Wiki Selling TSLA Options - Be the House

[InTheShadows]

yeap CC

the "buy stock and then sell ATM options" is strategy for those who don't care about owning/losing the stock and have no emotional attachment to the stock and just want the premium

note to self: do this first thing on monday; this is even less risky than the bps i am planning and more credit

Make sure your account is set to LIFO

 

[InTheShadows]

Quick update- decided not to close the open BPSs today, they are above 70% profit but I have nothing else to open. The premiums are too low for the strikes beyond 10% so might as well try and get a few extra $ waiting till next week. There might be a bear raid or some profit taking next week but I doubt the SP will drop below 795 so I feel they are quite safe. May consider taking it easy next week if premiums don’t improve. I like @adiggs idea of taking a week off occasionally - less pressure and helps keeping my greed in check.

This was a great week and frankly a great month. Not my highest earning week but I was playing it very safe. My total portfolio is up 10% for the week and 32% for 1 month - so quite happy with the combo of shares, leaps and sold options. Have not updated the holy spreadsheets yet but pretty sure the realized gains from options was in the 40K range in the individual brokerage and about the same in IRA. Not in the same league as some other folks here but plenty for my goals.

It’s more the percentages that matter. Even if you can only get 1% on your capital in a week selling the puts (bps), that’s still over a 70% return annualized. You tell most people you have an annualized 70% return rate and they think your crazy.

Awesome job with the 10% weekly and 32% monthly returns.

I was thinking the put premium was crap too until I remembered my goal is 2% return on the capital invested and 1% portfolio wide per week. Right now a 710/-810 is a 1.95% weekly return rate. With earnings over now, I am more comfortable turning these into IC’s adding another 1% -1000/1050.

I opened some 800/-850 yesterday 6.16% weekly rate then added -1000/1050 for another 1.77% weekly rate.

I know 850 is much closer than many of you are comfortable with. IMO we have known about this quarters stellar performance for months. The street just found out. I think we are heading for 1000 next week. I’m more concerned by the call side of my IC’s than the put side.

We have to remember that we had crazy not normal priced puts for 2 months now. The pricing now is more the norm.

If 1% per week isn’t good enough, maybe the other thread is better for you. (not directed at you EV forever, this rant has been building since Thursday when everyone started saying about bad put premiums.)

 

[InTheShadows]

How does everyone pick their short legs of their put spreads? I mostly look at delta. Is that part of the reason people think the put premiums are crap? They went from selling options with a delta of 10-20 to 3-6?

@Yoona ‘s post above she has the short leg at .038 delta. I was thinking she and most everyone else were looking at short legs around 1 std deviation 2 weeks ago.

 

[InTheShadows]

Ok. Someone talk me out of this. Looking at selling Jan 2024 CC against my shares for 1500 strike. Let's assume 100 contracts. Get $1,080,000 now for BPS. Start selling 200 $50 Iron Condors/week. Assume conservative $1.75/condor = $35k/week to start. In one year, easily get to $3.5M as I will sell more spreads as the money grows. I expect the SP to hit 1500 in the next year (maybe sooner). I would buy them back at that point - So I will have to close the CC at a loss. Current 920 strikes (for Jan 2024) are $250, so I assume if the stock gets to 1500, they will cost something in that range, for a tax deductible loss of $1.5M to close them ($2.5M - the $1M I get now), leaving me at least $2M in net income. Seems like a nice "loan." What am I missing?

Hmm. Is that premium you collect up front a taxable event? Or is it not taxed until the position is closed?

 

[Yoona]

i am thinking of opening a "super safe" 11/5 IC
+p750/-p800 Δ11, 12% away
-c1050/+c1100 Δ6, 15% away

credit is only $3 right now but will leg in the sides to maximize it

then, gradually tighten the range as the expiration sp becomes more obvious

thoughts? advice? not advice? objections?

 

[Knightshade]

.

Hmm. Is that premium you collect up front a taxable event? Or is it not taxed until the position is closed?

Premium is income when 1 of 3 things happen:

It's exercised.
It expires.
You close the position by buying it back.

 

[bonk3125]

i am thinking of opening a "super safe" 11/5 IC
+p750/-p800 Δ11, 12% away
-c1050/+c1100 Δ6, 15% away

credit is only $3 right now but will leg in the sides to maximize it

then, gradually tighten the range as the expiration sp becomes more obvious

View attachment 724620

thoughts? advice? not advice? objections?

All I can say is that a lot can happen before 11/5.

 

[BornToFly]

i am thinking of opening a "super safe" 11/5 IC
+p750/-p800 Δ11, 12% away
-c1050/+c1100 Δ6, 15% away

credit is only $3 right now but will leg in the sides to maximize it

then, gradually tighten the range as the expiration sp becomes more obvious

View attachment 724620

thoughts? advice? not advice? objections?

That is only $1.5/week, but because you are going two weeks out, the SP can move more on you (more risk). With naked Puts or CC, it can pay to go out a few weeks. But every time I do the math, it doesn't seem to work with spreads. Best returns seem to sell Thurs/Friday for the following week, and then close Thurs/Friday and sell again for the next week.

 

[BornToFly]

Off that topic, I ended up “resizing” the rest of the $100 put spreads I bought Wednesday to $50 ones and piling on some more $50s with the margin released. Premiums still weren’t great, but I’ve now exceeded my weekly goal in spite of it. It seems my goal assumes I’ll only buy the initial contract each week, and doesn’t count on this “double dipping” by shrinking the spreads. It makes me wonder if I should just plan for that — rather than a mix of $100 and farther OTM $50 spreads, maybe I should go all $100 spreads and plan to resize to $50s after the premium substantially declines. For whatever reason I like that better than buying them back altogether at e.g. 50% profit. I think I don’t want to “get out” at half profit and be unable to find another good entry? Though when I say it, it seems unlikely. Hmm.

Is selling $100 spreads, and then shrinking to 2x $50 more profitable than just doing 2x $50 to start?

 

[ammulder]

How does everyone pick their short legs of their put spreads? I mostly look at delta. Is that part of the reason people think the put premiums are crap? They went from selling options with a delta of 10-20 to 3-6?

@Yoona ‘s post above she has the short leg at .038 delta. I was thinking she and most everyone else were looking at short legs around 1 std deviation 2 weeks ago.

The stock has shot up so fast to a new all-time high… $50 OTM felt pretty safe at $650 or $750, but at $910 there seems to be a higher than usual change of taking a $50 dump by the time trading starts Monday morning. So I’m less comfortable being as close to the money as I was two weeks ago.

 

[ammulder]

Is selling $100 spreads, and then shrinking to 2x $50 more profitable than just doing 2x $50 to start?

Probably not, but starting with a $100 spread is less risky; there’s more time to react to a falling stock price. So I would only go to the 2x$50 if I was comfortable with how the stock price and IV are moving after the first 2-3 days that the $100 spread was open. (In practice, that’s usually been the case.)

 

[BornToFly]

How does everyone pick their short legs of their put spreads? I mostly look at delta. Is that part of the reason people think the put premiums are crap? They went from selling options with a delta of 10-20 to 3-6?

@Yoona ‘s post above she has the short leg at .038 delta. I was thinking she and most everyone else were looking at short legs around 1 std deviation 2 weeks ago.

My goal is to not have to lose multiple weeks of premiums because of having to roll my positions. TSLA moves 10% in a week (for no reason) many times each year, so I try to stay more than 10% away from the SP on weeklies. I'm a little nervous about my 1000/1050s for Friday, as they are right at 10% now and we may be looking at a further break-out (the upper BB is going almost vertical now). I'm hoping that being at an ATH and $1T market cap keeps the SP in check a little next week with traders profit taking.

 

[TheTalkingMule]

$950 makes sense for next week and maybe that gets most of the buying/covering out of the way for 3Q earnings season.

I could see some real big dips in Nov/Dec as we wait on 4Q numbers and people shuffle shares to take profits or proactively take a tax hit. Or retire!

My original projection for after 4Q earnings if $1000 is clearly looking wrong. The market wants to push this thing higher, so I'm thinking ~$1350 sounds right for Feb after all the numbers are in and we've given models a chance to be adjusted.

Then I'm looking forward to selling CCs and call spreads into the spring!

 

[Tslynk67]

It’s more the percentages that matter. Even if you can only get 1% on your capital in a week selling the puts (bps), that’s still over a 70% return annualized. You tell most people you have an annualized 70% return rate and they think your crazy.

Awesome job with the 10% weekly and 32% monthly returns.

I was thinking the put premium was crap too until I remembered my goal is 2% return on the capital invested and 1% portfolio wide per week. Right now a 710/-810 is a 1.95% weekly return rate. With earnings over now, I am more comfortable turning these into IC’s adding another 1% -1000/1050.

I opened some 800/-850 yesterday 6.16% weekly rate then added -1000/1050 for another 1.77% weekly rate.

I know 850 is much closer than many of you are comfortable with. IMO we have known about this quarters stellar performance for months. The street just found out. I think we are heading for 1000 next week. I’m more concerned by the call side of my IC’s than the put side.

We have to remember that we had crazy not normal priced puts for 2 months now. The pricing now is more the norm.

If 1% per week isn’t good enough, maybe the other thread is better for you. (not directed at you EV forever, this rant has been building since Thursday when everyone started saying about bad put premiums.)

The eye-opener is that most of us here could bring in 1% per week in our sleep, with very low risk...

 

[deerfield]

Ok. Someone talk me out of this. Looking at selling Jan 2024 CC against my shares for 1500 strike. Let's assume 100 contracts. Get $1,080,000 now for BPS. Start selling 200 $50 Iron Condors/week. Assume conservative $1.75/condor = $35k/week to start. In one year, easily get to $3.5M as I will sell more spreads as the money grows. I expect the SP to hit 1500 in the next year (maybe sooner). I would buy them back at that point - So I will have to close the CC at a loss. Current 920 strikes (for Jan 2024) are $250, so I assume if the stock gets to 1500, they will cost something in that range, for a tax deductible loss of $1.5M to close them ($2.5M - the $1M I get now), leaving me at least $2M in net income. Seems like a nice "loan." What am I missing?

If you break this down, this is what some are already doing here. Going to cash and selling bps to make more than the appreciation of the shares. Since you have so many shares, instead of cashing out your shares now to get that boat load of cash, you can a million bucks just like that selling cc. So you are actually in a better position. Just have frame it such that you are selling shares at $1500 to go to bps. Whereas some here are doing it at 900. And there's a potential that you could win on the other side and get the million bucks for free .

 

[pz1975]

The eye-opener is that most of us here could bring in 1% per week in our sleep, with very low risk...

When you state 1%, do you mean on your total portfolio value, total margin available or total margin used? I think we all need to be clear when discussing these returns. There is no way I would feel comfortable aiming for 1% of my total portfolio value each week, let alone in my sleep.

 

[corduroy]

Predictions for next week? TSLA up around 5% this week vs NASDAQ 1.4% (give or take). Do we keep climbing? How much and why? Sometimes when TSLA has climbed for a while, when the NASDAQ starts to do well, TSLA under performs while investors jump back into other companies that didn't do as well as TSLA the week before. Given that we are in ATH territory, who thinks we stay below 1,000 next Friday? I can't figure out how much of this weeks buying was Short covering vs institutions/whales accumulating because of Tesla's future outlook. I'm going to say we climb just under 5% next week, for a closing price around 949.99 as MM try to get control back with a Call Wall that grows at 950, and short sellers see the ATH as an opportunity to make up losses. Obviously, I'm just guessing based on my "gut." Anyone's mom, cat, magic 8 ball, etc., say different?

Just my speculation (and I hope I'm wildly wrong) but I think it's more likely we see the low 800s, and possibly 700s again before we see 1,000s. Don't get me wrong I am super bullish on the future, but I think it will a 2 steps forward 1 step back rise this time. There are so many possible macro headwinds that could stifle this rally.

 

[Tslynk67]

How does everyone pick their short legs of their put spreads? I mostly look at delta. Is that part of the reason people think the put premiums are crap? They went from selling options with a delta of 10-20 to 3-6?

@Yoona ‘s post above she has the short leg at .038 delta. I was thinking she and most everyone else were looking at short legs around 1 std deviation 2 weeks ago.

My criteria: >$100 away from SP, 15% better + below multiple put walls + below psychological strikes

Then the long leg at least $75 below that to give some breathing room

 

[samppa]

So far in October I have made 17% of my whole portfolio value. This is only from selling bps.. I mostly use around 70-80% of my available margin. Some weeks I have sold more spreads toward expiry and used my whole initial margin, which is around to 90% of my maintenance margin.

Actually 17% was counted on todays portfolio value, in fact it's more. My portfolio is now 75% tsla/25% cash and of course value of shares have gone up a lot lately.. so probably closer to 20%.
In 3 weeks. This is nuts

 

[samppa]

Just my speculation (and I hope I'm wildly wrong) but I think it's more likely we see the low 800s, and possibly 700s again before we see 1,000s. Don't get me wrong I am super bullish on the future, but I think it will a 2 steps forward 1 step back rise this time. There are so many possible macro headwinds that could stifle this rally.

I also think next week we will come down.. thats why I didn't sell any bps yet for next week.
We're at new ATH! Kind of expecting to see some profit taking and bear raids to trigger those 900 stop-losses.. I could be wrong of course.