week Wednesday, so now there is plenty of cash and no calls expiring in next couple of months.

This morning I realized they have approved the Level 2+ for this account, so I immediately opened some BPS in that account today. I got the standard warning about no day trading allowed in the account and the BPS went through. Now aftermarket close I got another warning in the communications "Transactions occurring on 09/20/2021 created a margin debit of $229,658.31. Please note that your core account and non-core money market positions will automatically liquidate to pay down this debt before you begin accruing margin interest charges."

The BPS opened were 25x p590/-p690 for 09/24 for $4.5. Also bought LEAPS for about 140K today. I had about 490K settled cash in the core account - should have been sufficient to cover both of these. So how are they coming up with this margin debit?

First time trading spreads in the IRA account - so getting concerned with these warnings!

I made the same change you did to get spread trading in an IRA. Now when I trade, it defaults to purchasing positions with “margin” instead of “cash” - even if I have the cash sitting there. It’s on the order page when you make a trade on the website, but on the app, you don’t even see the choice unless you click something to open up the choices. Could that have happened to you?

Edit: Picture for clarity. This is in a Fidelity IRA - if I buy TSLA under Trade Type "Margin", it holds the shares as a separate position than TSLA that was bought as Trade Type "Cash". It's the dumbest thing but I was wondering if it might explain the problem @EV forever is having.

 

[InTheShadows]

You have to keep cash in SPAXX to trade with margin. The margin keeps you from having to wait for the cash to settle and having good faith violations. Your level should say options level 2 + spreads.

the margin is t margin like in regular accounts. It’s not a loan. It just allows your funds to settle with out violations. And to instantly resolve like with a spread getting assigned.