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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
pz1975
Active Member
It seems like another stagnating, range-bound week. I sold some 830 and 850 covered calls and more BPS (730/630) to add to the bunch I opened Friday. I’m still staying well away from the SP but feeling confident just letting everything ride for now.
Following up on the abnormal number of low 700 puts we've been seeing week after week: could this be an alternative to shorting shares? Coupled with the lowest short interest we've seen in years, is this suggesting the shorts are trying to get smart by buying puts, therefore putting on MMs' selling of TSLA, instead of shorting shares? Maybe they're tired of getting blown up?
Did the IV just plummet or something? Put prices seem to have lost a lot in the last two hours, even though the stock price isn't any higher (after a jump and slide in between).
corduroy
Active Member
Maybe that peak short interest in puts is being caused by all of us selling so many BPSs.
Edit: Case in point, just sold more 10/15 700/600s for $7.15
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InTheShadows
Active Member
That’s what I was thinking. As long as they keep buying them from us.
TheTalkingMule
Distributed Energy Enthusiast
Watching my first ever BPS dwindle down to nothing has been a real eye-opener. I may be leaving the near-term call casino forever folks.
740/650 initiated a week ago for $11 is sitting at $3.80
If I can read back in this thread to gain an understanding of how to roll(literally) with the punches when things go bad, this is my new game. A bit boring, but I have other things I should be focused on anyway.
740/650 initiated a week ago for $11 is sitting at $3.80
If I can read back in this thread to gain an understanding of how to roll(literally) with the punches when things go bad, this is my new game. A bit boring, but I have other things I should be focused on anyway.
Start somewhere in June - I think that is when the strategy was being put to use the most for the first time.
I would also - not advice- suggest selling one contract that is ATM or slightly ITM to see how the mental part works for you on the spread and then go through the process of rolling it through.
That helped me a lot and has also helped me even more to not worry about a quick move one way or the other against me when I still had time left to burn as I was comfortable in the rolling of the whole spread.
For Schwab (Street Smart Edge) is what I have - they have a one click "roll spread" ticket, but it is easy enough to create in the custom ticket now that I have done it enough.
pz1975
Active Member
Please do this. I used to buy short-term calls now and then and almost always lost $ (except the epic short squeeze in early 2020 where I loaded up like crazy).
Since changing my strategy to selling options 1.5 years ago, it’s just been a steady win of good profits almost every week. Not as exciting as hitting on a profitable bought call, but just so much better overall. I’ve been profitable in ~90-95% of weeks I have been doing this, even through the big ups and downs. You just need to know when to take a small loss (and roll) to avoid sucking up a big loss.
Maybe new shorting strategy. Buy lots of Puts, then massive short selling of the stock to drop the SP and make Puts profitable before covering. Maybe that is how we get those periodic 30% drops for no good reason….
I've been doing some thinking that enough of us selling puts and bull put spreads (presumably often to market makers) has a similar effect on delta hedging as buying calls. While bull put spreads have a lower delta than just cash covered / naked puts, they are still net short, and MMs on the other end of that transaction need to purchase shares to get to delta neutral.
How dare you minimize racism!... no amount of money could ever make up for the experience of..... wait.... did you say 137 million? Oh... nevermind.
My current strategy for rolling (untested, not-advice, since I haven't had to do this yet..) is to roll out a week and as many strikes as possible if I feel that my short put strike is threatened. I will aim for 0 credit and as much strike improvement as possible. Key is to roll just when the short strike goes itm or slightly before.
Since I'm mostly making 2-3 times my weekly goals, I can go a week or two without earning income on that position.. hmm.. this idea really needs to be tested. Perhaps I will try to sell just one contract with $100 width and short strike almost atm..
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CLK350
Member
Learning isn't a smooth road up ... FWIW I made the best trades ever after rolling losing trades starting Oct '20 - now stuck not being able to do much as I'm all in medium and LT calls.
I'm a fan (the latter). I like to put on trades that are really for the purpose of education. Small enough so that complete losses won't matter; large enough to get and keep my attention.
I'm a personal fan of the bias to rolling for max strike improvement, and just taking a week off on the income side. The max strike improvement will get you the max increase in future choices should the shares just keep going, and going, against you. Most of the time it'll also be the sub-optimum financial choice, but I figure it's ALWAYS the optimal emotional choice
You'll find that rolling spreads is different than rolling puts (the mechanical difference is pretty straightforward, but also worth doing). You'll find that the wider the spread the more like a short put the roll works out, at least as you're closer to the money.
As you approach the midpoint, the effective roll will more and more be straight out for a smaller and smaller net credit, arriving at a $0 net credit around that midpoint (the bid/ask spread will probably make the roll into a net debit at that midpoint). Past the midpoint you'll have to give something up -- pay a net debit to hold the strike steady, or trade to a worse strike in order to get a net credit.
The wider the spread, the wider the range for the management choices to work.
For sure. What I made all of last year trading options (I used to primarily just sell covered calls) I now make weekly; part of that was getting badly burned on the S&P announcement which reduced my net profit for the year by 66%, but there were other mistakes made along the way as well.
I've decided to get in with some 800 strike lccs for this week for 4.50ish each. There is a huge pile of calls OI and activity at that strike and I'm comfortable joining that wall. I wouldn't go out another week for sure.
Bigger picture I very much like having both puts and calls open, so that I've got one side or the other earning income. The problem the last month or more is that call premiums are so low I don't feel like I'm being adequately paid for the incremental risk.
The other strategy problem is that using strictly lcc's I am no longer able to achieve similar position sizes as I'm selling on the put side. I don't want to be using similar position sizes, but I also don't want them to be badly different from each other. Roughly 3:1 I think on the put side, but it might be closer to 5:1 (position counts aren't directly comparable).
The only point on this larger call strategy side being that throughout, and continuing, I'm looking for opportunities to expand my call side exposure in a risk/reward positive fashion. Thus a few lcc's for this week, and possibly a pattern for me -- see what the early part of the week holds, and then see if I've got a handle on a call strike that'll be safe. Probably still more out than in for me.
Bigger picture I very much like having both puts and calls open, so that I've got one side or the other earning income. The problem the last month or more is that call premiums are so low I don't feel like I'm being adequately paid for the incremental risk.
The other strategy problem is that using strictly lcc's I am no longer able to achieve similar position sizes as I'm selling on the put side. I don't want to be using similar position sizes, but I also don't want them to be badly different from each other. Roughly 3:1 I think on the put side, but it might be closer to 5:1 (position counts aren't directly comparable).
The only point on this larger call strategy side being that throughout, and continuing, I'm looking for opportunities to expand my call side exposure in a risk/reward positive fashion. Thus a few lcc's for this week, and possibly a pattern for me -- see what the early part of the week holds, and then see if I've got a handle on a call strike that'll be safe. Probably still more out than in for me.
BrownOuttaSpec
Active Member
Hey guys, I'm new to this so don't hurt me too bad...
Maybe someone has tried this in the past and can tell me of their experience. Could someone "play safe" and make weekly bull put spread below the Boiler bands on 200 day MA and under Max pain? Walk away each week with a 3-5% gain just by letting them expire (dead investor style).
For example. lower BB today was $724, huge put wall @ $720, 200 day MA @ $702. You could buy 10/8 BPS at +620/-700. Excluding a black swan type event should be easy money each week: TSLA Put Spread calculator
Maybe that is more safe/conservative than you guys like to go though.
Maybe someone has tried this in the past and can tell me of their experience. Could someone "play safe" and make weekly bull put spread below the Boiler bands on 200 day MA and under Max pain? Walk away each week with a 3-5% gain just by letting them expire (dead investor style).
For example. lower BB today was $724, huge put wall @ $720, 200 day MA @ $702. You could buy 10/8 BPS at +620/-700. Excluding a black swan type event should be easy money each week: TSLA Put Spread calculator
Maybe that is more safe/conservative than you guys like to go though.
Yes. So far the only management I've had had to do with bull put spreads is that I tightened the spread, doubled positions and managed to roll everything otm, without changing expiry date, even with a bit of credit.. but right now I feel that is riskier than rolling out a week and keeping the spread wide. I'm trying to think of ways to reduce the risk.. and I could go for a long time without any income if needed. Doubling positions does feel like digging a bigger hole..I'm a fan (the latter). I like to put on trades that are really for the purpose of education. Small enough so that complete losses won't matter; large enough to get and keep my attention.
I'm a personal fan of the bias to rolling for max strike improvement, and just taking a week off on the income side. The max strike improvement will get you the max increase in future choices should the shares just keep going, and going, against you. Most of the time it'll also be the sub-optimum financial choice, but I figure it's ALWAYS the optimal emotional choice
You'll find that rolling spreads is different than rolling puts (the mechanical difference is pretty straightforward, but also worth doing). You'll find that the wider the spread the more like a short put the roll works out, at least as you're closer to the money.
As you approach the midpoint, the effective roll will more and more be straight out for a smaller and smaller net credit, arriving at a $0 net credit around that midpoint (the bid/ask spread will probably make the roll into a net debit at that midpoint). Past the midpoint you'll have to give something up -- pay a net debit to hold the strike steady, or trade to a worse strike in order to get a net credit.
The wider the spread, the wider the range for the management choices to work.
Of course the most important decision is when opening the position, when you decide on strikes and width.
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