Wiki Selling TSLA Options - Be the House

[stealthyc]

Also just a "chart with deceptive scale only comparing friday close with official MP" doesn't tell the whole story.

We've seen lots of weeks where MP was weird because of way OTM options, but there was a fairly obvious "realistic" target for the MMs, and it'd frequently close within pennies of it.

I did not claim that open interest did not matter, just the stated max pain. Also I'm not sure if by deceptive scale you are talking about a chart that I pasted a while ago (because it didn't just compare fridays) but for the purposes of options trading like some do here with fairly high delta, a very small deviance can have a big effect.

 

[Yoona]

lots of vol on 750

 

[EV forever]

FSD could move the needle if the beta release leads to improved uptake in either the pay-up-front or subscription numbers. Also if Tesla moves on to training and testing the beta in other regions with currently lower uptake. I think people spending more on Tesla software would definitely get Wall Street's attention (even if indirectly via increased margins).

I am more concerned that FSD could move the needle in the wrong direction in the short term. There are a lot of people eagerly waiting on it. While me and my husband are We are among those those waiting eagerly for the FSD release, I am under no illusions that it is going to be perfect on day 1. During this time, MMMs, TSLAQ and ill-wishers of Tesla are eagerly waiting for the first accident to occur. With wider rollout the probability of this just increases. Can you imagine the headlines? It is unfortunate, but I doubt FSD rollout will be positive movement to the stock in the short term.
Long term is a different story

 

[TheTalkingMule]

No sympathy for theta woes in the "main thread", so I'll do my whining here. 10/8 $800c down another 10% this morning with SP up 1%. I feel like we're gonna pop near to $800 just before P&D, so I'm gonna avg myself down a bit at a paltry $3.65/contract today.

 

[TheTalkingMule]

I did not claim that open interest did not matter, just the stated max pain. Also I'm not sure if by deceptive scale you are talking about a chart that I pasted a while ago (because it didn't just compare fridays) but for the purposes of options trading like some do here with fairly high delta, a very small deviance can have a big effect.

For simplicity's sake, I'll revise my statement to say "pain influence" was incredibly high this summer.

 

[TheTalkingMule]

I am more concerned that FSD could move the needle in the wrong direction in the short term. There are a lot of people eagerly waiting on it. While me and my husband are We are among those those waiting eagerly for the FSD release, I am under no illusions that it is going to be perfect on day 1. During this time, MMMs, TSLAQ and ill-wishers of Tesla are eagerly waiting for the first accident to occur. With wider rollout the probability of this just increases. Can you imagine the headlines? It is unfortunate, but I doubt FSD rollout will be positive movement to the stock in the short term.
Long term is a different story

Exactly. People forget how easy it was to crash Chipotle with a couple tiny squirts of e-coli over the sneeze guard.

Think of the shenanigans to be pulled when FSD is widespread. Fake stop signs, etc...

 

[AxlxA]

I (apparently foolishly) bought some hammered 100121C800 on Monday at $1.69 (-60% from Fri close) looking for a pop — which didn’t happen at that strike, it did at ITM C650 btw = a learning. I can’t think of anything constructive to do with these besides takes the loss before they decline further. [20th close $1.52 and 21st $0.86.].

Any ideas? Is there much of a chance of recovery by next week if SP moves to $760+?

These are what I like to think of when wallstreetbet does their plays, which to me is a pure lotto ticket. Those will not be ITM so sell now honestly. Sorry but some times we hit it some times we dont =p

If we have several LARGE down days, like 3-4% down a day for 2 consecutive days, then I try to buy a 1-2 mo out OTM call, and when we go green by a few % the next recovery day, I sell it for a 50-80% gain

 

[Knightshade]

I am more concerned that FSD could move the needle in the wrong direction in the short term. There are a lot of people eagerly waiting on it. While me and my husband are We are among those those waiting eagerly for the FSD release, I am under no illusions that it is going to be perfect on day 1. During this time, MMMs, TSLAQ and ill-wishers of Tesla are eagerly waiting for the first accident to occur. With wider rollout the probability of this just increases. Can you imagine the headlines? It is unfortunate, but I doubt FSD rollout will be positive movement to the stock in the short term.
Long term is a different story

Same concern...

Kinda thinking of doing some pretty aggressive (for me) BPS of like 645/745 for Oct 1, since that'll be immediately before P&D release and in theory JUST before the actual expansion of the beta... seems super unlikely we're lower that day than we are right now....currently offering about $11.50 net credit there.

But short term options between Oct 1 and at least ER at least is gonna be potentially sketchy esp if there's any FSD accidents.

 

[willow_hiller]

If there's any relationship between closing price and max pain, I would guess that's primarily a function of open interest and delta hedging. The buying and selling of the underlying to offset the change in delta will tend to drive the SP to an equilibrium in between the strikes of the most commonly held puts and calls.

If you imagine a call with a strike at 750, and the underlying hovering around 750, any SP movement up will increase the call's delta which will cause delta-hedging market makers to buy more shares which will increase the SP even further. And likewise any SP movement down will decrease the call's delta which will cause delta-hedging market makers to sell more shares which will decrease the SP even further.

So if you could imagine the entire options chain like a hill-covered landscape, with open interest adding altitude to the surface at a given strike, the SP will tend to roll down those hills like a ball and settle in the nearest lowest valley; until someone gives it a kick up over a peak and then it will settle in the next lowest valley.

 

[AxlxA]

No sympathy for theta woes in the "main thread", so I'll do my whining here. 10/8 $800c down another 10% this morning with SP up 1%. I feel like we're gonna pop near to $800 just before P&D, so I'm gonna avg myself down a bit at a paltry $3.65/contract today.

It's great when you're the seller of these.... Which side are you on?

 

[stealthyc]

If there's any relationship between closing price and max pain, I would guess that's primarily a function of open interest and delta hedging. The buying and selling of the underlying to offset the change in delta will tend to drive the SP to an equilibrium in between the strikes of the most commonly held puts and calls.

If you imagine a call with a strike at 750, and the underlying hovering around 750, any SP movement up will increase the call's delta which will cause delta-hedging market makers to buy more shares which will increase the SP even further. And likewise any SP movement down will decrease the call's delta which will cause delta-hedging market makers to sell more shares which will decrease the SP even further.

So if you could imagine the entire options chain like a hill-covered landscape, with open interest adding altitude to the surface at a given strike, the SP will tend to roll down those hills like a ball and settle in the nearest lowest valley; until someone gives it a kick up over a peak and then it will settle in the next lowest valley.

I very much agree with this sentiment. I personally think people here get way too far into the weeds of conspiracy theories regarding manipulation. I do believe though that open interest is meaningful, especially on a stock like tesla which has such high options volume, but more due to natural market forces than manipulation.

 

[AxlxA]

I very much agree with this sentiment. I personally think people here get way too far into the weeds of conspiracy theories regarding manipulation. I do believe though that open interest is meaningful, especially on a stock like tesla which has such high options volume, but more due to natural market forces than manipulation.

especially when this max pain vs closing price on friday is back tested. These max pain values updates every morning. of course the final max pain will be closest to the interests of the market players.

 

[jeewee3000]

"Everything" is perhaps a strong word. Mire accurately I would say volume was so low that MM's were in complete control from mid-April til the week after Labor Day. I mean, it's been nothing but two astonishing quarters and the SP was floating around at 30% off the ATH.

I find it hard to believe that was anything other than those well positioned to move the SP pushing it down.

I don't think FSD will have any positive impact on SP until we see a fleet of robitaxis and Tesla is licensing FSD to BMW. I think shocking revenue, growth, and earnings will move the needle up beyond $1000 by the time 4Q earnings is out and processed by the algos.

Wall Street has no imagination whatsoever, thinking they'll grasp the implications of FSD is giving them too much credit.

I think we cannot predict how FSD will move the needle, but it won't be obvious from this point in time.

I see some think FSD beta wider release will likely cause a SP rally (since true FSD could feel closer and more tangible than ever, surprising the mainstream) or a huge SP dip given some FSD beta accidents.

Personally, I think the beta will move the needle very little, since it hasn't before. Not one SP rally was the result of some FSD announcement. Heck, even the pinnacle of FSD announcements (Autonomy Day) didn't cause an upswing.

What I think WILL move the needle in a sudden and extreme manner, is a sudden press release by for example regulators in California that Tesla FSD has proven to be safer than human driving and is therefore allowed from version X.XX and above, or at least that they're thinking about allowing it under certain conditions.

In other words, I'm looking for announcements regarding FSD being accepted by regulators. The first step in that regard is official safety reports by an independent source, most likely NHTSA.

This won't happen in the short term I believe, but it's perfectly possible in 2022. If so, it will blindside WallStreet completely and send the stock to the moon.

Not advice. But that's why I don't sell LEAPS. Too much potential in the mid-term.

 

[stealthyc]

These are what I like to think of when wallstreetbet does their plays, which to me is a pure lotto ticket. Those will not be ITM so sell now honestly. Sorry but some times we hit it some times we dont =p

If we have several LARGE down days, like 3-4% down a day for 2 consecutive days, then I try to buy a 1-2 mo out OTM call, and when we go green by a few % the next recovery day, I sell it for a 50-80% gain

I think it's a bit early to claim that 800c will absolutely not be ITM by 10/1, but I would not call it likely.

 

[UltradoomY]

Closed out my BPS side of my Iron Condor today (closed the BCS side on Monday for 95% $820/$840)
BPS side was $695/$675
All opened 2 weeks ago.
Now waiting on a fill for my new Iron Condor for week of October 8th exp.
-$685 /+$655
-$830 /+$860
$3.90 credit per contract and keeps me way out in anticipation of P&D report.

Still have the BPS side of my Iron Condor for next week (closed the call side at 90% Monday) sitting at $690/$650

I really like these set it and forget it Condors. Low margin and good premium for the strikes.

 

[ReddyLeaf]

No sympathy for theta woes in the "main thread", so I'll do my whining here. 10/8 $800c down another 10% this morning with SP up 1%. I feel like we're gonna pop near to $800 just before P&D, so I'm gonna avg myself down a bit at a paltry $3.65/contract today.

I (apparently foolishly) bought some hammered 100121C800 on Monday at $1.69 (-60% from Fri close) looking for a pop — which didn’t happen at that strike, it did at ITM C650 btw = a learning. I can’t think of anything constructive to do with these besides takes the loss before they decline further. [20th close $1.52 and 21st $0.86.].

Any ideas? Is there much of a chance of recovery by next week if SP moves to $760+?

Sell now! Look at MaxPain call wall at 750 and put wall development at 740. There’s no way we’re hitting 800 this week, and probably next either. These bets, which I have done as well, have a low probability of success, maybe 20-30%. You’re burned 70-80% of the time. Better success happens closer to ATM, maybe 780s for next week, but then only when you’re able to buy at the bottom and know the SP will rise. We don’t appear to be in a time where the MMs need to buyback shares for the typical Monday pop. Apparently, they have more shares than they need.

Edit: maybe they watch This thread and see the level of selling ICs, CCs, and CSPs. They’re now trying to throw us off our game.

 

[Tslynk67]

It's great when you're the seller of these.... Which side are you on?

I keep telling folks to stop buying these lottery tickets, which expire worthless, what 9/10 times? One time you get lucky with a decent win, mostly not

Options trading is heavily skewed favour of the sellers, even more so with seller that do their homework, and even more with sellers that know the stock they are trading inside-out and watch their positions closely...

No offence, @TheTalkingMule, but it's a recipe for bleeding capital

 

[jeewee3000]

I keep telling folks to stop buying these lottery tickets, which expire worthless, what 9/10 times? One time you get lucky with a decent win, mostly not

Options trading is heavily skewed favour of the sellers, even more so with seller that do their homework, and even more with sellers that know the stock they are trading inside-out and watch their positions closely...

No offence, @TheTalkingMule, but it's a recipe for bleeding capital

Unfortunately I have to agree to this, merely out of experience. You win some, you lose some, but the wins generally don't make up for the losses.

With selling options the tables are turned.

 

[euro2012]

I, too, have been burned many a time buying options that you go in thinking you can’t lose. ‘Capital burn’ as a good descriptor of this. Selling only for me now, unless we are talking leaps…

 

[Yoona]

lots of vol on 750
View attachment 712717

still going up