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Wiki Selling TSLA Options - Be the House

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Also, I was curious if @adiggs or anyone have experience with inverted strangles as a way to cut loss? I assume premium and IV are the biggest factor on whether crossing shorts ever makes sense to reduce max loss.
I've gone inverted with short puts and calls (cash secured puts and covered calls). It worked out but it wasn't a choice I would make.

The key is that both sides need to stay in range of the share price (strike improvement with a credit). If they do and the shares bounce around inside of the strangle then the earnings will be grand and the two sides will quickly collapse to the share price and then go OTM.


I wouldn't open one as source of income - only land in one as I'm rolling losing positions, buying time.

And yes - I've been in an inverted strangle big enough that both legs were ITM and out of range of a strike improvement roll. The shares moved one way soon after and that leg started rolling for strike improvements again, but it wasn't fun.


On the IC roll, one side or the other is probably winning bigly when you're looking to roll for time on the other leg. In that case I would close the winning leg though that isn't necessary. On your roll ticket you roll only the put spread or the call spread at a time. For myself I find that Iron Condors are better thought of as a put spread and a call spread that match on the expiration date and on the spread size. They can be entered together or separately, they can be exited together or separately, and they can be rolled separately. The one thing that can't be done as best I can tell is roll both sides together.

Even if I could roll the whole thing in a single ticket I still wouldn't. Putting 8 bid/ask spreads together on a single ticket is going to make for a LOT of slippage and be difficult to get filled, even if it could be done. 4 positions and 4 bid/ask spreads is already hard enough with enough slippage.
 
What a great day and **** day lol. I closed all the BPS that I opened today at a $100,458 lost 😢 still up $4k for the month 😅 . If it was Wednesday I think I would have waited out until Friday.
Ouch on the loss. :|

From the thought process, analysis, and anything and everything else that went into the decision for entering the position, is there anything that you'd do differently the next time a similar situation or setup arises?

We can't do anything different about a situation that has already happened except deal with the consequences - but maybe there is something to be learned to help avoid that situation in the future?


These are the tough questions to answer, but they're also an opportunity for all of us to learn from your pain. I know that I appreciate any thoughts you have to share.
 
What a great day and **** day lol. I closed all the BPS that I opened today at a $100,458 lost 😢 still up $4k for the month 😅 . If it was Wednesday I think I would have waited out until Friday.
I am curious- why did you lose money on BPS? Those have been quite profitable this month. If it was BCS I can understand losing money on those.
 
So, as I mentioned earlier, last friday, I placed a very aggressive position, 940/1000; but kept 1/2 account in reserve (that's a lot of reserve for my daredevil self).

Today, as it was going against me, I bought 950 longs on the way up while I thought about my strategy.... and sold them back at end of day since they were high priced and had a big profit. I then decided to sell BPS at same 940 strike to form a butterfly 880/940/940/1000 to cut risk another 14k.

My goal is to not add extra capital to the trade, or to be very very careful about doing so.

I'd really like to be able to execute a split roll and learn how to manage the position until it can win, which I think is still possible with time. I think the challenge is trying to figure out if a dip to 970 is in the cards.


While it may take time to cure the position with a split roll, I'm mindful that rolls MUST be done in one ticket. For instance, if I were to close the 940/1000 without simultaneously opening a new position the following week, I would lose access to the capital while placing the new position! The problem is you can't roll a condor in schwab.... you have to close out the BPS and then roll the BCS... I'm curious if anyone here has executed a split roll in a way that doesn't expose the loss and allows you to place the new strikes a little further away the following week? This seems to be the big benefit of the split roll no?

Also, I was curious if @adiggs or anyone have experience with inverted strangles as a way to cut loss? I assume premium and IV are the biggest factor on whether crossing shorts ever makes sense to reduce max loss.

Thanks for the input!
I thought about adding 3 more March 2022 600 calls on the open last night, thinking about not liking my call spread. I lost my nerve with the big open and missed a good profit on a small counterplay to my call spread. Still working hard to work off the losses on the call spread with bps trades. I'll do great if we blast past 1050, but I'd prefer we setup a new base around 1000 this week and then march up to 1200 over the next 2-3 months. The rip your face off rallies are too often followed by tear off the rest of your head drops. A steady rise should let 2022 rise on opening in Berlin and Austin, which we'd have thought the same in Shanghai this year.
 
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I Still have a lot of 1100/1150 open for Friday. That would be another 7% gain the rest of the week. Those I might be tempted to roll out a week since at some point we have to level off/drop... Right? We are getting/have gotten to the point where BCS will become safe, and BPS will become dangerous. Might need to wait a few days/weeks to figure out when exactly.

What did I learn today:
I've learned that big moves on a Monday mean a $1 spread turns into a $10-20 spread even with the short leg OTM (later in the week the gap decreases if you aren't ITM with the short leg). Learned this the hard way - wow. When I looked on Friday for options expiring Friday, the gaps on $50 spreads were small if the SP was close to the short leg, while today they were huge even when we were still $20-40 OTM.
 
good news
- rolled just in time the BCS -c1000/+c1050 to next week 11/5 -c1020/+c1070
- there is strike improvement
- it's net zero credit (1020 is the highest i found that isn't a debit)

bad news
- it's -176% and now technically ITM but there's 11 DTE to fix it and time is my friend
- hoping for a pushdown from hereon (where is MM when you need him?)

lesson learned today
- i was 10% away but it doesn't mean position is safe (today is 12.66% rise)
- next time pls just go 15% and be done with it (voice in head "how many times do i have to say it?")
 
I Still have a lot of 1100/1150 open for Friday. That would be another 7% gain the rest of the week. Those I might be tempted to roll out a week since at some point we have to level off/drop... Right? We are getting/have gotten to the point where BCS will become safe, and BPS will become dangerous. Might need to wait a few days/weeks to figure out when exactly.

What did I learn today:
I've learned that big moves on a Monday mean a $1 spread turns into a $10-20 spread even with the short leg OTM (later in the week the gap decreases if you aren't ITM with the short leg). Learned this the hard way - wow. When I looked on Friday for options expiring Friday, the gaps on $50 spreads were small if the SP was close to the short leg, while today they were huge even when we were still $20-40 OTM.

Another lesson is that selling calls is more risky when we're in an area of price exploration. No defined resistance points behind which to hide. But part of this can be chalked up to a "white swan" - they happen. The S&P announcement wiped out 2/3s of my options selling profits last year.

I still can't believe the stock went up $115 in one day - that's $115B in market cap! 🤯🤯🤯 What a day, lol.

For the rest of this week, I'm looking at rolling my 1050 calls out to Nov. 19th 1200s at a debit (~$2.30 as of right now) if I think they're too likely to end up ITM. If the stock approaches 1,100 tomorrow, I will look at reopening BCS expiring 10/29 at strikes of $1,200 and above to try and recoup some of my losses. I've rolled up BPS to $880 from $780 for a meager additional $1.00 credit. Those are my "dare you" puts that I will continue to sell more aggressively while my covered call position is in the red.
 
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It's quite insane. How the hell did we get the SP credit upgrade, MS target upgrade, Hertz news, and model price increases all on the same day?
God witnessed us all boasting about massive BPS profits on the thread this last month, and said, I shall strike down upon thee with great vengeance and furious anger upon those who seek to profit from the languishing of the chosen stock. REPENT!

also for the record.... God hath not answered my prayers on how to split roll a crap position..... help me brothers.... for I am lost and enduring max pain.
 
Rolled BCS 10/29 1000/1100 -> 11/5 1025/1150 -> 11/12 1040/1200 today. I'm curious why people choose to take the loss instead of just trying to roll (possibly forever)? Is it because it ties up the margin that could otherwise be used for weekly BPS?
Two main reasons for me:
1) If I'm in danger of having the short position 'lose contact' with the share price (meaning that I lose access to 1-3 week rolls that improve the strike price) then I'm looking at what is about to become dead money. The position is far enough ITM that it's a big loss to close it out, but if the share price isn't coming back then I might just be dragging a loser around until I finally do decide to take the loss.

2) In some cases the size of the position is so large that even if it can be rolled seemingly forever, taking the loss preemptively can turn a potentially big loss (portfolio and life altering sized loss) into a loss that turns the month into a good month from an outrageously unbelievable good month.


In the case of #2 we should expect these positions to be losers on occasion. If we're picking up 3% per week and 1 week in 10 is a 30% loser, then we end up breaking even over that 10 week period.

In some ways the biggest influence on overall results is how well the losers are managed - not how well the winners are managed.


I personally have lost 40-70% on some call spreads back in June. Turns out that if I'd rolled them 1 week then they'd have been landed OTM that next week for a full gain. The problem is that I was 1/2way into a small spread, the roll options for even or better were mostly gone, and I was about $10 away from a max loss (ask me why I like large spread sizes now :D).

I took the loss preemptively at that point mostly to avoid it becoming even bigger (the loss still had room to double!!). And in the larger context of June I ended up with an unreasonably good month - if repeated then we earn more this year than last sort of good.

If losses are sized more like 10% losses and win rate is 9 in 10, then over 10 weeks we'd earn .03 * 10 - .10 = .20. 20% gain over 10 weeks is, on every planet in this universe, an amazingly good return. I believe that's about 100% over 50 weeks assuming no compounding.
 
Rolled BCS 10/29 1000/1100 -> 11/5 1025/1150 -> 11/12 1040/1200 today. I'm curious why people choose to take the loss instead of just trying to roll (possibly forever)? Is it because it ties up the margin that could otherwise be used for weekly BPS?

I took the loss because I could (thanks to the put spread strategy). Also because this jump up came completely out of left field and I don’t know how far it will go. If we end up back at $950 on Friday it won’t look too smart… though I’d still be well up on the week, so whatever. I was able to roll out a week for $30 strike improvement, but if the stock goes up to $1100 tomorrow then I wouldn’t be able to roll for much of anything without going way out in time. Let’s say after a week’s run I end up with $1200s for march or something… and then we’re at $1500 by the time that rolls around.

Anyway, as I say, for me it was a take-able loss. If the price keeps rising, it might have stopped being that way. I don’t want a semi-permanent ball and chain, I want a clean slate to see where this thing goes.

Finally, I only sold the calls to ensure I wasn’t completely screwed by a drop. Obviously that was no longer a concern today, and if I wanted drop protection tomorrow, I’d need way higher calls, so again, rolling wasn’t really a solution.
 
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Rolled BCS 10/29 1000/1100 -> 11/5 1025/1150 -> 11/12 1040/1200 today. I'm curious why people choose to take the loss instead of just trying to roll (possibly forever)? Is it because it ties up the margin that could otherwise be used for weekly BPS?
I did it to cut my losses. Today's news/gains could be the starting point of another big run up (or it could revert to 800 levels, no one knows). I had a 1100/1150 spread and was probably alright at the end of the week but didnt want to risk it with all the positive news for TSLA.

I told myself I would only do options with TSLA and I ventured out of it and got burnt last week in another stock.... I also told myself I wouldnt bet against Tesla on the postive share price since it could run up at any moment and made some Bear call spread this morning and also got a little burnt. I'm only a small fry noobie compared to most people on these forums so I am going to stick with my gut from here on out (Far OTM BPS).
 
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Rolled BCS 10/29 1000/1100 -> 11/5 1025/1150 -> 11/12 1040/1200 today. I'm curious why people choose to take the loss instead of just trying to roll (possibly forever)? Is it because it ties up the margin that could otherwise be used for weekly BPS?
Here was my problem. My "expertise" was with naked puts. You can roll those forever, stay ITM without getting assigned as long as the cost of the put is greater than the strike price-stock price, and keep making money as you roll. I just learned today that this does not apply with spreads. Those that rolled had marginal improvement in the strike price, which works if the SP drops again soon, but won't work with a prolonged squeeze. Why can you not roll out forever with a call spread if the stock keeps climbing? Well, the gap for the 1000/1050 had grown to $20 or so with the SP around 1000 today. So you buy back the 1000 and sell the 1050 and go shopping for higher strikes and future dates (do a roll). But now, when you try to sell the same spread, the gap in the premiums for the future dates is narrow, so you still lose a lot of money if you get the same price for the short leg because the long leg you are buying costs so much more than the one you sold. I did not appreciate this, to the degree I do now, until today. I believe it is not as bad if it happens on a Thursday/Friday of expiration, but it happening on the Monday is the perfect storm. My goal for the future is to never sell a spread that can end up in the money with a 15% change in SP. I think I'm going to be less greedy in the future, and realize that the money I'm making on 50cent spreads is still much more than I was making when I was working. Maybe in the few weeks going into P&D numbers and ER where we always see support, I'll get a little closer with the Puts. But Calls - No.
 
Ouch on the loss. :|

From the thought process, analysis, and anything and everything else that went into the decision for entering the position, is there anything that you'd do differently the next time a similar situation or setup arises?

We can't do anything different about a situation that has already happened except deal with the consequences - but maybe there is something to be learned to help avoid that situation in the future?


These are the tough questions to answer, but they're also an opportunity for all of us to learn from your pain. I know that I appreciate any thoughts you have to share.

Yeah it was awful.

Why did I entered the positions?

The stock was up a lot before I started opening my trades and I never though it could go as high as 14%. I also have done trades like today before successfully. When I start to hear about gamma squeeze, short squeeze and what I thought it was possible a "split" while still having 4 days to expiration I wasn't feeling too confident.

What I can do different?

Don't go all in on Monday..

I think I made lots of mistakes today:
  1. I went after really small premiums too early on the day with what I thought was safe strikes.
  2. I should have cut my losses earlier. Maybe I need to set a dollar amount rule were to cut losses?
  3. BCS scare me more than BPS. I have experience rolling BPS but with the way Tesla is moving I didn't want to tied up the capital for a while because I know I can make my money back. Avoid low premium BCS?
  4. I got used to fat premiums so maybe I opened way too many positions to get the same kind of return.
  5. I hit my retirement goal and I was scared about blowing up my account and having to wait who knows what to get back to where I am. Too emotional?
  6. Gambler?
I thought about keeping half the positions and seeing what it would happen but I decided just too pull the band aid off and get it over with. I am thinking about trying to recover some of the losses with BCS 1150/1200 or 1200/1250, bad idea? I would think BPS would be way more risky.