Wiki Selling TSLA Options - Be the House

[PastorDave]

Wondering.

With everyone and their mom expecting a gamma squeeze next week, wouldn't there be someone else with the means, who says screw all of you, this time I take your money?

When this happens, I think it's market forces rather than a nefarious monocled tophat wearing billionaire. I was suspicious the opposite of what everyone was expecting would happen after Q3 earnings because of watching my own behavior. Even though I didn't think we'd see a large dip, I still cleared out a lot of positions, raised a ton of cash and waited to buy the dip. I think everyone else did too. So there wasn't really a dip.

What happens in this case? Everyone is expecting a pop on Monday, so everyone bought calls today. How does this go Texas Institute of Technology and Science up (as WSB would say)? The market corrects when there are no more buyers; when everyone is all in and out of gas because they're SURE it's going one more leg up and they are not going to miss this one! I'm not all in yet. I'm not FOMOing, and I don't see people on this board doing so either (we might not be the average traders, but we do represent a lot of shares). If it goes down 50 points, I'll probably sell some more BPS. So we could go higher, I think. Alternatively, if this is really a short squeeze (because retail - us - keeps thinking "there's no way it goes up ANOTHER 200 points this week - I'm selling some more calls" only to have to cover), it's over when people finally decide to give up shorting. Again, no more buyers. I'd guess both factors are at play.

I tend to think that the institutional buying is over, or mostly done. Next week could easily see retail doing our buy at the top thing, driving us up to 1200 or even 1300 before slamming back down to 1050 or 1000. I think there's a psychological floor there, as well as institutions who wouldn't want to sell on the dip, or who would want to buy back in there.

There's always a drop. But will it be 1200 back down to 900? Or will it be 2000 back down to 1300?

Couldn't agree more with this. We just don't know how high this will go, or where it will correct to. When we find out, we'll have discovered the price and likely a new trading range. Might pay to be patient with selling calls until then. My personal guess is that we hit 1300 then back to 1100 or so, but I'm not putting all of my eggs into that basket. Obviously big numbers like 1200 or huge call walls are good resistance points to watch for the end of the rally as well, but who knows? SP could do anything.

 

[juanmedina]

I am thinking the same around $1350-1300 will be the high. I am also watching IV30 and I think if we hit 100-90 I will start dumping my shares. I am considering stopping selling covered calls just to make sure that my shares are not tied up depending on what I decide to do. I regret getting rid of my LEAPs because if feel like we are early on the run but at least I swapped them for shares. I wish I had loaded up on short term OTM options. Maybe the guys on the other thread are right about their bullishness.

I update my spreadsheet and I lost $138k for the week and I am at -$33k for the month .

 

[Ogre]

I definitely picked some weird timing to get back into options trading.

Appreciate that there is such a great and interesting group of folks who are here to bounce ideas off.

 

[M3Rider]

I am thinking the same around $1350-1300 will be the high. I am also watching IV30 and I think if we hit 100-90 I will start dumping my shares. I am considering stopping selling covered calls just to make sure that my shares are not tied up depending on what I decide to do. I regret getting rid of my LEAPs because if feel like we are early on the run but at least I swapped them for shares. I wish I had loaded up on short term OTM options. Maybe the guys on the other thread are right about their bullishness.

I update my spreadsheet and I lost $138k for the week and I am at -$33k for the month .

I am thinking less than 1300.

I am thinking 1200 is max until Q4 deliveries and Q4 ER. That is max of analysts upgrades which are 6-12mo goals, so reaching that is an over-achievement.

That still screws me up real good with my 1030/1050 ccs.

Very painful subject to attend to.
Why Hertz had to screw with it?

Q4 ER? Could potentially warrant 1300-1500.
My pain of having to deal with CCs.
We know Q1/Q2 will screw up margins due to small number of cars out of Austin/Berlin and expenses divided by those number of cars killing margins.
A chance to recoup losses? Maybe. But not for a long time.

Then FSD. Ouch.

Some think Jan 22 will bring market correction.

On average. Starting to think about @Yoona's idea of saving x CCs at a time.

 

[dc_h]

I used to have 700 shares of Tesla pre-split. That's 3,500 post split. I sold covered calls to make extra income, and buy extra shares... Eventually I couldn't roll my covered calls far enough out into the future to cover them all, and lost shares. I never lost money. I've made $250,000 on an initial $60,000 investment. Yep, I've been the house, making that consistent income...

What did I lose? Let's see.. 3,500 * $1,088 = $3,808,00 - $250,000 = $3,558,000 in potential gains lost.

I played it safe, I played the house as it were, and as a result I missed out on $3.5 MILLION!

I'm back on dice.com and linkedin looking for jobs in the IT field where I was working previously. I seriously messed up, I could have a larger home that fits all my things and a Plaid Model S to boot, doing a bunch of nothing but fun, and instead I'm job hunting with a big gap in my employment that it seems is holding me back from being employed...

Too smart for my own good, and I should have just HODL? I'll go crawl back into my hole, and try not to vomit when I think about what I could have had.

DM me if you like, I may be able to help on the job front. Can't help get those shares back.

 

[ReddyLeaf]

I still think we have to mean revert to the mid 1,000s at some point, so we'll see how long I can continue to roll these.

so, 1400-1600 this week? Unfortunately/fortunately, this feels different. SP rising nearly every day, I think we’re in for a steady rise for quite some time, maybe even through 2022. Because I lost most of my shares, I’m selling/rolling puts (1040 &1050) hoping to keep up with the SP rise, maybe getting lucky and getting my shares back.

update my spreadsheet and I lost $138k for the week and I am at -$33k for the month .

It’s so bad, I stopped updating my spreadsheet. I’m now making huge premiums (~$30/wk) but lost my shares and the SP is going up $200/wk. I don’t know whether to jump for joy or cry. I’m making 3%/wk which is insane, but missing out on 20%/wk. #FirstWorldProblems.

 

[samppa]

It's very applicable, I posted a few times about it.
I just call my broker and ask to exercise my 2022 DITM calls when I have the cash.

Boom, done. No need to wait for expiration.

That's for American options. Can't do the same in Europe.

All TSLA options are American style. Only some etfs have european style options.

Where you physically are, doesn't matter. So tsla options in europe can as well be exercised/assigned early.

 

[ammulder]

so, 1400-1600 this week? Unfortunately/fortunately, this feels different. SP rising nearly every day, I think we’re in for a steady rise for quite some time, maybe even through 2022. Because I lost most of my shares, I’m selling/rolling puts (1040 &1050) hoping to keep up with the SP rise, maybe getting lucky and getting my shares back.

It’s so bad, I stopped updating my spreadsheet. I’m now making huge premiums (~$30/wk) but lost my shares and the SP is going up $200/wk. I don’t know whether to jump for joy or cry. I’m making 3%/wk which is insane, but missing out on 20%/wk. #FirstWorldProblems.

I love the price action this week as much as anyone (anyone who hasn’t been killed by selling calls, that is), but there’s no way it can continue through 2022. We saw Tuesday that it’s clearly possible for the stock price to get ahead of itself. At some point the volume will cool and macros and manipulators will start to have an influence again.

I do think it’s different this time to some degree… I think some investors and funds have been permanently pried off the sidelines, and I think the bear case is evaporating with every additional news release. I don’t see us revisiting $560’s. My guess right now is not more than a $200 pullback. But that could be too optimistic, especially if this coming week features another big gain. We could certainly hit a peak of optimism and FOMO that then takes until Berlin and Austin are ramped to justify and reclaim — six months or more? But also perhaps not, depending on how Tesla can manage financials through the ramp. So much variability!

Anyway, I don’t want to criticize, but I would like to try to send a message as a friend might (yes, an anonymous found-on-the-Internet friend, but hey): the message quoted above sounds a bit frantic. If you can find a way to take a breather and look at things again when not so caught up in the moment, it might be beneficial.

 

[jeewee3000]

I have never been so sure that there will be spike at/after opening Monday.

That's what we thought the Friday before the Monday-Evergrande drop.

Macro's can always fudge things up.

 

[jeewee3000]

All TSLA options are American style. Only some etfs have european style options.

Where you physically are, doesn't matter. So tsla options in europe can as well be exercised/assigned early.

Indeed. Was going to post the same thing. With all Tesla options early exercise is possible. Even my 100% European broker software in my 100% European location has a nice little "E" button next to all bought option contracts listed under my positions. At first I didn't know what the "E" button did but when I hover over it, it states "Excercise". Pretty straightforward

 

[juanmedina]

It’s so bad, I stopped updating my spreadsheet. I’m now making huge premiums (~$30/wk) but lost my shares and the SP is going up $200/wk. I don’t know whether to jump for joy or cry. I’m making 3%/wk which is insane, but missing out on 20%/wk. #FirstWorldProblems.

Seriously, I always look forward to updating my spreadsheet but this time not so much. It is painful but I had to do it to stay true and to understand if can depend on option trading as my main source of income. I was having the best month ever and it got completely destroyed in two days. I was being conservative with my positions at 15-20% OTM but I waited too long and then panicked but now I seriously think if I start to see losses accrueding to two weeks of premium I will close the position.

As of last week 60% of my shares are in ITM CC at $1070 $1060 and I am going to do the split and roll to see if can save a few of them and I think we will eventually drop to the $1000 level at some point.

 

[Knightshade]

If banks get a discount that discount will be dumped on the open market the next day.

Not if they're among the folks who have previously been underweight on Tesla-- something Gary Black has discussed at length recently on twitter.

They'd be getting back to equal weight on the cheap and Elon avoids open share dumping- win win.

I think Leo is looking to add another million shares or so in the next 1-2 months so I'm sure he'd take some at a discount too.

On top of that, the banks who would buy to then sell would make more on the deal NOT dumping all at once- and unlike Elon, they have no deadline to act, so they could certainly spread their sales out.

 

[pz1975]

That's what we thought the Friday before the Monday-Evergrande drop.

Macro's can always fudge things up.

I didn’t say that then. I’m saying it now. And yes of course I realize that a black swan can make me wrong but outside that it is my not-advice opinion. I have followed this stock for almost 10 years and have a good sense of its movements. I rarely buy short-term calls - only when the risk:reward is very low in my opinion, and Friday before close was one of those times. If I’m wrong no biggie as I wagered only a small amount compared to my portfolio, but I think I will be right.

 

[juanmedina]

I didn’t say that then. I’m saying it now. And yes of course I realize that a black swan can make me wrong but outside that it is my not-advice opinion. I have followed this stock for almost 10 years and have a good sense of its movements. I rarely buy short-term calls - only when the risk:reward is very low in my opinion, and Friday before close was one of those times. If I’m wrong no biggie as I wagered only a small amount compared to my portfolio, but I think I will be right.

Out of curiosity. What strikes and expiration do you end up getting?

 

[pz1975]

Out of curiosity. What strikes and expiration do you end up getting?

All next week - 1,300 and 1,400s. Note I don’t expect the SP to reach those levels. I plan to sell them Monday morning soon after open whether there is a pop or not. If it really spikes, I may keep some of the 1,300s for fun.

 

[traxila]

I sold 1400, 1500 and 1600 CCs for Nov 5.

Am I nuts? Think the 15 and 16 are pretty safe .

No really, I go a 50 point a day cushion. What could go wrong?

BTW, just to verify, I rolled my 875 and 905 and 1000 CC that I sold (one of each) to Nov 5 for 4 or 5 dollars each extra premium. Am I interpreting this correctly, that at some point it is possible that even with no downturn, if the SP just stabilises, I might actually catch up (In a couple years lol). I figured when they are so DITM the premiums would disappear between one week to the next, but something was still there at expiration. It does make sense to keep making a few hundred dollars a week and waiting, right? What is the downside? Am I leaving money on the table in other ways?



UPDATE: I tried to take everyone’s advice, Including my own, to close out positions before they expire on my 1300/1400 bear call spread yesterday, but somehow I could not get IAB to I execute on the damn order. Man, am I new at this. TD is no problem , I don’t get it. But they expired worthless so all is good and I kept 100% of the premiums. Thanks to everyone for showing me another way to profit on my positions, although I know everyone here just wishes they bought naked calls this week, me included lol.

 

[Joshker]

All this talk of not knowing where this will go, $2000-3000 etc. The thing that is different this go around is the current valuation. This company has literally changed my life and I‘m a hyper bull not doubt. With that being said what we’ve witnessed here going from 800B to a 1T company in basically 2 days is not the norm and hence why so many of us either lost out on this run or lost money this week. Unlike our last run up where we flat based/coiled for years and even at the day of skipping the 800’s and tagging 958 presplit the valuation was believable. Suggesting that a 1T company will become a 2-3T making it the most valuable in the world with less than 1M annualized production in short order is pretty ludicrous...

Remember at some point even longs and even institutions who know how this stock goes up/pulls back 50% (probably never again in my opinion) will start to sell and with options premiums costing what they do the volume will slow and buyers will not be there. I’m just trying to keep prospective for all of those who are in my same position and trapped with CC’s against their long term core positions. $1100 12/17/21, here’s to hoping this levels off in the near future…

 

[mongo]

I sold 1400, 1500 and 1600 CCs for Nov 5.

Am I nuts? Think the 15 and 16 are pretty safe .

No really, I go a 50 point a day cushion. What could go wrong?

BTW, just to verify, I rolled my 875 and 905 and 1000 CC that I sold (one of each) to Nov 5 for 4 or 5 dollars each extra premium. Am I interpreting this correctly, that at some point it is possible that even with no downturn, if the SP just stabilises, I might actually catch up (In a couple years lol). I figured when they are so DITM the premiums would disappear between one week to the next, but something was still there at expiration. It does make sense to keep making a few hundred dollars a week and waiting, right? What is the downside? Am I leaving money on the table in other ways?

Non advice
If buying shares or options or selling puts or anything else earns you more than rolling, those things are 'better'. Rolling those DITM calls are fairly safe returns for now, unless SP drops below strike.

I let the rest of mine get assigned due to risk/ hassle of using Vanguards no-roll interface vs volatility.

 

[traxila]

Non advice
If buying shares or options or selling puts or anything else earns you more than rolling, those things are 'better'. Rolling those DITM calls are fairly safe returns for now, unless SP drops below strike.

I let the rest of mine get assigned due to risk/ hassle of using Vanguards no-roll interface vs volatility.

Thanks for reply, but I am still not clear.

From the perspective of the CC, do I not want the SP to drop below strike? Then they transform into the “free“ money I was seeking out in the first place.

As far as using the money for other trades, I have the shares still that cover the calls, so it does not cost me anything in margin or buying power, right? Am I missing how the brokers choose to calculate this?

I do have a lot more buying power anyway, do not need to ever get wiped out again, pretty paranoid against overleverage etc etc.

 

[⚡️ELECTROMAN⚡️]

Sorry for being annoying, but what does BCS and BPS stand for?