InTheShadows
Active Member
I hereby nominate you for genius position of the day!!! Did you take profit in that spike? If so, that gets you the Elon genius level award!
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
You’re the catalyst. Please sell a $1200 strike now. For science.Sold a -1150/+1105 BPS for 11/5. Now can I finally get myself into trouble!
You can have days like today - you TRY to go ITM and the shares take off and leave you in the dust. I've tried stuff like this and 'failed' for weeks on end before I finally had my desired experience. This is a component of being paid to learn - I love being paid to learn.
But when the purpose is education / experience, rather than an intentional component of your larger trading plan, then just take the win (oh darn) and keep repeating the exercise. Don't let the $$ dance in your eyes and think "wow - if my whole position was in that spread, then I'd have made $$$$$$!&(*&!!!!". More specifically don't start increasing the position beyond that education / experience purpose just to collect those $$ dancing in your eyes. Ask me how I know.
Alternatively what might help is to think of this week as being part of a string of weeks that is rolling off into the years to come. If you're going to be doing this for 10+ years, then a week with a little less or a little more premium just doesn't matter. Acquiring knowledge and experience though that will inform those 10+ years of trading to come -- priceless.
My 860/660 for next week are down 30+% since afternoon when the SP was lower. Volspolsion I guess.
Unfortunately shot my wad too soon. Good premiums if anyone is still looking to sell BPS for next week.
Unfortunately shot my wad too soon. Good premiums if anyone is still looking to sell BPS for next week.
With the late in the day rise I decided to roll 1 set of my 1200 strike calls expiring on Friday into 1250 strike calls for next week and an $8 credit. The other set is still 1200 for this week expiration because I ran out of time and didn't chase the option credit.
I may well have a better roll available tomorrow for that second set, in which case I'll almost certainly take it.
Also considered - a 2 week roll to the 1300 strike and a $7 credit. That was sounding really good to me and I would have taken it, except that the 1 week roll is too good - it keeps my weekly credit high in case I lose the opportunity to take assignment, and providing a big improvement in my strike.
The analysis for the roll is pretty simple - would I rather be assigned this week on the 1200 strike calls, or next week on the 1250 strike calls AND be paid $8 to delay my assignment for a week. $58 in a week sounds pretty good - I'll wait for next Friday.
The alternative I consider - would I rather be assigned this week on the 1200 strike calls, or in 2 weeks on 1300 strike calls AND be paid $7 to wait. If the 2nd week had been more than double a single week roll then I'd have taken that. I have frequently seen 2 week rolls being a lot better than 2x - usually when I'm approaching deep enough ITM that the 1 week roll is a small net credit and no strike improvement.
The risk is that we don't get to 1250 and I'm left 'only' earning $8 this upcoming week. That's a risk for me in that I'd like to shave off a few of my leaps as we're on our way up as I don't know where the top is. Thus selling a few here and there on the way up will realize some of these share price gains. I'm also doing these in retirement accounts so tax consequences of buying and selling the long calls that are quite deeply ITM now isn't an issue.
But there's risk, and there is risk. Selling the long calls is an opportunity cost risk, where I realize some profits now at the risk of missing out on more profits later. Opportunity cost risk is just fine for me as I've got my pile accumulated, and now my focus is on income.
The other kind of risk is the risk of permanent loss of capital. The put spreads I like so much - those carry the risk of permanent loss of capital. For me a high % loss (which is quite achievable) will also be a high absolute loss. These are the risks that matter deeply to me.
Yeah, it's a poor decision to sell those - indeed it's "easy money", until it starts to play out, then reveals itself as an almighty **** up
I did the same some months back, I was selling lcc's against 15x June 22 c700's, they went ITM and I rolled out to June 22 c780's - I pocketed a neat $192k for that with a guaranteed $120k if the SP was >$780, but look at it now, I threw away $500k of profits, maybe more
But hey, you make decisions based on the information you have to hand, and it's a very dynamic arena
awesome non-advice
Yes, the point is to explore management ways of trades gone bad.. the bulk of my trades are waay less risky and I do not plan to go more aggressive.. actually vice versa.
So far during the 10 months I've been doing this, I only have one loss.. that was sometime in june or july. I had sold almost atm bull put spreads, and only $30 wide, on a friday afternoon, out to next friday. Monday open was so much down that my trade was at max loss when market opened.. I kept a close watch the whole week but just could not find any decent rolls, and tsla did not recover.. so in the end I closed the trade at max loss. Fortunately atm credits were so good and position not too big, that it wasn't too bad.. iirc initial credit was $30k and max loss was around $10k.
The problem with the way our days are organized at the hospital where I work is that our workload is ultraconcentrated. I can be off for 2 weeks than I have 7 days straight in call with days I have 70 patients at the Clinique while going in the middle of the day do 3 fracture surgeries because some OR room is unexpectedly available. Then you finish the day seeing all the parity of my colleague because they are in another city doing medical expertise and they never comme round their patients. So these weeks it’s virtually impossible for me to manage positions. I tried to show my wife, being an engineer she good with numbers, however our stress thresholds don’t belong in the same world. She has trouble managing 5k to invest from her TFSA, I wanted to show her how to manage BCS and how to move the legs in case the stock is moving unexpectedly against the position but it seems I would have to do so on my stupid iPhone in less than 5 minutes between 2 cases. Which is far from optimal for decision making.The way I look at this, at least for myself, is that I'm not looking for something I can do a few trades with, win some $, and then go do something else. This is an income for me, and that means this is something I'd like to be working well in 10 years, and every week between now and then. Or 20 years. Then again I also enjoy it so its not like a job, though I also need to keep it down to not very much time
That's a tough set of constraints to optimize around. For sure!
Something I've tried to do before and sort of worked - I just didn't carry through and keep doing it - is to use really far OTM positions and then set a price alert for somewhere comfortably short of the position. For example - I have 750/900 bps open right now - maybe I set a price alert at $950. When it goes off I will still have an opportunity to react. Of course this assumes that you personally could work this way, as well as assuming that you could find a few minutes to do something if/when that price alert goes off. Most of the time that won't go off, so I just need to adjust what share price the alert is set for each time I change my short strike (which doesn't necessarily happen every week).
Maybe you need a few price alerts: 1000 (fyi), 950 (getting interesting), 900 (red alert - code blue - air raid siren - do something now!)
Another mechanism that might work, even if it feels like leaving a lot of money on the table, is to either enter GTC or just next day orders whenever the opportunity presents itself. I.e. I have these roughly $5 positions open right now - maybe I enter a GTC $1.25 (80%) when I open the position.
Or maybe I evaluation each day when the opportunity is available, and decide on whether I think a close opportunity might present itself during the next trading day and enter the 1 day order at what I consider a good price would be. This is probably more like what I'd be doing - entering the daily order whenever I'm after close of trading and I have the opportunity to make a plan for tomorrow.
I know there are fancier mechanism available - these are the two that I know of (1 day orders - these can be entered the day before; GTC orders that will live up to expiration).
I bet there are others around these parts with ideas also.
NOT-ADVICE
And yet it sure is going to sound like advice. I've gotten into trouble on both sides, but the side that is always the one that hurts is the call side. So my own choice is that I've gone back to selling covered calls at strikes and for contracts that I'm ready and willing to take assignment on. I might only be a little bit willing, so I'll plan to roll as long as I can get a good roll (the new position is enough better than the current position, that I want the roll more than I want the cash to start selling BPS with).
And I might be a lot willing to take assignment (I've got some right now that I pretty actively would like to be assigned - the price is good and I'd like to shift some of the leaps over to cash; its part of my own position / portfolio / object management).
But the real point is that all I have on the table / all that I am risking when I'm selling cc against long dated calls (which is what I'm doing) is opportunity cost. If my $1200 strike calls for this Friday suddenly find themselves in a position where I don't like the new position enough to roll into it, then I'll take assignment and probably sell at $1200 something that is worth $1350 or $1400 or something. That is opportunity cost and its real, buts its not life or portfolio threatening (at least for me). There won't be permanent loss of capital from that - only missing out on $100-200 or something of share price increase.
So - I don't do BCS, which also means that I don't do Iron Condors (IC = sell put spread AND sell call spread, and I don't sell call spreads no more).
Personally , If the SP rises 4% more tomorrow around $50, I will buy back my 1325 CC 26/11 to avoid letting 400 shares go. I don’t know if it’s the right thing to do with my -263% position :X
Given that these are not yet ITM another option might be to wait and see what happens over the next few weeks. If they get close to the money it might be time to buy them back.
Of course it’s a riskier approach but given the big gamma squeeze coupled with institutional buying I expect the stock to go on a long consolidation phase at some point. Good luck.
Today I closed Jun 22 1200's CC before the spike, and feel lucky. Negated some of the losses by selling jan 24 2K+ CCs.
(Don't like getting CC's get ITM and get assignment)
Next, I need to manage 3 Jun 22 1450's. The underlying is Jun 22 450's. On 12th the trades will be more than a year old.
new option .. thinking if I close both sides, and immediately sell 2 PUTS at 1100 ... I could negate some of my CC losses, that way ..
Might go at a slightly lower strike with the PUTS, so that some money is left over to buy Jan 24 OTM calls as well ....
need to think/decide .. can't keep up with the gamma momentum
This side of option process is something that not many talk about but is critical point.... the "career patience" aspect of things and learning how much time is needed to manage positions that is really intriguing.
I appreciate your description of your day as I have had to find ways around my schedule and career. 6 months into options trading, I'm just barely barely starting to integrate things less clumsily. For a while, trading options made me bad at 3 things at once.... family, career and options. I'm just now finding strategies that work with my life. The cost of learning options is higher than most people can imagine. It is so far from easy money it's not even funny. reminds me of the story about Mozart and someone saying to him, "I'd do anything to be able to play piano like you" and his answer was... "no you wouldn't"
Some people on the thread are retired, some are working and can't wait to stop working, and others (like me) really enjoy my career but don't want to HAVE to keep working the same amount and saw options trading as a possible way of doing that with a company I follow constantly.... if I do really really well, I'll still do my career, but about 2 hours a day less of it with more massages and martinis and ski trips interspersed throughout.
Since you are an Orthopod... perhaps I can stop by to fix my ACL after a ski trip?
Your post piqued my curiousity for understanding which expirations would be 'optimal' for timing an expected price movement.
For example, if I think in the next 3 months the price will dip to $1100, $1000, or $900, which expiration should I choose to maximize profits?
So I whipped up a quick simulation using Black Scholes and some normal distribution sampling of expected price drops and timing of when it happens.
Selling a call with an ATM $1200 strike price, varied expiration.
The predicted time for reaching the min price is ~ 2 months +/- 2 weeks. (x axis is in trading days, ~ 260 days / yr, 22 days per month).
The y-axis is the amount of premium you will net at that time (about 2 months).
$900
$1000
$1100
If you are very confident that the price will drop to $900 in 45 days (2 real months) from now, then you will maximize profit by selling long dated CC's that you then close out at that time (in 2 months).
However, if you think the price will only drop to $1100, there is more benefit to selling shorter dated calls (e.g 2 months) as main driver to premium decay will be theta.
At $1000 basically the premium tradeoff is flat. Given there are other costs to having longer dated CC's, I would err on the shorter side of whatever prediction you make. So if I was thinking it might hit $900 but pretty confident it would get around $1000, maybe the max expiration out I would go is 9 months out (~ 200 days on plots).
If I thought $1000 was the target, I would definitely be going "shorter", 100 days or around 4 months out.
This is just one example.
Last edited:
Adding on to this, for those with full time jobs, I'm curious how people structure their days (or even week) to incorporate/optimize their trading. I work a corporate job and I'm on the computer all day, so it's very easy for me to check, but I find myself greatly distracted and maybe spend too much time looking at my account/checking price movement. I'm wondering what steps people have taken to make things a bit more hands off. Do people have a rough trading plan at the beginning of the week, knowing that they want to enter into rough X positions (naked puts, spreads, condors, etc)? how are you laddering into your positions to make sure you have a full position by the end of the week (especially with recent days of just green)? I struggle with this as well.
It’s amazing how one can get out of trouble by rolling a week, or alternatively receive a lot of extra premium. If today just before close you rolled a short call 1250 from 11/5 to 11/12 you would have gotten $27. And if you rolled with no extra premium you could have gone all the way up to 1370. Both the 11/5 1250 and 11/12 1370 are about $12.5.
I remember doing this with monthly puts, but it was much more difficult. I guess the weekly options are much more suitable for this kind of manoeuvring.
bkp_duke
Well-Known Member
Still travelling for work, so looking for some "safer" positions since I can't be watching the stock all day.
What's the "not advice" on the following:
Iron Condor - I believe we have hit a new trading window for lateral movement, that's why I picked this
850/950 1450/1550
Pays about $7 in premium for close on 11/12
optionsprofitcalculator.com puts the odds on this at 95.6%
Built up a nice pile over the past 3 months, not looking to be greedy, just steady returns now.
What's the "not advice" on the following:
Iron Condor - I believe we have hit a new trading window for lateral movement, that's why I picked this
850/950 1450/1550
Pays about $7 in premium for close on 11/12
optionsprofitcalculator.com puts the odds on this at 95.6%
Built up a nice pile over the past 3 months, not looking to be greedy, just steady returns now.
Similar threads
