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Wiki Selling TSLA Options - Be the House

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Like others, I've also got about 75% of my shares stuck in covered calls ranging from 1000-1100 and mostly expiring in the next 1-4 weeks. I was able to roll all of them up a little bit last week for some credit, and more on Friday for very small strike improvements. I also sold a large BPS for next week and used the $10K to buy back one of the options for a slight profit.

Current plan going forward is to keep trying to roll everything up a little bit each week and hope for a SP correction in the next month. And continue to sell BPS and try to buy back one or two calls each week. I don't want options assigned because of the tax issues.

In my IRA it is more difficult since I can't sell BPS, so I'll just have to keep rolling them forward. Another option there would be to just let them expire and then buy back the shares using puts.
 
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.
On the CC, if the goal is to keep the shares, then SP below strike at expiry is good. If you are trying to maximize return on investment, then having them called away is better at the strike than keeping them if the SP then goes below the strike. Of course, on a SP drop, the calls lose value which might make buy back more palatable. Basically, if you have shares that decreased in value that you can't sell due to the calls, that might be a concern.

re money for other trades. While the CCs exist, you aren't getting gains off the shares other than premium and strike improvements for rolling. So you might want to look at what happens if you buy back the CC exposing yourself to stock price changes or let them be executed which frees up their value for other positions. Example, I bought back a bunch of DITM calls for a loss @1040 which then went up 70 a share. This is more than I would get rolling in the near term, but medium term if the stock dips or flattens, rolling could be better. The other options assigned, so I have less shares but more cash now. Could use that to buy calls (optomistic) sell puts (optomistic) or buy shares.

But I'm not the one to listen too, did more trading in the last month than the previous years with negative net return vs HODL.
 
On average. Starting to think about @Yoona's idea of saving x CCs at a time.
All kinds of good ideas around these parts, eh?

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.
A really weird idea that's gone through my mind since summer - maybe I don't need to own TSLA shares or DITM calls any longer? At some point the pile is big enough that just using it to generate the rather generous income from selling TSLA options is all that is needed.

Or more particularly to your comment - maybe arranging things to optimize for the 3%/week, realizing that an important risk / cost of doing so is not having as much exposure to a 20%+ week that will rarely come along. For me at least this isn't a bad optimization as one problem I've realized I have is that my wife and I won't sell shares to raise living expenses. Or it is at least a difficult mental jump to make. But hey - those shares can generate an income via CC or margin backed puts / spreads.

My own pursuit of this idea led me to start turning shares into DITM calls and holding a lot more cash. AND that conversion from shares to DITM calls actually left me with more share equivalents / delta than I started with, and thus had larger exposure to this run. But the focus was arranging the accounts to generate an income.

Because (making up some #s) if you've got $1M/year in income and never thought you'd even reach $400k and the portfolio is bigger than ever expected, is optimizing for additional accumulation and wealth the right choice? It may well be - my only point is that its worth thinking about, because maybe that isn't the right optimization any longer.

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?
As was pointed out elsewhere if you're earning as much or more by just rolling those CCs where they are, then I see no need to stop. But if you've got better investments using the cash from the sales, then maybe not. One important reason for continuing the rolls over taking assignment is shares with big unrealized gains in a taxable account.

Something I would be looking at as well on those rolls - can you be improving the strike on each roll (subject to a net credit). The way I think about this - once I'm ITM and especially deep ITM, then the question I start asking myself is whether I would rather take assignment on the current position or on the new position? You'll find that your largest unrealized gain each week is the max strike improvement (again - net credit). Whether that's your best new position though is a different question.

That assignment question should also get you thinking about time value of money, or what you'd be doing with the share sale from the CC assignment. That time value, or what you could be doing instead with the money, is the primary downside that I see.
 
In my IRA it is more difficult since I can't sell BPS, so I'll just have to keep rolling them forward. Another option there would be to just let them expire and then buy back the shares using puts.
Is that a broker thing, where your broker doesn't support that at all? I know that BPS are available at Fidelity (they're my broker), and my research says they're available at tastyworks. Pretty sure that Schwab and IB customers here in the thread are doing spreads in their retirement accounts as well.

So if your broker just doesn't support them at all, maybe its time to think about a different broker :)

With Fidelity at least, and this might be true for you as well, the Spread Trading in the IRA was an additional options level (they call it Options Level 2 + Spread Trading). So I had to apply for it as an additional feature.
 
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In my earlier post I omitted this but of course it is implied that, when choosing option #3, you keep actively searching for possible solutions to reduce risk.

Split-rolling is one tactic that took me out of a jam as well. For example if you have 10 cc's ITM: upon your weekly roll of the ITM cc's you roll 9/10 to the same strike or a lower one, and with the credit this move nets you, you roll the last cc up in strike hugely. That one expires the next week and you do the same next week, etc. (And this opens up the shares again, so you can then also start spreading the value of the 9 remaining cc's into 10cc's at higher strikes upon your next roll should you want to).
that sounds very interesting, would you be able to provide some more detail? Is the idea that you are willing to go more ITM on 90% of the CCs for the sake of getting out of 10%? As you progress through, assuming the SP doesn't change, are you digging a deeper hole? Or does it all work out in the end somehow?
 
My apologies if this is a repeat - I thought about posting this previously and now I can't remember if I already did :)


I'm new to making use of margin in a taxable account. I've learned a few things the last couple of days that I assume might be valuable to others. I figure that if I have an ah-hah, then I just assume there is somebody else in the thread that will benefit from that ah-hah.

For buying options, or backing sold options with margin, the total amount that can be used is the House or SMA call amount derived from Margin Equity PLUS cash. I've been assuming all this time that the cash was wrapped up into the original margin size calculation and it isn't (or at least it isn't at Fidelity).

Oops - that account has had a LOT more ability to buy or sell than I thought.


At least at Fidelity the relevant numbers I'm starting to learn better and better what they mean:
- Non margin buying power. THIS is the margin + cash value that is the full amount that can be used.

Under Details:
- Margin Equity. This is the value of the shares and other marginable securities, and is used to calculate margin (next 2 elements)
- House call. The margin available to be used, using the House (Fidelity) call method of calculation.
- Federal or SMA call. The margin available using that calculation method.
-- At least for me the Federal call method yields the smaller available margin, so that's what I have to manage to.


With as much cash as I have in the account, the non-margin buying power is more from the cash than from the marginable shares, so I routinely have negative House and Federal call balances (which is to say, margin calls). Or at least I will after this - I finally figured it out this week.

At the bottom of the Balances page is a Margin Call Summary link. In that link are "Margin Calls Issued" where I am currently told that I have both a house and a federal call. And its a non-trivial amount. However those amounts ARE trivial compared to the cash level, and that same page has a blurb:
Note: Based on Previous Day's balances, you have
sufficient Cash (core) that may cover one or all of the
outstanding calls on your account (also known as a
Phantom Call).

A phantom call being a situation where you've got more on margin than your margin will support, but the cash is already on deposit that covers the call.

Also on that page is a Calls Due Today which is currently $0 for me. Next to that is a details link in which the details of the margin calls that have been issued are listed out. So 10/27 I had both a Federal and House margin call issued that were due 11/2 and their amount. They are also flagged as MET (on the spot, when they were issued) again because the cash was already present to handle that call.


Definitely NOT-ADVICE. There's all kinds of ways one can get themselves into trouble using margin, and I'm totally a n00b at this, so like really for sure don't look to me as anything more than a n00b playing around with small positions to learn more. I'm taking it v e r y slowly and conservatively. My initial efforts at using margin this week just barely pushes me beyond what I would need for the cash to cover everything.

And I'm definitely making use of the Margin Calculator to see what some stock price changes will do to my margin situation (thanks @BornToFly).
 
All kinds of good ideas around these parts, eh?


A really weird idea that's gone through my mind since summer - maybe I don't need to own TSLA shares or DITM calls any longer? At some point the pile is big enough that just using it to generate the rather generous income from selling TSLA options is all that is needed.

Or more particularly to your comment - maybe arranging things to optimize for the 3%/week, realizing that an important risk / cost of doing so is not having as much exposure to a 20%+ week that will rarely come along. For me at least this isn't a bad optimization as one problem I've realized I have is that my wife and I won't sell shares to raise living expenses. Or it is at least a difficult mental jump to make. But hey - those shares can generate an income via CC or margin backed puts / spreads.

My own pursuit of this idea led me to start turning shares into DITM calls and holding a lot more cash. AND that conversion from shares to DITM calls actually left me with more share equivalents / delta than I started with, and thus had larger exposure to this run. But the focus was arranging the accounts to generate an income.

Because (making up some #s) if you've got $1M/year in income and never thought you'd even reach $400k and the portfolio is bigger than ever expected, is optimizing for additional accumulation and wealth the right choice? It may well be - my only point is that its worth thinking about, because maybe that isn't the right optimization any longer.


As was pointed out elsewhere if you're earning as much or more by just rolling those CCs where they are, then I see no need to stop. But if you've got better investments using the cash from the sales, then maybe not. One important reason for continuing the rolls over taking assignment is shares with big unrealized gains in a taxable account.

Something I would be looking at as well on those rolls - can you be improving the strike on each roll (subject to a net credit). The way I think about this - once I'm ITM and especially deep ITM, then the question I start asking myself is whether I would rather take assignment on the current position or on the new position? You'll find that your largest unrealized gain each week is the max strike improvement (again - net credit). Whether that's your best new position though is a different question.

That assignment question should also get you thinking about time value of money, or what you'd be doing with the share sale from the CC assignment. That time value, or what you could be doing instead with the money, is the primary downside that I see.
I started the wheel wondering if I could generate enough income at retirement without selling TSLA. I have another 5 1/2y of my schooling (I'm a forever sophomore in the School of Hard Knocks), but by using 20% of my stock for covered calls and selling another 20% of my stock and using that money for put strategies, I think I can...
 
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.

I sold 1400CC's for 11/5 as well. Honestly, I'm perfectly fine with the shares being called away at that price (although I don't think they will).
 
that sounds very interesting, would you be able to provide some more detail? Is the idea that you are willing to go more ITM on 90% of the CCs for the sake of getting out of 10%? As you progress through, assuming the SP doesn't change, are you digging a deeper hole? Or does it all work out in the end somehow?
NOT-ADVICE.

When I've done this previously I ended up using a small amount of incremental resources, devoted to that subset (initially a single contract), to get it into a desirable situation where I could resolve it.

So one application might be selling a BPS (some different and otherwise unrelated position) that later expires with a profit. Then use that profit to buy out 1 or more of the losing positions that are being rolled week to week. Repeat week after week until all of the losing positions are resolved.

Or I used some covered calls to flip some deep ITM puts into deep ITM calls. The covering shares become the resources to back what used to be deep ITM puts. Pretty sure that on that trade I also added some additional shares / calls to make some of those deep ITM calls a lot less ITM. So something like turning 1 deep ITM put into 4 ITM calls using 400 shares (or 4 long calls) to back those 4 cc.


One could also make some of the position worse off, in order to take all of that to make a subset a lot better off. I would tend not to do that - I'd keep the bulk of the position unchanged (roll straight out) and then use the straight roll, other position, etc.. resources to close a subset of the position that needs healing.


Bigger picture - none of this is risk free. When doing these sorts of things we are effectively moving that risk / reward around in such a way that we think we're better off. The most common theme is that we're adding resources and/or adding leverage to a bad position with the hope and expectation that the whole position will resolve more quickly due to that leverage. It just needed that extra bit to get there. BUT the extra leverage can also turn a big loss into an even bigger loss if things go against (woot!).

So the first thing I always evaluate when considering these more dramatic and exciting sounding management choices - how about just pay for the loss and be done. It's a lot easier to take this choice when one can look back at 1-8 weeks of income with the idea that those weeks of income are paying for this loss. Or you've already 'healed' this problem position and you're better off clearing the slate for next week.

In fact this is something we should all have baked into our trading. There WILL be losses each year, pretty much regardless of how far OTM we are trading. The rate of wins and losses is a big contributor to overall profitability (maybe the biggest), but even a high win rate strategy will still have losses. Witness this past week where even 15% OTM wasn't far enough.

My own studies in which I incorporate some losses or loss rate into my trading results have consistently revealed to me that managing my losers into small losers is about the biggest contributor to overall profitability that I have available. Small losers are offset by the flurry of small gains that we're doing routinely. The small gains don't offset big losses very quickly though :)
 
I started the wheel wondering if I could generate enough income at retirement without selling TSLA. I have another 5 1/2y of my schooling (I'm a forever sophomore in the School of Hard Knocks), but by using 20% of my stock for covered calls and selling another 20% of my stock and using that money for put strategies, I think I can...
Finding that trading approach / strategy that I know well enough, and have enough experience with, was a big focus of mine last year. It's still something I think a lot about, but my focus is now into optimization and income, rather than "can I do this, and is it good enough / useful". Last year was for learning whether I could do it (and I got paid, really well, to learn it!).


Really for real not advice, but at that low level of cash for selling puts, you might find that your shares provide plenty of margin to back those puts or put spreads. Which means that you might be able to keep that 20% of stock as stock instead of selling it for the cash to back puts. Might save some taxes that way as well.


Learn lots about margin, use that Margin Calculator that @BornToFly keeps pointing out, and make sure you don't end up needing to sell shares that you don't want to sell (and do so in a declining market / low price). Tiptoe into it, etc... But this is a bit of leverage you might be able to make use of to get to your larger target, while keeping that 20% cash as shares instead of cash.

Also think about the total level of leverage you're taking on and in its various forms, with particular attention to how fast you'd be losing money when it all goes against you. Leverage is a sword with 2 edges - study the unfriendly side particularly closely!

The sources of leverage that I use and have seen used in this thread (probably not exhaustive):
- purchasing calls (deep ITM calls in particular)
- spreads, both call and put. With the narrower the spread, the more leverage that is available
- using margin to back option sales (puts, put spreads, call spreads)


I personally like having the actual cash - it damps out swings in the portfolio value due to share price going up or down, and it has better flexibility for backing those put / put spread sales. But its not an either / or thing either.
 
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To those reluctant to take assignments on CCs, it could be helpful looking at the benefit of taking assignments now ($XX/CC loss), buy back shares, and ride the upward trend that the stock is giving you (+150/week gain).

I only say this because it may become harder to roll up in the next weeks and months and you'd be better off financially/psychologically getting those paper gains.
I had my first CC assigned at 750 when the stock jumped up from 745 to 770 around September 24th, 2021. Took my lickings and bought right back in. That $20 per share loss is of course now a nearly $350 gain per share. Of course, my example and experience pale in comparison to what people are going through and I only share to offer an "option" that could work.

This thought (not advice) is more for those not comfortable yet using put spreads and other option strategies above CCs. Those limited to Level 1 option trading strategies may want to consider taking the short-term L (loss) now and buy back shares for the long-term gain.

Taken from r/teslainvestorslcub on Reddit:
"
Times TSLA broke ATH:

12/18/19 from 78 to 193=+150%
6/10/20 from 193 to 359 = +85%
8/17/20 from 359 to 502 = +40%
11/19/20 from 502 to 900 = +80%
10/23/21 from 900 to ???? = ???%
"

Option buying for next week is probably what drove Friday's stock price up. Looking at max pain, the max pain number for next week rose on Friday from 950 to 980, due to increased call buying and MMs having to remain delta neutral and buy more shares in response.
Options O.I. for next week was already at 616,090 contracts on Friday morning. We won't get the net change due to Friday's Options trading until 7 a.m. on Monday morning, but I do note that Max Pain had already increased to $980 on Friday morning (a steady rise during the week). It doesn't look like Options traders are expecting a SP drop.

View attachment 727474

Cheers!

At this point, you'd be at the whim of call buyers, which there are many. I can see more people buying short-term calls because everyone "knows' or has the assurance that others are doing the same. The crowd only grows larger and can keep the upward trend going as long as it keeps delivering.
 
To those reluctant to take assignments on CCs, it could be helpful looking at the benefit of taking assignments now ($XX/CC loss), buy back shares, and ride the upward trend that the stock is giving you (+150/week gain).

I only say this because it may become harder to roll up in the next weeks and months and you'd be better off financially/psychologically getting those paper gains.
I had my first CC assigned at 750 when the stock jumped up from 745 to 770 around September 24th, 2021. Took my lickings and bought right back in. That $20 per share loss is of course now a nearly $350 gain per share. Of course, my example and experience pale in comparison to what people are going through and I only share to offer an "option" that could work.

This thought (not advice) is more for those not comfortable yet using put spreads and other option strategies above CCs. Those limited to Level 1 option trading strategies may want to consider taking the short-term L (loss) now and buy back shares for the long-term gain.

Taken from r/teslainvestorslcub on Reddit:
"
Times TSLA broke ATH:

12/18/19 from 78 to 193=+150%
6/10/20 from 193 to 359 = +85%
8/17/20 from 359 to 502 = +40%
11/19/20 from 502 to 900 = +80%
10/23/21 from 900 to ???? = ???%
"

Option buying for next week is probably what drove Friday's stock price up. Looking at max pain, the max pain number for next week rose on Friday from 950 to 980, due to increased call buying and MMs having to remain delta neutral and buy more shares in response.


At this point, you'd be at the whim of call buyers, which there are many. I can see more people buying short-term calls because everyone "knows' or has the assurance that others are doing the same. The crowd only grows larger and can keep the upward trend going as long as it keeps delivering.
I think it would be interesting to quantify these large moves over the same timeframe we’ve seen this last 9 days. Because that puts it in a totally different light. We’ve seen 310+ dollars in 8 days which is problematic for sustained rise given that a lot of the rise ahead of earnings was priced in after the sky high delivery numbers…. if institutional buyers unload at their price targets…. It will create enormous selling pressure. Gary black is at 1400, even he would be selling at that level, so I think if it goes up to 1400 level in this week or next, a violent reversal may be seen. The coked up cat bouncing off the ceiling?
 
I think it would be interesting to quantify these large moves over the same timeframe we’ve seen this last 9 days. Because that puts it in a totally different light. We’ve seen 310+ dollars in 8 days which is problematic for sustained rise given that a lot of the rise ahead of earnings was priced in after the sky high delivery numbers…. if institutional buyers unload at their price targets…. It will create enormous selling pressure. Gary black is at 1400, even he would be selling at that level, so I think if it goes up to 1400 level in this week or next, a violent reversal may be seen. The coked up cat bouncing off the ceiling?
The coke supply runs strong and deep! You can always use your health insurance to cover the cost of Adderal, painkillers, benzos, etc.

I am there with you around 1400 being a possible sell-off point. I personally haven't decided on when I would sell and am just sitting on my hands.

But I remember all the analysts ( even Gary Black) in 2019/2020, raising their prices as TSLA increased. So I see analyst ratings as reactive instead of predictive. I remember pre-split, TSLA in 2019/2020, Piper Sandler analyst appeared on Tesla Daily being the bold analyst to suggest TSLA at 420-ish. It then broke through to about 1,000. Gary Black himself would tweet, retweet, and adjust his calculations and price targets to match TSLA's rise over the next few quarters. I may mistake a few numbers and names as I'm going off memory. Of course, I know I may be wrong, as past performance is not indicative of what may occur. I just like to pick my information to confirm my bias just like the next bloke.
 
To those reluctant to take assignments on CCs, it could be helpful looking at the benefit of taking assignments now ($XX/CC loss), buy back shares, and ride the upward trend that the stock is giving you (+150/week gain).

I only say this because it may become harder to roll up in the next weeks and months and you'd be better off financially/psychologically getting those paper gains.
I had my first CC assigned at 750 when the stock jumped up from 745 to 770 around September 24th, 2021. Took my lickings and bought right back in. That $20 per share loss is of course now a nearly $350 gain per share. Of course, my example and experience pale in comparison to what people are going through and I only share to offer an "option" that could work.
Also NOT-ADVICE but strongly related to another topic on my mind.

Portfolio management, and in particular my own plan...
A portfolio management approach that I've begun thinking about and am interested in thoughts / opinions about. High level my focus is on income, even if that means I miss out on some of the gains from big moves up like we're experiencing right now. I have plenty of delta to gain access to these big moves - I really don't need more, and I know that I won't sell shares or leaps to pay the monthly bills / living expenses. Ideally I don't ever need to get over this weakness.


That being said - the overall approach I'm planning to organize around right now are put spreads below the share price and covered calls (actually leap cc's) above the share price. I might do margin backed puts where they're available - I'm going to be experimenting with these as well, but don't know enough yet to have an opinion.

My thinking of the moment are leaps for the covered calls, and my historic view on these is to go out as far as I can, and pretty deep ITM, in order to minimize the time value. A more recent thought is to roll these roughly month to month - maybe 2 months at a time (but short) as I think I can be closer to the share price while still achieving a similar time value/month that I need to pay for. When the expiration is closer, then the time value fades off to nearly nothing - so if I change out the purchased calls on a regular basis I think I can get more calls for the same money, and at the same time value per month.


Some examples using the option chain right now:
December 2021 600 strike calls are on sale at $481. With shares at 1077 I'm paying $4 time value to have leaps I sell calls against for about 6-8 weeks, or ~$3/month. I might hold these all the way to expiration before rolling, and I might roll earlier, but there's so little time value from the get-go that closing early doesn't hold much value.

At $48k each I can buy 2 of these and have a little left over relative to buying 100 shares.


At the other extreme, in the Jan 2024 chain (let's say that's 25 months out; it's more like 26 but the math is easier with 25 months) and aiming for that $3/month (so $75 worth of time value) then I might buy the 500 strike at $650 each. There is about $75 worth of time value there ($500 strike + $650 purchase price is $1150. minus the $1077 share price is close to $75). My time value/month is about the same. I can get roughly 3 of these for the price of 200 shares ($65k*3 vs $107k*2).


Analysis - time value / month is similar, but I get 4 contracts vs 3 contracts for the price of 200 shares (actually a bit better on the 4 contracts side). The delta on these contracts is .91, so I get a lot more total delta from the closer contracts that I roll / replace every month or two vs. contracts that I can ignore for a couple of years once established, as well as 1/3rd more contracts to support covered calls.

The two downsides that I see:
- more frequent contract replacements means that I'll be realizing changes in the share price more frequently (good and bad)
- more contract replacements means more work (but not much)
NOT-ADVICE. And maybe even an outright bad idea :)


I've been thinking more about this portfolio management idea, and I think I'm honing in on something more precise, more formulaic, and that I like.

It amounts to using 1/2 of the cash / value that I devote to creating an income and holding that as cash (for selling puts / put spreads), and holding the other half as deep ITM calls (for the delta, and to sell covered calls). I don't make adjustments to these two pools on a weekly basis, but I do make changes as needed so I'm in the vicinity of 50/50.


I use the cash to back put spreads and because it's 1/2 of the total pool I can use roughly all of it (very far / low risk positions). If I get a full loss situation then I would sell enough of the deep ITM calls so I'm back to 50/50, and go on like nothing happened (well - hopefully I learned something from being stubborn and eating a 100% loss :D).

Meanwhile I'd use the deep ITM calls as the backing to sell leap covered calls. Knowing full well that these will occasionally get assigned (sold) for the calls. I am intentionally staying away from call credit spreads - plenty of people burned this last week by those; 1 of my 3 biggest mistakes, and the most traumatic, was the 40-70% losses I ate on some call credit spreads back in June. Part of the dynamic I don't like about the call spreads is that they can't be resolved by taking assignment using the shares or DITM backing calls - they can only be resolved in cash and that can be an actual loss, rather than an opportunity cost loss.

I think that I solve my call credit spread problem by not selling them in the first place, and instead owning leaps that I use to back covered calls.

As the income / realized profits accumulate I will naturally end up with a steadily increasing pile of calls AND a slowly growing pile of cash to write an increasing number of put spreads. This approach keeps me from intentionally or not, doing 100% compounding on the put spreads. 100% compounding looks great on a spreadsheet, but the spreadsheets never have a 100% loss on them, and full compounding means that the first 100% loss is also the last loss (wipe out the account).


Over time when the shares are going up, I'll take assignment on some (or even all!) of those covered calls as a means of transferring value from shares to cash and staying close to that 50/50 relationship. If I got into a position where I took assignment on them all, that's ok too - I'd immediately pick my new deep ITM call and buy enough to be back to 50/50.

If the shares are going down then the cash is reasonably constant while the shares (calls) are losing value. I would periodically use some of that cash to add calls to the pile and bring the calls side of the pool back to 50/50.


The overall dynamic I'm aiming for is more complete use of the resources, while also having resilience to a full loss. I think I'll get some degree of buy low / sell high from the flow of money in and out of the deep ITM calls and that's a nice bonus. Choosing those DITM calls will be its own chore - I find myself waffling minutely between really far / really long calls (like Jan 2024 400s) and much closer - time and strike - calls. For the larger purpose I'm probably better off with the longest dated calls. Or at least longer dated calls.


Maybe I go with thirds - 1/3rd cash, 1/3rd calls, and 1/3rd cash that just sits there :). The idea and the approach doesn't change.
 
My opinion/guess right now is that while it's true that "this time is different' in the sense that this might be a watershed moment for Tesla in the main stream media and casual investors on the fundamental level (blowout ER, Hertz, etc.), we will still come down and retest the previous high. You look at the last few times a rocket ship happened:
  • 02/2020 - blowout Q3 ER: broke above above the previous level high $80 and went to $194, came back down and retested $70
    1635626451336.png
  • 07/2020 - blowout Q2 delivery number; broke above the previous level high of $208 and went to $357, came back down and retested $275
    1635626486639.png
  • 09/2020 - stock split; broke previous level high of $357 and went up to $500, came back down and retested $330
    1635626533696.png
  • 12/2020 - S&P 500; broke previous high level of $550 and went up to $695 then 900, but still retested $540-560 on 4 occasions
    1635626730582.png
I am not saying the Starship is out of fuel on the way to the moon but I think the probability of a consolidation/pull back is more likely than continuing, non-stop blastoff to $1,500. I personally rolled out my CCs in hopes of catching a consolidation. With how high the IV is, a consolidation is likely all you will need to get out of this mess.
 

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This is something I should probably know by now, but I wanted to confirm if my assumptions are correct.

In a taxable account holding TSLA shares, LEAPs and BCSs. If I had a BCS, 1050/1150 for example, and someone early exercises the -1050 call (but the long call is still OTM), my assumption is that I would then be short 100 shares and credited $105,000 in my account, and then would be able to choose how to deal with it.

Is this correct? Could my broker possibly liquate 100 of my shares or a LEAP in the same account to cover the short call assignment?
 
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A really weird idea that's gone through my mind since summer - maybe I don't need to own TSLA shares or DITM calls any longer? At some point the pile is big enough that just using it to generate the rather generous income from selling TSLA options is all that is needed.

Or more particularly to your comment - maybe arranging things to optimize for the 3%/week, realizing that an important risk / cost of doing so is not having as much exposure to a 20%+ week that will rarely come along.

The higher the stock goes, the more sense it makes to do what you are suggesting: sell the shares and/or leaps and use that money for writing options (naked or spreads).

At 1130 TSLA has at most maybe 200% upside until 2025 (a valuation that would put it 30% above the current valuation of AAPL or MSFT). I’m convinced that selling options can lead to a much higher return than 200% over a period of 4 years. So if there’s no emotional bond with the shares switching strategies makes a lot of sense.
 
This is something I should probably know by now, but I wanted to confirm if my assumptions are correct.

In a taxable account holding TSLA shares, LEAPs and BCSs. If I had a BCS, 1050/1150 for example, and someone early exercises the -1050 call (but the long call is still OTM), my assumption is that I would then be short 100 shares and credited $105,000 in my account, and then would be able to choose how to deal with it.

Is this correct? Could my broker possibly liquate 100 of my shares or a LEAP in the same account to cover the short call assignment?
I'm pretty sure that you'll get 100 shares sold as well. Having 200 long shares and 100 short shares for instance doesn't make sense - you'd have 100 long shares.

For exercise / assignments on leap covered calls, the actual mechanism that keeps the call seller in complete control is to execute a ticket that does a BTC on the short call, and a STC on the covering long call.