Wiki Selling TSLA Options - Be the House

[bkp_duke]

Premiums for next week's puts took a nosedive with everything else. Hopefully there is a "sell the news" event in the next few days that gives an opportunity to get into some BPS positions with juicy premiums. Past few weeks have spoiled us on those premiums.

 

[FS_FRA]

Premiums for next week's puts took a nosedive with everything else. Hopefully there is a "sell the news" event in the next few days that gives an opportunity to get into some BPS positions with juicy premiums. Past few weeks have spoiled us on those premiums.

agree - premiums suck right now. not worth it. no MMD to speak of either. waiting for a better entry.

 

[dl003]

Seems put IVs have been crushed along with the risk of a US default. I'm doing ok just selling naked *sugar* puts @ 650 for @2 a piece. It's something.

 

[Cherry Wine]

Usually do this when there is a much better position for the next week you want to get into. In this thread at least, it's been common to close on Thurs/Fri and open a new position for the following week, as long as you have some good indicators on where the SP is going. Make much more by getting into that new position than you leave on the table with the old position.

Yes, I closed my BPSs expiring 10/8 yesterday before close leaving 0.80 per contract on the table. Opened new spreads expiring 10/15 at open this morning, which have already dropped by $1.30 since then (already eclipsing the $0.80 I would have gotten by leaving my 10/8s open to expiration).

The one time I will leave my BPSs open to expiry is if I’m betting on a downward move by expiry (but not to my strike price).

 

[ReddyLeaf]

Premiums for next week's puts took a nosedive with everything else. Hopefully there is a "sell the news" event in the next few days that gives an opportunity to get into some BPS positions with juicy premiums. Past few weeks have spoiled us on those premiums.

Hmmm. Tuesday, I received $14.80 for -p750s 10/15 at SP near 785. Now they are showing $10.30 near same SP. I just assumed this was theta, but I’ll take IV crunch too. I’m still waiting until next week to buyback/roll. That’s nearly 2% on a straight CSP, though it did cost $5 for the buyback on Tuesday, so only $10 cr and closer to 1.3%/wk.

 

[samppa]

So, education time!
Sold a put credit spread -p785/+p685, oct 15, for $13.93. Only one contract. Way closer to the money that I'm comfortable with - plan is to see how to manage this if it gets ITM. My current thinking is that if short strike goes ITM, I will roll out a week for max strike improvement, and about zero credits.

My bigger position for next week is -p750/+p650. Opened these just now as well, after closing this weeks spreads that we're at around 80-90% profit.

If we get an IV crush tomorrow or a big pop, might close these.. we'll see. IV already slightly crushed this week after p&d, probably won't change much after tonight.

 

[cbh03]

So, education time!
Sold a put credit spread -p785/+p685, oct 15, for $13.93. Only one contract. Way closer to the money that I'm comfortable with - plan is to see how to manage this if it gets ITM. My current thinking is that if short strike goes ITM, I will roll out a week for max strike improvement, and about zero credits.

My bigger position for next week is -p750/+p650. Opened these just now as well, after closing this weeks spreads that we're at around 80-90% profit.

If we get an IV crush tomorrow or a big pop, might close these.. we'll see. IV already slightly crushed this week after p&d, probably won't change much after tonight.

Haha, I was just thinking about doing an educational put credit spread at 750/650 as that is closer to the money than I am comfortable with. I'll never join the $10k/week club, let alone the $100k/week club, unless I start inching closer to the money. Hopefully this education will help with that.

 

[BornToFly]

Haha, I was just thinking about doing an educational put credit spread at 750/650 as that is closer to the money than I am comfortable with. I'll never join the $10k/week club, let alone the $100k/week club, unless I start inching closer to the money. Hopefully this education will help with that.

Careful. A 10% drop could really hurt if you start flying too close to the sun. Those of us in the 100k/week club can sell a lot of contracts because of large accounts developed over years. I’ve started selling for next week. 670/720

 

[bkp_duke]

Careful. A 10% drop could really hurt if you start flying too close to the sun. Those of us in the 100k/week club can sell a lot of contracts because of large accounts developed over years.

Exactly. I could see it taking weeks/months to unwind a bad position just because of getting to close to the share price with puts/calls. Not advice, but IIRC tastytrade on YouTube recommended +/- one standard deviation from the share price. I believe that is what @Yoona has been doing here with very good results.

 

[cbh03]

Careful. A 10% drop could really hurt if you start flying too close to the sun. Those of us in the 100k/week club can sell a lot of contracts because of large accounts developed over years. I’ve started selling for next week. 670/720

Exactly. I could see it taking weeks/months to unwind a bad position just because of getting to close to the share price with puts/calls. Not advice, but IIRC tastytrade on YouTube recommended +/- one standard deviation from the share price. I believe that is what @Yoona has been doing here with very good results.

Thank you both, I really do appreciate all of the help in this thread. The advice and cautious approaches of most really sets us apart from the gambling/WSB crowd that cheers huge risks that can wreck a portfolio.

All of my other positions for next week are 600/700 and 590/690 BPS, but I wanted one BPS closer to the money to get comfortable with management/rolling, per the techniques provided by @adiggs and others.

 

[BrownOuttaSpec]

Careful. A 10% drop could really hurt if you start flying too close to the sun. Those of us in the 100k/week club can sell a lot of contracts because of large accounts developed over years. I’ve started selling for next week. 670/720

Thanks for the tip. I'm trying my first BPS @ 615/685. Tiny and I feel like it is super safe so good to watch and learn from.

 

[samppa]

I remember you tried the put spread a week or so earlier and closed down your position with a loss because the SP tanked because of Evergrande..
Did you have to close down? Could you not have rolled down instead? Or do put spreads not roll down and out as easily as just sold puts on their own?
Are there maybe margin considerations to be taken into account? I suppose you would need to keep the spread to have no margin impact, but do you then need to roll the short puts down and the the long puts up (to not lose on them), or should one consider the profit globally on both legs and roll both down? Or forget rolling down spreads altogether?

With a spread, you have to take into account the long leg and it's value.

ATM options always have the highest intrinsic value. So when in a situation that short leg is atm and long otm, you can usually roll for credit, if there are no signifigant changes in IV. Deeper itm the spread goes, gradually harder rolling for credit and/or strike improvement becomes.

In regards to margin, the width of the spread defines required margin. So if you keep the width the same, no changes in margin. Or you can eg. cut the width in half and double positions, it will use the same margin and have the same max loss. These are defined risk positions, basically the margin impact should equal the max loss of the position.

So if rolling down, roll both legs.

IV comes into play so that if IV is rising, rolling for credit becomes harder or you'll need to go out more than a week - maybe 2, 3, a month or so. It's because those further out in time options have higher intrinsic value.

 

[InTheShadows]

All of my standing 80% orders closed this am. My weekly goal is 1.3% of total account value. This week I achieved 447.5% of my goal. I am also sitting at 94.8% of my monthly goal.

Below is for understanding on why I choose to take profits early.

So I played this week with two rounds. The spreads I opened last Thursday all closed except one on Monday morning. Which I reopened most with a 730 short leg which was around -20 delta at the time. They are the ones that closed this am.

The one that didn’t close on Monday, ironically was my I dare you test 650/-750. I achieved a weekly 10.3% ror on that spread. (I normalize everything to weekly ror. PNL%/days open * 5)

My other spreads I opened around the same time. 625/-700 achieved a 14.78% weekly ror. The 600/-700 got 14.11%

The two that closed Monday I then combined the capital into 680/-735 that closed today for a 7.55% weekly ror. So averaging the first two then adding the last trade, I received a stupid ridiculous weekly return of 22% on my capital. (Did I do my math right?) This week had a binary event so it’s much larger than normal. With returns like these, who needs to YOLO.

This is why I don’t sweat over pennies and close early.

I figured this out a few months after I started selling cash secured puts. I would take my weekly expected return and divide the $ by DTE to see how much I was expecting each day then if I would get ahead of that number significantly then I would close it. I eventually turned it into a formula.

For next week I started opening 615/-715’s. I chose 715 because it is below one standard deviation which is actually slightly above 720, but 720 is a big put wall and I want to be on the other side of that.

IMO the 700 wall is noise because next week is monthlies.

 

[ammulder]

You see that, for me, is a moderately risky position - a couple of crappy days and that could easily go ITM, then the relatively narrow spread would get you sweating...

I think the SP was 760 when I setup that 680/715 (I think it was), the Evergande Monday took the SP right down to $718, which was super stressful

Really? I feel like 670/720 is not super risky, unless there's a terrible announcement tonight. I mean, for a time there were days of 5% drops reasonably often, but from $785 it would take 10% before you'd really need to take action. And there are several put walls and moving averages and the lower bollinger band in between here and there. I don't see a sudden drop to $700, I think there would be time to plan and act.

I will grant you I wouldn't ignore the market for several days with a 670/720 outstanding, though. It wouldn't be my go-on-vacation play.

 

[samppa]

Haha, I was just thinking about doing an educational put credit spread at 750/650 as that is closer to the money than I am comfortable with. I'll never join the $10k/week club, let alone the $100k/week club, unless I start inching closer to the money. Hopefully this education will help with that.

Yeah, my position was taken with the hopes of it going itm and that I would have to manage.. so that's why so aggressive. If *sugar* hits the fan, I'm prepared to take the 10k loss on this (actually max loss is 10k-credit so about $8600).

I have a plan how to manage the position and will stick with the plan. Roll for strike improvement and time, no additional credit, and do not dig a bigger hole that would increase max loss. Let's see how it goes..

 

[InTheShadows]

Haha, I was just thinking about doing an educational put credit spread at 750/650 as that is closer to the money than I am comfortable with. I'll never join the $10k/week club, let alone the $100k/week club, unless I start inching closer to the money. Hopefully this education will help with that.

I wouldn’t rush it. I have an account that just broke $10k this week. Slow and steady will win and you will be there before you know it.

I’m working on getting high deductible health insurance so I can get a tax free health savings account that I can do this in too. Working to try and get it in place this year so I can fully fund it this year with $7200 then in Jan with another $7200. Then hopefully I can have it at $30k by the end of next year.

 

[deerfield]

Yacht buying power?

It's either me visiting @Chenkers or vice versa

All of my standing 80% orders closed this am. My weekly goal is 1.3% of total account value. This week I achieved 447.5% of my goal. I am also sitting at 94.8% of my monthly goal.

Below is for understanding on why I choose to take profits early.

So I played this week with two rounds. The spreads I opened last Thursday all closed except one on Monday morning. Which I reopened most with a 730 short leg which was around -20 delta at the time. They are the ones that closed this am.

The one that didn’t close on Monday, ironically was my I dare you test 650/-750. I achieved a weekly 10.3% ror on that spread. (I normalize everything to weekly ror. PNL%/days open * 5)

My other spreads I opened around the same time. 625/-700 achieved a 14.78% weekly ror. The 600/-700 got 14.11%

The two that closed Monday I then combined the capital into 680/-735 that closed today for a 7.55% weekly ror. So averaging the first two then adding the last trade, I received a stupid ridiculous weekly return of 22% on my capital. (Did I do my math right?) This week had a binary event so it’s much larger than normal. With returns like these, who needs to YOLO.

This is why I don’t sweat over pennies and close early.

I figured this out a few months after I started selling cash secured puts. I would take my weekly expected return and divide the $ by DTE to see how much I was expecting each day then if I would get ahead of that number significantly then I would close it. I eventually turned it into a formula.

For next week I started opening 615/-715’s. I chose 715 because it is below one standard deviation which is actually slightly above 720, but 720 is a big put wall and I want to be on the other side of that.

IMO the 700 wall is noise because next week is monthlies.

Okay, now you have me asking...how the heck did you arrive at standard deviation being 715? Is there a formula that you plug a share price in?

 

[FS_FRA]

STO 10/15 695/595 BPS @ $3.99, 75% profit GTC close order placed at same time.

 

[BrownOuttaSpec]

I wouldn’t rush it. I have an account that just broke $10k this week. Slow and steady will win and you will be there before you know it.

That 8 billion/year income in 2033 looks NICE!

 

[InTheShadows]

It's either me visiting @Chenkers or vice versa

Okay, now you have me asking...how the heck did you arrive at standard deviation being 715? Is there a formula that you plug a share price in?

standard deviation is like a -16 delta on the put side and 16 on the call side. It comes from the bell curve. This will help explain it better than I can.

I also use -20 delta meaning that there is about a 20% chance that that strike will expire ITM. I go with -20 when I am extremely bullish and use 1 standard deviation when I'm neutral. I'm super bullish about tonights meeting, however from a stock price perspective, I'm neutral. It seems to take the market about 3 trading days to digest really good news from tesla events (If they digest it at all).