Wiki Selling TSLA Options - Be the House

[alterac000]

I got scared. I closed all of my option positions today and left only shares intact. Missed the 1090 peak but what the heck ever. After this year I'm tempted to just go all cash but can't bear the thought of paying crazy taxes.

There's nowhere else for me to talk about this and felt I needed to share, you all are my support group now. In the past week I've gone from a realized -1M ytd (remember all my warnings about being careful and disciplined, don't do what I do? and most recently -2.5M in margin on interest on top of that...) to positive 700k ytd. I'll take it. May need to start taking aspirin, a statin, and other cardiac meds to keep my heart going, I guess I can afford those now . Maybe a nice vacation and bottle of Teslaquila!

 

[mongo]

Learned three things today:
Vanguard is terrible if you want to do a roll (although if I had done it, I would have sold new at the peak and bought back at the low, went deer in the headlights though).
Vanguard's (and probably every broker's) account balance already takes into account ITM (negative) sold options. This is obvious in retrospect but makes it a lot easier to close losing positions because it does not impact your account further (versus knocking the loss off the listed balance). So you're just choosing to switch between cash, shares, and options.
Keep an eye on your cash reserves. Only after doing the call buyback did I realize I came within $20k of a deficit (non-margin IRA).

 

[TheTalkingMule]

Last week I opened 750/800 BPS for 10/29 which I still have
Yesterday opened 1100/1150 BCS for 10/29, these got too scary so I closed for a loss this morning, but I waited longer than I should
Near the peak today I sold a bunch of 10/29 1500 CC against all my shares and leaps and sold 1300/1350 BCS for 10/29 as well

Should I do nothing more I will have have recouped just over 50% of my loss which brings it to less than a typical week's income.

It's hard for me to distinguish between a rational recovery plan and a dangerous leveraged move that could sink me.

All your moves above seem perfectly logical, but it makes me uneasy. For instance, if it were logical to sell $1500 CC against all my shares, why wouldn't I do something similar nearly every week? Why only do it to recover one bad week's losses that should be independent of future decisions?

I'm chalking my confusion up to just a lack of comfort with the leverage and understanding of the margin requirements. Thanks for all these posts, they're a huge help. In a few months I want a playbook I'm comfortable with and all the audibles I'll call should anything happen in any direction. With our deep TSLA knowledge, that should be enough of an advantage. Selling spreads already in the shitter, rather than rolling, is going in the playbook.

 

[samppa]

hertz BCS problem fixed with net zero $ loss

history and sequence
- opened IC x370 10/29 +p750/-p800/-c1000/+c1050
- hertz drama started
- rolled 10/29 +p750/-p800 to +p800/-p850 (credit to maximize the winning side)
- rolled 10/29 -c1000/+c1050 to 11/5 -c1020/+c1070 (zero credit but strike improved)
- opened 10/29 -c1100/+c1150 (credit)
- start of day 2; decided to shut down and remove all 10/29
- rolled 10/29 +p800/-p850 to 11/5 (credit and 20% away)
- rolled 10/29 -c1100/+c1150 to 11/5 (credit and 10% away)
- opened more 11/5 +p800/-p850 (credit and 20% away)
- opened 11/5 -c1300/+c1350 (credit and 30% away)
- closed 11/5 -c1020/+c1070 (zero out)

notes
- everything is Market Order; now is not the time to be cheap
- this rescue is all hands on deck, with all positions helping out to prevent portfolio blowing up
- although there is no actual $$$ lost, the real loss is zero income for this week; there's 3 days to catch up (or just do nothing while recovering from trauma )

Very nice rescue operation!

 

[adiggs]

It's hard for me to distinguish between a rational recovery plan and a dangerous leveraged move that could sink me.

All your moves above seem perfectly logical, but it makes me uneasy. For instance, if it were logical to sell $1500 CC against all my shares, why wouldn't I do something similar nearly every week? Why only do it to recover one bad week's losses that should be independent of future decisions?

I'm chalking my confusion up to just a lack of comfort with the leverage and understanding of the margin requirements. Thanks for all these posts, they're a huge help. In a few months I want a playbook I'm comfortable with and all the audibles I'll call should anything happen in any direction. With our deep TSLA knowledge, that should be enough of an advantage. Selling spreads already in the shitter, rather than rolling, is going in the playbook.

It's my observation that we can learn from events like these but ending up with a playbook that just works - that'll be dicey. All of these playbooks work ... until they don't.

 

[TheTalkingMule]

Looking back on prior spikes, it does seem that on the 3rd day, there shall be a red candle, but who knows. Maybe we'll see a big drop back to "normal" today or just keep going. Personally I'd like to see us close at 1024 for the week, kind of goes with living in a simulation and would leave me ahead for the week.
After these sprints up, there is consolidation or reversal before resuming the upward trajectory, so indeed be ready for a big reversal to hit BPS positions. My straddles will work out pretty well anywhere from 950 to 1030 and really well from 990-1010. With IV up, looks like Thursday is a good day to roll or hang on til Friday to close.

I think we just did the 2nd and 3rd days in one morning. Hoping we flatten out here a bit.

Sold 11/5 BPS @ $880p/$780p for $3.45

SP immediately tanks $5 of course, but I don't have to worry about such trivialities anymore. I'm a conservative spread seller not some hooligan looking to get lucky on naked calls.

Edit: And for anyone interested.....this spread is now paying ~$4.50 Lol

 

[bballshinobi]

Citadel stepping to save my $1,050 CC lol

 

[dc_h]

All of our shenanigans to right the ship this week and the @accountants simple sell covered calls, sell shares some weeks and then sell puts the next week sounds pretty pleasant. Nothing risked except some upside and something like 2% or more premium week in and out. Maybe the ultimate be the house move is to sell at the money calls and puts. Like @Lycanthrope I thought about selling both sides, but then your stuck holding if the market moves too much in either direction (my position this week, as I've wandered into my current straddle). Now I have to worry about losing on my bps positions and getting bailed out on my calls. With the current dip, I'll probably sell another 10 bps 970-870 with some good premiums. I'm in deep! Stop the count, halt the stock at 1010!

 

[TheTalkingMule]

It's my observation that we can learn from events like these but ending up with a playbook that just works - that'll be dicey. All of these playbooks work ... until they don't.

Sure. And that's where the knowledge kicks in from spending waaaaaay too much time here. No play will get you out of the market moving against you, but I think we can keep ourselves out of the way far better than most.

Like this week for instance. No way I'm looking at call spreads until February or $1350. Period. And I'm on the record with that a couple weeks back

All I want to know is what's optimal when I find myself in a jam. Being able to flat out cross off rolling weekly spreads when down 100% is a huge load off my mind. And I'll remain open to others making a case for the opposite.

 

[stealthyc]

It's hard for me to distinguish between a rational recovery plan and a dangerous leveraged move that could sink me.

All your moves above seem perfectly logical, but it makes me uneasy. For instance, if it were logical to sell $1500 CC against all my shares, why wouldn't I do something similar nearly every week? Why only do it to recover one bad week's losses that should be independent of future decisions?

I'm chalking my confusion up to just a lack of comfort with the leverage and understanding of the margin requirements. Thanks for all these posts, they're a huge help. In a few months I want a playbook I'm comfortable with and all the audibles I'll call should anything happen in any direction. With our deep TSLA knowledge, that should be enough of an advantage. Selling spreads already in the shitter, rather than rolling, is going in the playbook.

I sold $1500cc because the price had shot up so much that IV on calls was enormous and as such the price for a ~40% OTM 4DTE call was something worth selling. That is definitely not the case every week. I estimated the chances of it going to 1500 by friday as ~0%, and also decided that if it did happen I would be ok with liquidating my whole position in tesla. I would have done it even if everything was ok.

Regarding the other stuff, remember that these spreads are often 10-20:1 risk/reward. The problem I find is when you are sitting there watching the stock move against you it is hard to think clearly, and also you are obviously getting hit very hard with that leverage. If you always close at 100% loss you have converted your risk from 20:1 to 1:1. After such a draw down, you can consider the stock movement and make clear headed, no-stress decisions about what to do next. Assuming you are trying to gain roughly the same income every week, it also is just a loss of one week of income, which is pretty easy to stomach. You can always re-open a position if it feels right. You have cost yourself things like bid/ask and time value, but weighed against the leverage that is not so bad.

Today at open my spreads were just under 100% loss. By the peak of the movement they would have been about 500-800% loss.

I also would not say that I opened the 1300/1350 to recover my position per se. It was more of a re-opening at a much better price.

 

[Cherry Wine]

Classic squeeze.

 

[BornToFly]

The SP is doing exactly what I expected, but I was chicken because I just couldn't afford to be wrong. $2M+ down the toilet for nothing, and the 900/850 BPS are potentially going to be a problem real soon.... F'ing awesome.

 

[Yoona]

Thanks for the advice whomever to keep the long leg if you think the stock is going to get to that price.

does anyone have links/posts about this advice? i missed it

TIA!

 

[Cherry Wine]

The SP is doing exactly what I expected, but I was chicken because I just couldn't afford to be wrong. $2M+ down the toilet for nothing, and the 900/850 BPS are potentially going to be a problem real soon.... F'ing awesome.

I think your 900s are safe, FWIW.

But ugh, this marks the second time this year I've been caught out in these violent moves and been unable to take advantage by selling long-dated covered calls at ridiculous strikes for some serious cash. Hopefully this juices IV for a little while.

 

[ammulder]

Actually the chart looks a lot like the NASDAQ today... seems odd that Facebook could tank Tesla, but there you go.

 

[TheTalkingMule]

The SP is doing exactly what I expected, but I was chicken because I just couldn't afford to be wrong. $2M+ down the toilet for nothing, and the 900/850 BPS are potentially going to be a problem real soon.... F'ing awesome.

This is precisely the brand of chaos and confusion Little Kenny Griffin wants. And why @StarFoxisDown! made a good call on this quick spike happening before 4Q earnings. The SP was getting too rational compared to earnings and people round here were getting way too comfortable with their easy returns.

I think you're OK on this BPS as well, if that counts for anything. The stoploss orders at $1000 can't be even 1/100th of the buy orders at $985.

 

[dc_h]

My big lesson is don't sell 30 bcs for $750 with a 150,000 max loss. That is not smart, even with .01% odds, the 1 in 1000 week storm was this week.

 

[generalenthu]

Yet to catch up with the thread, but in the spirit of posting trades, I got myself into some juicy Jan 2024 short puts at 400 strike at slightly less than a 40 average.. I am viewing this as a replacement for my BPS position. These puts have gone up by 6 ish bucks this week from rising IVs, even as SP has gone up. I think once the volatility comes down these are worth probably 30-32 at most in a month. So 7 bucks for a month or 2 is better than doing BPS for very short time frame.

And the kicker is, you can pair these with something like 500 or so puts for December, and see that sweet *jump* in margin. At least in IB. Myself I am not buying these puts yet, but perhaps will do so.

Just trying to pick the right tool for the opportunity market presents.

 

[dc_h]

Yet to catch up with the thread, but in the spirit of posting trades, I got myself into some juicy Jan 2024 short puts at 400 strike at slightly less than a 40 average.. I am viewing this as a replacement for by BPS position. These puts have gone up by 6 ish bucks this week from rising IVs, even as SP has gone up. I think once the volatility comes down these are worth probably 30-32 at most in a month. So 7 bucks for a month or 2 is better than doing BPS for very short time frame.

And the kicker is, you can pair these with something like 500 or so puts for December, and see that sweet *jump* in margin. At least in IB. Myself I am not buying these puts yet, but perhaps will do so.

Just trying to pick the right tool for the opportunity market presents.

Wow, so many trades. I see you could buy a Dec 400 put for .60 and cancel out your margin and if the IV does drop, as it should, thats about a 10 to 1 payout for 3 weeks with almost zero risk.

 

[Yoona]

I did something new. I rolled my 10/29 BCS from -990/1050 to -1000/1060 11/5 early for strike improvement and a credit yesterday before it hit 990. Before market close, I rolled my short leg to 1100 for about $35 debit, turned it into a debit spread, 1060/-1100. It has now recouped half of my loss. If the SP stays $1100 11/5, I can recoup all of my loss.

this is interesting, hmmmm
note to self: research more about bull call spread as exit strategy