Wiki Selling TSLA Options - Be the House

[corduroy]

FWIW STO -750/+650 BPS for 10/22 this morning at $9.50 net credit

Short leg is at current put wall, and $22 OTM past the 1SD cited earlier, so seems pretty safe.


Are folks selling for next Friday mostly looking to close by late Wed. before ER announce, or Thursday looking for IV crush vs any possible sell the news?

For now I plan on keeping mine open after the meeting. If the SP rises, or if IV crushes, I'm good. If we drop, my strikes are low enough (laddered between $650-$700) I think I will still be fine. I went conservative around earnings.

If I had to guess, I am expecting a sell the news drop, but muted and offset by the stellar earnings. Two opposing forces canceling each other out, resulting in no big moves.

 

[bkp_duke]

IV on a steady drop right now. Lowest point in 2 weeks.

 

[generalenthu]

A bit of color to add to the discussion upthread about elevated put premiums and how long this regime will last. First off, I want to point out that this dynamic is not tesla specific at this point in time. The tweet below for starters shows that there is historically very high demand for hedging via puts.

https://twitter.com/x/status/1448270611562778624

This manifests itself as higher IV (especially for OTM puts) across all equities, also known as skew. Now there are quant shops looking to arbitrage this increased Index IV / skew across individual equities. Now Tesla being high beta and liquid, especially in the options space, a lot of this index vol demand spills over into the options chains we are seeing. As long as these macro fears persist and folks keep buying index options, I suppose we will continue to see fat premiums. The supply from posters here is only a metaphorical drop in the bucket of this options universe.

The other side effect of this is - market is well hedged broadly speaking. And typically when this is the case, it is unlikely that there are sharp macro drops. We may not see a continuation of the strong macros from the post covid lows, but at the same time, we likely wont see sharp drops either. Overall the environment is broadly constructive for measured put / BPS selling. What we are left with is the idiosyncratic Tesla risks which I think we track very well here.

 

[Yoona]

IV on a stead drop right now. Lowest point in 2 weeks.

yeap, i opened this BPS yesterday and it's a quick 81%

 

[adiggs]

In for a pile of 10/22 630/730 BPS. Credits around 7.60 (7.6% of spread size, and thus 7.6% of capital at risk). I could have gotten closer to 10% using 650/750s or by shrinking the size of the spread. But I don't need 10% and I do want that warm and cozy feeling of being on the other side of the put wall, rather than being in the put wall.

We might see a pull back between now and earnings, but we might also see the shares increasing between now and then. I dunno which way we're going, but this is getting me a much more than adequate result, so take the good position and we'll see what develops.

 

[Cherry Wine]

It’s been a long road, but these are finally out of the money.

 

[Cherry Wine]

In for a pile of 10/22 630/730 BPS. Credits around 7.60 (7.6% of spread size, and thus 7.6% of capital at risk). I could have gotten closer to 10% using 650/750s or by shrinking the size of the spread. But I don't need 10% and I do want that warm and cozy feeling of being on the other side of the put wall, rather than being in the put wall.

We might see a pull back between now and earnings, but we might also see the shares increasing between now and then. I dunno which way we're going, but this is getting me a much more than adequate result, so take the good position and we'll see what develops.

Nice! I just opened my position next week as well - 700/600 BPS for a credit of 5.50. Wanted the comfort of being a few extra strikes away during earnings week.

Another fantastic week this week for me.

 

[adiggs]

I've also opened some cc for this Friday; 820 strike for $6 premium. These match up exactly with some Dec 2021 500 strike calls that I want to close anyway, so I'm trying to nick a few extra $$ on the way to a sale.

Closed these CC as well - about a 1/3rd profit, and sold the calls. I think they earned about $60 from their original purchase back in the summer and they've enabled me to sell a few CC along the way. The CC on these calls never really worked out the way I'd intended - they made money but I had visions of CC each week, and that didn't happen. Having decided that I'm ready to close that position, I carried through this morning and just closed it.

As a bonus I've got a significantly larger pile of cash in that account. It being the living expenses account and all, a bias towards cash is my preference anyway.

 

[Drezil]

widend my 775/725 BPS to 775/700 because i had some margin left over. got ~0.3 for it straight up + 0.2$ theta that ticks away until i close it tomorrow or so.

can't edit anymore .. -.-
closed that @1$ on the rise just yet.

Edit: Opened first play for next week: 725/625 BPS @7.13. Gives best Theta ATM with 0.7 (10% theta-decay per day). Will roll up tomorrow/friday to 750/650 and maybe next week to 775/675 to farm even more theta.

 

[Yoona]

I used to worry about big moves upwards in the share price causing me to miss out on big share price gains. At some point the income side of the house is doing well enough that I realized it doesn't matter to me anymore; that I'm earning enough income to pull back on my share holdings. I've still got lots of exposure to moves up, but not as large as it has been previously.

That's NOT-ADVICE of course - it's a consequence of my objectives and state I'm in relative to those objectives (which are focused on income).

EDIT to add: I suppose that's really "worry a lot less" about missing out on big price moves upwards.

i have the same thinking - hoarding shares isn't priority anymore and it's ok for CCs to be called away (income from cash is significantly more than waiting for sp appreciation and it compounds right away)

don't tell the other thread or they'll be throwing stones...

 

[Drezil]

EDIT to add: I suppose that's really "worry a lot less" about missing out on big price moves upwards.

So much this.

I always stressed out about not "being in there" when the SP moves up.

But i seem to get the hang of it. This week i had times where my SP/Portfolio-Delta-Graph showed a measly delta of 33 with SP @900 or so, while still having ~2k delta at the current SP.
I always try to get the delta down in parts where i don't think the SP will fall via covered calls, bear call/put spreads etc.
This worked wonders against the "waiting for the calls to rise & lose due to paying too much theta to the MM"-Trap that i got caught in more than once.

 

[corduroy]

Really interesting, all the discussion about moving more to cash.

Before, I used to think of cash as "dead money", that if it wasn't invested money it would lose ground against inflation. Now cash itself is the investment, as the backing to selling options.

I have recently been liquidating my other holdings to move into cash. I sold my position in ARKK, which was my second largest after TSLA, and various other stocks. and will soon be in only TSLA and cash. I don't plan on adding anymore shares or LEAPs (unless we have a huge drop). I like the downside protection of having more and more of my total portfolio in cash.

 

[Yoona]

Really interesting, all the discussion about moving more to cash.

Before, I used to think of cash as "dead money", that if it wasn't invested money it would lose ground against inflation. Now cash itself is the investment, as the backing to selling options.

I have recently been liquidating my other holdings to move into cash. I sold my position in ARKK, which was my second largest after TSLA, and various other stocks. and will soon be in only TSLA and cash. I don't plan on adding anymore shares or LEAPs (unless we have a huge drop). I like the downside protection of having more and more of my total portfolio in cash.

shares generate leverage (ie add margin room), so i will still keep some

 

[generalenthu]

710/640 main course for 10/22, while holding on to a small 720/670 10/29-10/22 diagonal for educational purposes.

 

[CHGolferJim]

Really interesting, all the discussion about moving more to cash.

Before, I used to think of cash as "dead money", that if it wasn't invested money it would lose ground against inflation. Now cash itself is the investment, as the backing to selling options.

I have recently been liquidating my other holdings to move into cash. I sold my position in ARKK, which was my second largest after TSLA, and various other stocks. and will soon be in only TSLA and cash. I don't plan on adding anymore shares or LEAPs (unless we have a huge drop). I like the downside protection of having more and more of my total portfolio in cash.

Fascinating, wonder what Eugene Fama would think of that?

 

[Knightshade]

I'm not gonna lie, your posting this week has me a bit concerned. We're entering a window of time where SP moves from -30% to +100% are easily possible over the next 3 or 4 months. That's A LOT of volatility to try and roll your way out of if you're in so deep.

Imagine a Model X on FSD beta 2 iterations from now plows into 16 2nd graders waiting for a school bus? Not talking a software problem. Maybe someone somehow gets confused, over-rides the FSD, and slams the gas by accident. SP could easily spiral below $600 real fast, maybe much worse with a macro(inflation) headwind.

Or imagine 3Q and 4Q go as expected and Wall Street realizes a 150 PE ratio is absurd? We could easily shoot to $1300 before spring with sufficient macro mania.

FWIW I've yet to see any FSDBeta video where the car does not appear to be VERY cautious where pedestrians and bikes are concerned.

Now stationary objects and road-closed signs are another story.

 

[TheTalkingMule]

Got a quick long call spread question for y'all. In the main thread I was posting about the following simple long call spread:

Jan 2024 call spreads at $1200/$1400 can be had for ~$29, so that's $2,900 to show a max profit of $17,100 in 27 months. I haven't seen a revised 5 year EPS estimate from @The Accountant , but $1400 in January of 2024 would be a PE ratio of about 60 in my conservative estimation.

Question is, what does it look like to unwind this position if SP crosses the long call strike far earlier than expiration? I know the spread itself doesn't reach full profit til near expiration, but is there a way to roll to a far closer expiration or similarly capture the leveraged value of the SP run-up immediately? If so, what kind of % profit can be captured.

In the instance above, what if we're at $1250 in April 2022 and I think that's where we'll still be in Jan 2024?

 

[BornToFly]

If the Accountant is correct, our BPS should be safe end of next week. Let's hope so!

Near-future quarterly financial projections

Here is Q3 2021 vs Q2 2021

teslamotorsclub.com

 

[ChefBoyardee]

Got a quick long call spread question for y'all. In the main thread I was posting about the following simple long call spread:



Question is, what does it look like to unwind this position if SP crosses the long call strike far earlier than expiration? I know the spread itself doesn't reach full profit til near expiration, but is there a way to roll to a far closer expiration or similarly capture the leveraged value of the SP run-up immediately? If so, what kind of % profit can be captured.

In the instance above, what if we're at $1250 in April 2022 and I think that's where we'll still be in Jan 2024?

Once both legs go ITM it becomes the equivalent of an OTM Bull Put Spread. So you could close it and sell a BPS at the same strikes at an earlier expiration.

If only the long leg is ITM, you could move the short leg to a closer expiration to make it a Leap w/ CC. (I've never tried this though)

 

[AquaY]

Set up 1 aggressive ( for me) BPS for 10/22 +610/730 @ $8.12
Several support levels between me and the need to manage it.
I like to be more conservative but the probabilities look good and I like to have one aggressive trade on.