Wiki Selling TSLA Options - Be the House

[SOULPEDL]

OK, I read the 1st page and the last couple, but have not taken the course. Guess I'm a rebel for posting now. It's rebel day!
It's a new language over here, I'm better at French actually. Some are getting honest about trying again after loosing all.
Sounding like my brother Bob, so I'll be doing more observing with extreme caution.

Thanks for all the suggestions and have a great weekend!

 

[Yoona]

my final 10/1 positions; CCs are -c805
i will close the calls early

 

[Yoona]

Condolence to all who $ this week, and congrats to all who $.
Just a reminder that SP was 380+ exactly 1 yr ago and we are slowly back to the

 

[InTheShadows]

OMG ! 10 pages in the main thread to read to catch up.

 

[bballshinobi]

These 10/1 700p are worth about the same as I sold them for 2 days ago when the SP was $25 lower.

Yea I think everybody is shoring TSLA and that’s the only reason it hasn’t gone down yet. The pricing on calls and puts are very disproportionate right now.

 

[EV forever]

Folks, this trading credit spreads strategy is AMAZING!
I am up 58K for realized gains this month - of which 32K was just this week. That was just by copying some of the trades posted here this week. Why was I sitting on the sidelines for last 4 months?

I am keeping things conservative so far, but definitely feeling a lot more comfortable opening 25-30 spreads at a time. No more ominous warnings from Fidelity either, so that may have been a 'first-time after credit spread approval' thing. I did end up with a wash sale in my brokerage account - but no warning about that either.

Now on the bad part for next week - today was the day I chose to open the call spread side of a bunch of ICs when SP was around 760. The spread is -c805/+c845 for 10/01. Also opened half the put spreads -p685/+p725. I still have some put spreads and ICs from previous week for 10/01 and the TastyTrade IC for 10/22 which is moving so very slowly. Hopefully, can get out of these next week without losing anything.

I did not get a chance to buy the LEAPS I wanted - the price ran away from me and none of my orders went through. So now, I find myself hoping for a dip on Monday - such traitorous thoughts!

 

[pz1975]

I am glad I was 10:1 sold puts: calls this week. My BPS ended up all with 95-100% profit and I closed my 770 calls for a small loss today during the run-up. My overall profit was very good (ignoring the covered call mistake below that I rolled out anyways).

The mistake I made was selling $755 CCs this morning around $750 thinking the maximum the SP would go is $760 and I wanted to squeeze out a little more profit - note to self: don't do that on expiration Fridays when the SP trend is overall up. I ended up rolling them out to Jan22 $940 CCs before close for a small credit. I actually don't mind this because I never sell calls against all of my shares and LEAPS and I can just basically forget about these since they don't affect my margin or trading plans at all. And if the SP is >$940 in January, then hooray - I will either sell some LEAPS (which I would be doing anyways) and lose a bit of the profit or roll them out and up further. Having sold puts go against us is so much worse since they use up valuable margin while rolling and waiting.

 

[ammulder]

Well I feel fortunate to have closed the c760s in my taxable account yesterday, even if only for break even and I could have done better elsewhere in the day.

I let the c760s in the non-taxable account ride… and then got distracted this morning early and my limit buys never quite triggered. Oops. Rolled to 10/1 c770 for $5 and now that doesn’t look much better. If there’s even a temporary drop next week I’ll be looking for it! Otherwise, I don’t super mind getting assigned at some point… though I still think I’d prefer to just accumulate more shares.

At least I’m deeper in put spreads and shares, so the lousy luck with calls is only a sidebar for now.

All those Fridays with push-downs were a great pattern… until today they weren’t. Sigh.

 

[InTheShadows]

So I was just looking at my spreadsheet and sept 2nd I bought both shares and June 23 550 leaps when tsla was 735. The shares are up 5% and the leaps are up 4%. That is so messed up.

 

[BornToFly]

I got absolutely creamed picking up pennies in front of the steamroller today:
STO -760c/770c @ $1.25, ended up closing @ $9.25 or so.

No more risky spreads on a Friday hoping for the MMs to step in for me. I kept thinking that we'd see an end of day dip to at least 760, then at least 765, then "oh well, I'm already at max loss for the spread, I'd might as well see what happens". One dumb trade ruined my whole week, unfortunately. I guess I underestimated either Elon saying the chip shortage wouldn't be a problem next year or FSD button release (or both) as a catalyst.

It seems that you, and a few others here, traded this week like it is any other, and have now extended some of the risk into next week. But these two weeks are not like what we had the last two months, and you can't trade the same way. We are going into a record breaking PD coming out after 5 more trading days. Wall Street can be blind and dumb, but they aren't completely blind. Reports all over twitter and elsewhere about record production from China, with record European deliveries, and now record registrations in China. US delivery is off the charts. This is not the time, IMHO, to sell calls anywhere near the money. I had sold and made a little money on 820CC expiring today. I am sitting on my hands all next week! If the past repeats, there will be a run up into next Friday (probably over 800), with maybe a small pullback early in the week. Then we might have a further climb the first week of October if the numbers are really good, before a slight pullback 2 weeks before earnings when Wall Street plays a game of Chicken. I do expect another climb going into the ER in the later part of October. After ER, anything can happen, no matter how good the ER (Buy the Rumor, Sell the news again?) I think Puts are safe. But for selling CC, better to wait 10 days. My personal rules 1-3 are Don't Get Greedy for a reason. Good luck friends.

 

[M3Rider]

I keep thinking how much we run up before the ER. P/D will be good no doubt, but will that be enough to justify a run to 850? 900?
Without the final EPS numbers?

I.e. if CCs are rolled the next 2-3 weeks as sp goes up, is there a chance to catch up to it without taking losses on CCs?

Feels like 50/50.

 

[BornToFly]

I did sell my first BPS today (instead of straight naked Puts). 520/620 for $7. I was happy to see in my Margin Calculator that it did not impact my Margin. However, when I then simulated a SP drop to 620, my margin requirement went way up. So maybe these spreads aren't as safe as I thought.

 

[BornToFly]

Another thing I want to add to the discussion, is to think in percentages and not dollars as the stock price goes up. We could easily climb 5% next week. That puts the stock at 808 next Friday. When picking strike prices for your calls think percentage above the current stock price and not dollars, and ask yourself can the stock climb X percent this week?

 

[stealthyc]

I did sell my first BPS today (instead of straight naked Puts). 520/620 for $7. I was happy to see in my Margin Calculator that it did not impact my Margin. However, when I then simulated a SP drop to 620, my margin requirement went way up. So maybe these spreads aren't as safe as I thought.

The margin usage for that will always be no more than $9300 per contract as it is a defined risk position.

 

[InTheShadows]

I keep thinking how much we run up before the ER. P/D will be good no doubt, but will that be enough to justify a run to 850? 900?
Without the final EPS numbers?

I.e. if CCs are rolled the next 2-3 weeks as sp goes up, is there a chance to catch up to it without taking losses on CCs?

Feels like 50/50.

If it takes off, it’s doubtful. I took losses closing my 770 sold calls on Thursday in the morning, I thought this was how the week was going to end, I just thought it was starting Thursday am. The few hundred it cost me I counted it as a medical bill for stress relief.

I won’t be selling any calls for a while. At least until the stock looks to have stagnated. We have had 3 sessions of spring winding, first at 650 for 1.5 months, then at 720 for a month, then 2 weeks capping at 760. We shattered the 760 today with decent volume. Not much resistance left to ATH except for round numbers now.

 

[adiggs]

This time I have decided to wait until next Monday to open new positions. I believe I've been burned the last 2 out of 3 times I sold puts into heavy Friday positive movement. Always has worked out ok in the end, so maybe it doesn't matter, but I'll try it differently this week.

I'm sitting out puts today as I want to sell them into weakness. Or at least flatness .

And i want to sell CC into strength - mission accomplished! Even if it was only 1/2way up at that point on the day, it still got me out to the 800 strike for next week.

 

[adiggs]

The margin usage for that will always be no more than $9300 per contract as it is a defined risk position.

From what I've seen the margin on a $100 spread as the example you're quoting ($7 premium collected) what you get is $10k margin and $700 (the premium) in hand that you can spend as you'd like. Safest of course is to think of it as a $9300 margin so you don't go spend the $7 and find yourself coming up short later.

That is how it looks like in my IRAs for sure - I get cash and they hold $10k/contract on these $100 spreads.

 

[adiggs]

I always wonder if we can keep this going in the foreseeable future. It feels like we found a cheat code and it is hard to believe sometimes. The other day I was talking to my wife about my options trading and she was asking me "why other people don't do this" because it has been very profitable so far.

My wife and I have had the same conversation - nearly the exact same wording.

I did sell my first BPS today (instead of straight naked Puts). 520/620 for $7. I was happy to see in my Margin Calculator that it did not impact my Margin. However, when I then simulated a SP drop to 620, my margin requirement went way up. So maybe these spreads aren't as safe as I thought.

Unless you're using portfolio margin or something of that ilk, a $100 spread has a max loss of $10k so the margin reservation should be $10k.

That is exactly how it works in my IRAs where I'm doing these.


In my brokerage I do the math in my head assuming this, but I've been seeing different (smaller) actual margin reservations. Which then increase more than I like if I've used some of that extra. At least with Fidelity the dynamic I've seen is that they take my put credit spread, and chop it up amongst all of my holdings to get me the minimum margin usage across everything. So I see long puts being added to my long shares as insurance (for instance).

So I do my own mental math on the size of the position I'm willing to do put spreads with and I rely on my own calculation rather than what Fidelity says I can do. We're mostly in agreement - but when we're not its because they're giving me a little extra rope to hang by

 

[EVCollies]

I saw my 710 puts expire, the 750 calls get assigned for bit more put $ for next week. Up $23K this week, $65K this month and the wheel continues to turn. Those 10/1 760 puts are looking good but will wait for Monday's MMD to STO.

Hard part is HODL strategy beats all my efforts. Every month or so with rising SP, I need a bit more assigned calls to get assigned to feed my put juice. I rationalize this with my wish to have some cash in my portfolio, and I have never had a cash return equal to running the wheel.

 

[EV forever]

I did sell my first BPS today (instead of straight naked Puts). 520/620 for $7. I was happy to see in my Margin Calculator that it did not impact my Margin. However, when I then simulated a SP drop to 620, my margin requirement went way up. So maybe these spreads aren't as safe as I thought.

i have seen the Fidelity margin calculator do this for my brokerage account as well. That is because it does this weird pairings of the short and long puts. In my case, it designates the purchased long put as a 'protective put' on the stock in the portfolio. The short put is designated as a naked put. So when you drop the price of the stock the margin calculator shows you a huge increase in required margin.

However, I believe that is an error in the calculator for margin estimation.

My IRA account on the other hand shows me the cash reserve for spreads margin perfectly - like @adiggs said