Wiki Selling TSLA Options - Be the House

[Tslynk67]

I'm going to ignore most of what you wrote and go on my rant about "paper trading".

It's very easy to convince yourself that you will make money, because (being human) you think to yourself "I'd have bought at the bottom here", or "that's obviously a blip, I'll hold through it", or things like that. But once real money is on the line, it's much harder to make the correct decisions, and what is more, sometimes the trade you do want to make simply doesn't go through. Or you place a market order and discover it gets priced a lot differently than you expected. Or someone on the other side of the option decides to exercise it at a time that makes no sense to you, but it comes out to be exactly the wrong time. I can't even enumerate the ways that you can mislead yourself with paper trading.

So, take your $200k scenario. I suggest you use $50k to implement your strategy, and at $4k/month you can live off the other $150k for a few years (invested in something relatively solid, like ARKK). Once you've consistently turned a profit on the $50k, then you can top it up with whatever is left in your other investment.

"The market can remain irrational longer than you can remain solvent" -- John Maynard Keynes.

Nightmare scenario: it's March 2012. Back on Feb 19, you sold a $140 put, and made some money on it (it's hard to get historical options pricing, so I can't use real numbers here for the actual pricing of the option, but the stock prices you can get on Yahoo Finance by looking at the YTD chart; these numbers are post-split adjusted); on Feb 19 TSLA was $159.98. On March 11, the counterparty exercises your put (remember, you don't have any say in this) and you just bought TSLA for $140 at a time when it is trading at $86.04. What do you do? All your capital is tied up in TSLA stock that's worth about 70% of the money you used to have. It doesn't get back up to the initial price until mid-May, but by then you've eaten $8k of it for living expenses. And remember, this is Tesla doing well at a time everything else was crashing... what if everything else is fine but Tesla tanks all by itself?

Notes:
(1) it doesn't matter how long the period of the Put was, since it's the buyer who decides to execute it.
(2) The broker had withheld enough margin to buy the stock at $140. But now it's only worth $86, you've borrowed against margin to buy it, so now you get an instant margin call.

Of course I've chosen the worst scenario in recent memory. But people who paper trade usually only look at the best scenario. "Think how much I would have made if I sold the Put in March!"

Not a professional, not advice, but... not optimistic.

Indeed, paper-trading is good to learn the mechanisms, but you need skin in the game to experience the emotions and stress of real options trading as your decisions will be coloured by that.

(hint: you'll be stressed)

 

[adiggs]

I'm really curious if you have seen better results in selling the weekly puts vs. longer expirations. I have been calculating what would be most profitable, and from an overall ROI perspective (not factoring time of management), it appears there is a bell curve with a peak ROI at about 3-4 week out expirations.

I haven't studied it in a systematic way. All I can say is that it sure seemed like I could make more by opening puts with 3-8 days to expiration, and frequently closing them at ~70% profit in 1/2 that time. That overall result in many months was better than what I can make right now selling monthlies (say 1/2 to 1 1/2 months out).

Some reasons that won't work as well - some of those 3-8 day trades are at times where the position is particularly attractive, and others are at times that aren't so good (or actively bad). I think of it as locking in the situation as it was when the position was opened, good or bad. Trading monthlies (or longer), I can lock in the situation and results at that moment in time.


I know I've seen a number of different option selling strategies talk about time to expiration, and they pretty consistently recommend that 20 to 50 day range, or 30 to 60 -- something like that. The notion being that time value starts eroding pretty seriously somewhere in that range and keeps on accelerating as you approach expiration day. That's the power of the 3-8 day options - time value is already pretty aggressive and continues getting more aggressive (the weakness being that you end up in strikes much closer to the share price).

So that's sort of what I've seen, realizing I'm not a pro and I've been actively trading since March - making me not all that experienced of an amateur so far.

My own motivation for extending the option expirations is it's enabled me to lower my day to day attention on what's going on. With 3-8 day options, I need to be watching multiple times / day. I'm glad I've done that as it got me a lot of iterations quickly to get a feel for how this works, at least for me, and one of those outcomes is I don't want to trade so actively


Another important thing to realize, is that selling options is going to be a sub-peak ROI trading strategy in many circumstances - most especially when the share price is "going somewhere" (my term / thinking) whether that is up or down. When the shares are trading up so strongly, as they have for the last year, just owning shares or buying calls, will generate a higher ROI (and potentially a LOT higher ROI). Any and every trading strategy will have good and bad environments as well as having risks and rewards.

So for peak ROI, you're going to need a variety of trading strategies, with option selling being a peak ROI approach when the shares are trading sideways. And I frankly, am not investing time and energy into learning other strategies, nor am I particularly concerned with peak ROI (more concerned with income I'll be generating - income I'll be spending).

 

[CrunchyJello]

I'm going to ignore most of what you wrote and go on my rant about "paper trading".

It's very easy to convince yourself that you will make money, because (being human) you think to yourself "I'd have bought at the bottom here", or "that's obviously a blip, I'll hold through it", or things like that. But once real money is on the line, it's much harder to make the correct decisions, and what is more, sometimes the trade you do want to make simply doesn't go through. Or you place a market order and discover it gets priced a lot differently than you expected. Or someone on the other side of the option decides to exercise it at a time that makes no sense to you, but it comes out to be exactly the wrong time. I can't even enumerate the ways that you can mislead yourself with paper trading.

So, take your $200k scenario. I suggest you use $50k to implement your strategy, and at $4k/month you can live off the other $150k for a few years (invested in something relatively solid, like ARKK). Once you've consistently turned a profit on the $50k, then you can top it up with whatever is left in your other investment.

"The market can remain irrational longer than you can remain solvent" -- John Maynard Keynes.

Nightmare scenario: it's March 2012. Back on Feb 19, you sold a $140 put, and made some money on it (it's hard to get historical options pricing, so I can't use real numbers here for the actual pricing of the option, but the stock prices you can get on Yahoo Finance by looking at the YTD chart; these numbers are post-split adjusted); on Feb 19 TSLA was $159.98. On March 11, the counterparty exercises your put (remember, you don't have any say in this) and you just bought TSLA for $140 at a time when it is trading at $86.04. What do you do? All your capital is tied up in TSLA stock that's worth about 70% of the money you used to have. It doesn't get back up to the initial price until mid-May, but by then you've eaten $8k of it for living expenses. And remember, this is Tesla doing well at a time everything else was crashing... what if everything else is fine but Tesla tanks all by itself?

Notes:
(1) it doesn't matter how long the period of the Put was, since it's the buyer who decides to execute it.
(2) The broker had withheld enough margin to buy the stock at $140. But now it's only worth $86, you've borrowed against margin to buy it, so now you get an instant margin call.

Of course I've chosen the worst scenario in recent memory. But people who paper trade usually only look at the best scenario. "Think how much I would have made if I sold the Put in March!"

Not a professional, not advice, but... not optimistic.

Oh, ok.
Thanks.

 

[CLK350]

Yes, I prefer LEAPS, or at least much longer plays. Actually, these Oct & Nov were bought back in June/July, so not exactly short term, but always with the S&P, Q3 P&D, ER to boost us - and look what happened... Weird, weird, weird...

Thanks! Maybe lacking conviction, but diversifying the odds, just rolled out half of my Oct 30 440 C to Jan 15 540 C - this way if the 3Q Earnings blowout doesn't translate into big enough SP appreciation I survive and get to play the next, probably bigger 4Q event. With MIC MY rolling out of Giga Shanghai and the Nov turbulence, more chances of increased IV and/ or SP appreciation. Unless something else gums up the gears.
Meantime watching the daily gyrations /manipulations of the SP is sorta entertaining, keeping me from worrying about the smallish play pot.
My next goal is to convert some LT holdings into longer LEAPS, while waiting for weekly covered calls to be worthwhile doing again.

 

[Tslynk67]

Thanks! Maybe lacking conviction, but diversifying the odds, just rolled out half of my Oct 30 440 C to Jan 15 540 C - this way if the 3Q Earnings blowout doesn't translate into big enough SP appreciation I survive and get to play the next, probably bigger 4Q event. With MIC MY rolling out of Giga Shanghai and the Nov turbulence, more chances of increased IV and/ or SP appreciation. Unless something else gums up the gears.
Meantime watching the daily gyrations /manipulations of the SP is sorta entertaining, keeping me from worrying about the smallish play pot.
My next goal is to convert some LT holdings into longer LEAPS, while waiting for weekly covered calls to be worthwhile doing again.

It's really hard to rely on anything now, but normally you'd see an appreciation the SP for the run-up to the ER. Maybe profits are high enough that we get a blip afterwards too, maybe not - look what happened after Q2ER, shot up to $1700 in AH, then got capped and walked-down to the 1300's until the split was announced.

But I expect something, at some point between now and then.

After the ER we have the election to contend with, maybe even worse, the time between Trump losing and Biden being inaugurated. That's a time of extreme risk, Trump might be even more erratic than usual. That being said, a DEM win might boost green stocks. Who knows...

Pretty weird the way there's such a big gap between the election result and the change of government - in the UK it's pretty much overnight.

 

[bxr140]

I’ve been paper trading for 6 months;
fairly comfortable with it, but now focused on option trading.

I'm an advocate of paper trading but also caution that it serves a spectrum of purposes, from learning basic mechanics to actually validating a trading strategy. If for instance the result of 6 months of paper trading is "I've straight mastered the difference between buy to open and sell to open, let's DO this!!1!1!!", IMHO its best to stay in the sim a little longer... If you've meticulously sim traded and backtested your strategy and have hard data on its effectivity, then maybe you're ready to dip your toe into live trades. Even then, 6 months on TSLA is NOT a representative data set. If we're honest, the past 10+ years of shooting fish in a barrel is only representative of what happens in a bull market...but I digress... Anyway, the smart play if you're at that point is to start small, build confidence in the strategy, and then start increasing position size.

What are the incremental risks in this instead of using Deltas for the SP?

Choosing strike prices based on dollar offsets is a terrible way to sell contracts, especially with something as volatile as TSLA. Choosing based on %underlying or ∆ is slightly better, but still very JV. Best to use whatever tool your platform has to identify statistical probabilities as it better normalizes R/R than other methods then--most importantly--fold in some kind of technical and/or fundamental price movement analysis, including cognizant strike price assessment around expected events like earnings.

Consider that on average TSLA has a >20% drop every ~5 months, and a >40% drop two years or so. Catch even part of those drops unfavorably and its very plausible you wipe out a month or two of 'income'. Certainly if you're comfortable going deep red under the conviction that TSLA will pull out of a bad situation that's one thing, but if the plan is to live off the income things could get pretty stressful...

Of course, the flip side of the wheel is that you miss out on the massive upswings in TSLA too, and that's the big rub with the concept of "making income" selling contracts--there's a notion that the many incremental steps inherent in selling contracts is somehow easier/less work to trade, and with less risk than other strategies. Its not, its just a different profile.

If your portfolio is less than $200k, how much would you keep in cash?
How about if I have no other source of income for the next 5 years?

A bit dismissive perhaps, but...$180k? Seriously, attempting to literally live off solely selling TSLA contracts (which your post intimates) is a horrible, horrible idea. As noted above, take a small amount and trade live, then invest the bulk of it in some reasonably safe growth vehicle.

 

[juanmedina]

@CrunchyJello that sounds like a stressful kind of retirement. I mostly sell calls with the intend of not loosing any shares so I really mostly play on one side of the wheel. The calls that I usually sell are for small premiums high probability trades and I had some close calls during the recent stock increase but I didn't loose any shares. To get 4k a month consistently I would think you will need about 1000 shares with some months making 12-8K. If you loose the shares you should consider taxes if you had a lot of share appreciation but if selling options is your only income it would not be that bad.

 

[corduroy]

I haven't studied it in a systematic way. All I can say is that it sure seemed like I could make more by opening puts with 3-8 days to expiration, and frequently closing them at ~70% profit in 1/2 that time. That overall result in many months was better than what I can make right now selling monthlies (say 1/2 to 1 1/2 months out).

Some reasons that won't work as well - some of those 3-8 day trades are at times where the position is particularly attractive, and others are at times that aren't so good (or actively bad). I think of it as locking in the situation as it was when the position was opened, good or bad. Trading monthlies (or longer), I can lock in the situation and results at that moment in time.


I know I've seen a number of different option selling strategies talk about time to expiration, and they pretty consistently recommend that 20 to 50 day range, or 30 to 60 -- something like that. The notion being that time value starts eroding pretty seriously somewhere in that range and keeps on accelerating as you approach expiration day. That's the power of the 3-8 day options - time value is already pretty aggressive and continues getting more aggressive (the weakness being that you end up in strikes much closer to the share price).

So that's sort of what I've seen, realizing I'm not a pro and I've been actively trading since March - making me not all that experienced of an amateur so far.

My own motivation for extending the option expirations is it's enabled me to lower my day to day attention on what's going on. With 3-8 day options, I need to be watching multiple times / day. I'm glad I've done that as it got me a lot of iterations quickly to get a feel for how this works, at least for me, and one of those outcomes is I don't want to trade so actively


Another important thing to realize, is that selling options is going to be a sub-peak ROI trading strategy in many circumstances - most especially when the share price is "going somewhere" (my term / thinking) whether that is up or down. When the shares are trading up so strongly, as they have for the last year, just owning shares or buying calls, will generate a higher ROI (and potentially a LOT higher ROI). Any and every trading strategy will have good and bad environments as well as having risks and rewards.

So for peak ROI, you're going to need a variety of trading strategies, with option selling being a peak ROI approach when the shares are trading sideways. And I frankly, am not investing time and energy into learning other strategies, nor am I particularly concerned with peak ROI (more concerned with income I'll be generating - income I'll be spending).

Thanks for your insight throughout this thread. I just started selling covered puts on TSLA with some dead cash I previously was holding in a money market. I'm pretty risk adverse, but I feel I can execute this strategy in a safe and data driven way. Before I enter a trade, I predetermine all my scenarios and exit points, so I can execute with less emotion as things are happening. I haven't been assigned yet, but I am choosing strikes at levels that are fairly safe OTM. I will choose strikes that are closer to the money with better premiums as I get a few more trades under my belt. I feel like the fact that I want to be assigned at some point and add shares to start the CC side of the wheel makes any outcome OK as I get more aggressive.

 

[Tempus]

I want to throw my general thesis out here to test it with this group. Always good to get insight.

My underlying reason for playing the sell side of options is that i've realized that while i have a great feel for the general movements of TSLA, i'm HORRIBLE at predicting short and medium term. When i've played at buying short term or medium term calls (anything less than a year from expiration), i've consistently done poorly - the crazy runup to 2000 excepted.

So I've lately gone with a strategy of core shares, and buying leaps when I feel the stock price is exceptionally low, and then using some extra cash to primarily sell short term puts. I'm using adiggs prior strategy of the 8-10 days out from expiration, and closing them when I get to 80% profit or better. So far this has worked well, as even when the stock price runs away from where i expect, or stagnates, the time decay works in my favor. I have been assigned just once in the last 4-5 months of doing this, so i've been able to "test" that side of things. In that case, i was fine with accumulating another 100 shares at a high 300 strike price, so didn't bother selling an aggressive call against it.

In all cases, i'm working with small amounts here relative to my overall position, and I can cover the puts with cash, or occasionally a bit of margin.

Tempus

 

[adiggs]

Thanks for your insight throughout this thread. I just started selling covered puts on TSLA with some dead cash I previously was holding in a money market. I'm pretty risk adverse, but I feel I can execute this strategy in a safe and data driven way. Before I enter a trade, I predetermine all my scenarios and exit points, so I can execute with less emotion as things are happening. I haven't been assigned yet, but I am choosing strikes at levels that are fairly safe OTM. I will choose strikes that are closer to the money with better premiums as I get a few more trades under my belt. I feel like the fact that I want to be assigned at some point and add shares to start the CC side of the wheel makes any outcome OK as I get more aggressive.

One of my mechanisms for choosing a strike price, after doing my version of what @bxr140 has been talking about, is to stop and ask myself whether I would genuinely be ok with assignment at that strike. That doesn't mean I'll accept assignment at that strike (there are mechanisms for stretching out the position to avoid assignment), but I always want to have that willingness to accept assignment at that strike as my backup.

In the cases of covered calls, for myself, I need to view the transaction as me pre-selling my shares at that price and being paid for the privilege. If I can't view things that way, then I don't get into the position. I've also got a lot more leeway than most, so I can take positions with that strong of a view (such as the 840c in Sep '22 I have open right now). For those to be assigned means my portfolio is up roughly double by the time I get assigned, and that's way better than ok for me, even if I leave a lot more upside beyond that on the table (which doesn't at all necessarily make it a good position for others - it fits well with my situation).

I've also sold puts specifically for the purpose of being assigned, for the purpose of then holding those shares for the long term. My original TSLA position back in Fall 2012 came from selling $29 puts for $1.70 and being assigned. I still have those shares today with a post-split acquisition price of ~$5.40. The key here is that I entered that put sale with the intent of being assigned, and being paid $1.70 for the privilege of being willing to buy shares at $29 . So generous of me.

That was also a lot more aggressive of an option position to take back then than it sounds like today. The shares had been bouncing between the 20s and 30s and it wasn't (at all) clear that we were close to a breakout, much less a run into the 100s that then carried into the 200s. I mostly hoped the stock would double or triple in a few years and I thought that'd be great.


One of the scenarios that I've experienced and hadn't planned for was a >$200 move (pre-split) on expiration day. The real point here is to be thinking about those black swans, both up and down. Selling covered calls creates upside risk (as in - the shares take off, and you miss out on that upside past your strike). I find it can be hard to think in terms of these "it got too good" types of risks, but they are real.

Same thing on covered puts to the downside - the 365 puts I've got open right now, and would be happy today to be assigned on, won't look nearly so good if we experience one of the black swans that I don't really consider to be a black swan; namely the stock market resetting so that it better matches the economy (where economy is much broader than the high tech industry). I don't consider TSLA going down by 50% for that reason to be off the table, and being assigned on 365 puts with shares at 200 could be bad juju if I'm not ready to hold those shares for an extended period (I see ~zero chance TSLA doesn't come back from that sort of drop to new ATHs, but the market can be irrational longer than I can be solvent). These sorts of black swans are a big reason why I don't use margin - I can land in positions I'm not thrilled with, but I can't be levered out of my positions against my will by margin leverage working against me.

And those examples are also a good reason to be really conservative and really far OTM when the purpose is to pick up a few bucks and not be assigned. There are different purposes for each of us, leading back to one of the things I repeat regularly - the value to me in this thread is the mutual education. I know I have particularly learned a lot from @bxr140, but he/she/they isn't the only one by any stretch.


Back to your original comment -- you're welcome, and I started exactly the same way (using dead cash to back some covered put sales). For me, I think I sold some $200 puts when the shares were a bit over $400. I went REALLY far OTM to start getting a feel for how things worked (I didn't really want more shares, was ok getting them, and wanted to earn a few bucks for being willing to take those extra shares).

I think my own experience has now extended to opening and closing about 100 positions over the last 6 months. That rapid iteration has been valuable to me, and has helped me figure out that I'd rather my next 100 positions to open and close take more like 6 years . And to be clear, I consider that volume to still leave me as an amateur. At least it's been enough to have some good and bad experiences.

 

[adiggs]

My underlying reason for playing the sell side of options is that i've realized that while i have a great feel for the general movements of TSLA, i'm HORRIBLE at predicting short and medium term. When i've played at buying short term or medium term calls (anything less than a year from expiration), i've consistently done poorly - the crazy runup to 2000 excepted.

With my own twist on how I word it, this is exactly what got me looking at this approach in the first time. My experiences buying calls have been (with 1 exception) bad. Turns out I'm bad at picking direction, magnitude, and timing on the shares, at least in your short / medium time periods. I'm really good at buy and hold though!

I've even done badly with a 15 or so month call (I was off 1 week from my hypothesis paying off *sigh*).

I've learned that the buy and hold mentality that works so well with shares, is a pretty bad mindset for buying options. Who'd a thunk, eh?


But selling options - it's not risk free. I feel like I'm operating the casino instead of playing in the casino (it's an analogy, not intended to be so gambling oriented in the view it conveys). I know the odds are on my side. I at least know that the mechanics are on my side - I know that the time value in the option goes to 0 on expiration day. There may or may not be value left at that point (ITM vs OTM), but the time value = 0 at that point.

Most importantly, I have a really big funnel within which to "pick" direction, magnitude, and timing and be right. Among my current positions, I need to be above $365 for the November expiration, above $600 for the Sep '21 expiration, and below $840 for the Sep '22 expiration for everything to expire worthless (I keep it all!). Those all seem reasonable to me (the 600 puts in Sep 21 seems least likely right now), and most importantly to me - all of those positions represent situations that I would sell / buy at today (including the premiums received) and will represent good changes in my portfolio (whether they are max / optimized or not).

 

[CLK350]

OK - getting some live experience/ practice, sold a covered call Oct 9 430 C @ 5.15 for this Friday. Pocket change, but need to learn and test my psychology. Rationale: the SP went up today b/c of Elon's tweet, but it will be easily walked down by Friday to the 420 Max pain target, and I don't really mind getting assigned, would use the cash to get some long LEAPS.
Still would like not so sell, who knows, maybe there's a big bump pushing the SP way above 440... well I don't mind either, as my Oct 30 440 Call would kick in.
TBH have no idea if this was a good trade based on whatever indices.. just eyeballing prices at different strike points and going with gut feeling. 3Q earnings is far enough too.

 

[llirk]

OK - getting some live experience/ practice, sold a covered call Oct 9 430 C @ 5.15 for this Friday. Pocket change, but need to learn and test my psychology. Rationale: the SP went up today b/c of Elon's tweet, but it will be easily walked down by Friday to the 420 Max pain target, and I don't really mind getting assigned, would use the cash to get some long LEAPS.
Still would like not so sell, who knows, maybe there's a big bump pushing the SP way above 440... well I don't mind either, as my Oct 30 440 Call would kick in.
TBH have no idea if this was a good trade based on whatever indices.. just eyeballing prices at different strike points and going with gut feeling. 3Q earnings is far enough too.

View attachment 596225

I sold these same 430s on Monday for $9/each thinking the exact same thing. I'm betting the draw to max pain this week will happen once again but expect a rise into earnings next week to hopefully buck this trend. Good luck!

 

[CLK350]

Hah - well, what with the SP strongly up @ 429.75 in pre market thanks to Ferragu's new target 578 target price and supporting documents, my Oct 9 430 C will likely be assigned. (yes this may have been unwise considering it wasn't rich @ $515 - but could not have anticipated Ferragu's publication, so OK).

Well, this is accelerated learning - which Puts to sell ... 387 is/ was the technical resistance, 420 is probably be the new one.

Question is then which strike price - any that gets me back in shares ASAP since expecting big 3Q earnings, and when to sell - I guess at a local max before Friday's slap down, or wait for Monday morning's

I haven't done my homework, according to this great thread - but roughly put I'm OK, 50/50 to risk/ lose half of my pot for any sizeable gains, meaning 3X on a 2 year time table. Doing the wheel regularly/ conservatively isn't going to work to get the profits I am looking for. Being aggressive now because it seems to me that the days of Tesla being under the radar of most investors is ending soon.

Beats paper trading for sure on the entertainment aspect ;D

 

[redan]

@CLK350 you can always wait for the MMD and see about closing early. Between dip and time decay you may be able to get out of the contract without much harm.

 

[llirk]

@CLK350 you can always wait for the MMD and see about closing early. Between dip and time decay you may be able to get out of the contract without much harm.

Agree, don't underestimate the MMD's last chance to make money this week by pinning to MP ahead of next week's FOMO into earnings.

 

[vikings123]

@CLK350 you can always wait for the MMD and see about closing early. Between dip and time decay you may be able to get out of the contract without much harm.

Agreed. MMD always come through. Just wait and see what happens tomorrow. Trump seems be throwing another tantrum about the change in Debate format etc. There will probably be more empty threats as he gets more desperate. Market will remain choppy if you ask me.

 

[juanmedina]

Hah - well, what with the SP strongly up @ 429.75 in pre market thanks to Ferragu's new target 578 target price and supporting documents, my Oct 9 430 C will likely be assigned. (yes this may have been unwise considering it wasn't rich @ $515 - but could not have anticipated Ferragu's publication, so OK).

Well, this is accelerated learning - which Puts to sell ... 387 is/ was the technical resistance, 420 is probably be the new one.

Question is then which strike price - any that gets me back in shares ASAP since expecting big 3Q earnings, and when to sell - I guess at a local max before Friday's slap down, or wait for Monday morning's

I haven't done my homework, according to this great thread - but roughly put I'm OK, 50/50 to risk/ lose half of my pot for any sizeable gains, meaning 3X on a 2 year time table. Doing the wheel regularly/ conservatively isn't going to work to get the profits I am looking for. Being aggressive now because it seems to me that the days of Tesla being under the radar of most investors is ending soon.

Beats paper trading for sure on the entertainment aspect ;D

View attachment 596472

that is why I like to use a set % away from the SP or what @bxr140 suggested of using the Prob of ITM/OTM if you want to win consistently.

 

[CLK350]

Ah, thank you all for the prompt replies - much appreciated!

@jareade @llirk @vikings123 - I ended up chickening out, bought back @10.60, rather sloppy execution too. Didn't want to risk being assigned, though would have liked to find what the odds were I could be during the day . Should have paid more attention to your more experienced views.

Really would have liked to know, what are the chances the SP wanders around 430-440 till Friday and nears 430 at close, I'm still not assigned by 3PM Friday, and can buy back the position on the cheap.

@juanmedina : yes, will study that too - thanks for the specific pointer

So that was not too expensive a lesson, fortunately the Oct 30 440 C and Jan 15 540 C (paper) gains made up for the cost, tho it was avoidable. On the psy level, I note that I still tend to act too fast/ early, AND err too much on the bullish side.

@Lycanthrope : "buy the LEAPS on dips and sell weeklies " sounds like what I want to do, so my next task is figuring out when to sell some shares as a first step, since I'm nearly all in now and my business revenues aren't going to make a sizeable difference.

Considering the SP volatility I'm also tempted to trade chunks of core shares as I believe we still have some sort of edge knowing how the MM's operate. Something tells me I'm fooling myself and should just admit it's better odds than lottery tickets and I just like to gamble.

Keeping in mind it's all good fun, grateful I get to play if I want

 

[llirk]

One of my biggest learnings was not being patient and not sticking to my original plan. During the huge run up over the past few months, I sold the call side of an iron butterfly on a Thursday for a big loss which would have been profitable if I just waited it out to Friday.

My 430s for tomorrow were sold at this aggressive strike because I purchased the underlying shares on a recent dip but feel a bit over invested and would prefer to get back to selling puts instead.

My core shares are separate and calls on these shares are only written OTM at a 15 to 20 delta to ensure a better chance of expiring worthless. Hope this helps!