Wiki Selling TSLA Options - Be the House

[BornToFly]

I keep mine tracked for each series when rolling. So if I roll, I don’t reset the open date, I keep the stock entry price as the original, and I add or subtract the previous premiums and fees to the current position. My spreadsheet also gets me the last option prices when I click a button so it updates the % PnL on the position so I know exactly where it is at.

I’m mot even sure I could effectively trade without it.

Nice. Since I'm usually far OTM a loss is very rare for me. So I keep it simple. I look at my cash balance and then I look at my tax activity to date, where Fidelity keeps track of my net gain. As long as those number keeps growing, I'm happy.

My only real losses are the BCSs I did after the first ATH when the SP climbed so much it shattered records. The only current losing positions are the 2024 CCs I wrote to replace the cash I lost on the BCS, but I'm not even sure I want to buy those back vs going to all cash in 2024, vs rolling them in 2024, etc.

 

[BornToFly]

Well the past week has been quite the learning experience. It’s interesting now after a few rolls how my initial positions have progressed as well as my thoughts.

Monday am I was looking at max loss for many. I am much more conservative with my wife’s retirement accounts than I am with mine. My Roth which was twice the size of hers was half the size of hers on Monday. It’s just a little behind hers now. I had 200 wide spreads in hers way OTM. Her Roth is the only account that I’m managing that has continued to make its weekly targets. This week just that account alone got me 45% of this weeks goal for all of our personal portfolios.

Please keep us posted on the gains of your two accounts over the long haul. Obviously if everything starts slowly climbing predictably again, your account will start to win. But if there is a series of mini "black swan" events your wife's account will probably win. Since I'm retired and what we are doing here is my only source of income, I'm trying to trade in a way that losses are rare and easily manageable when the inevitable bad things happen.

 

[strago13]

Honestly, I don’t know why roll down puts.
I think it makes more sense to roll them up.
At least a manageable number.

I was out of margin, so I sold only 1 yesterday - 1050 strike for 11/26, premium $80.
Today sold 1 more 1100 strike for 11/26 @ $71.
With a bit more margin from appreciated SP. I can start closing bps soon for this week, so the risk of running out of margin is lower.

If SP gaps up, you capture this move with your ITM put. Maybe it becomes worthless, maybe you close it for the fraction of your premium. Worst case you roll a few times.

This is like buying calls in anticipation of SP going up, except it costs you nothing.
You use other people’s money to benefit from the move.

This is a great question and I spent the night mulling it over. You are correct, if I was selling 100% cash secured puts, one could take this approach.

With that being said, in this specific circumstance some of them were cash secured and some of them were naked. I had originally sold 11/19 890's for 5.4. During the peak of the drop (I got lucky timing this), I rolled those puts from 11/19->11/26 870's. I ended up selling these for 11.93 which is more than double what the original puts I sold. Did I get lucky? Yes, but I also took advantage of the downturn and subsequent upturn this week. I will be able to close the 11/26 870's out for 90% today and open a new position for 11/26 while making double my weekly income target and being pretty far OTM.

Had I just done nothing and kept my 11/19's at 5.4, I could have also closed them out today but made subsequently less.

 

[Chenkers]

It's starting to look suspiciously like O/I Put and Call walls might have some relevance again. After a few weeks of the MM's not getting it all their way, the stock is starting to trade like they've got a little more control. The main battle appears to be between 1000 and 1100 with a skirmish between 1020 and 1050. It'll be interesting to see how this pans out but if the MM can walk it back closer to 1050 and keep it well under 1100 by Friday then we may start to see a little more predictability come back into TSLA. At least until the next Elon tweet, P&D or whatever major FUD comes along.

 

[InTheShadows]

Was it yesterday or today in the main thread where someone said it wasn’t very nice of Elon to tank the stock with this series of tweets and they had a friend who needed to sell some shares to buy a house and was going to have to sell 15-20% more shares because of this… and was greeted with what?

1. Real investors don’t sell, therefore you and your friend aren’t real investors
2. only an idiot would put themself in a position where they need to sell
3. only an idiot wouldn’t have identified and sold at the top if they needed to sell
4. only a jerk would whine about this when the stock price is still up from May
5. if you don’t like what Elon tweets you are no good and should sell all your TSLA stock
6. …

There was a notable lack of “bummer!” or any other sympathy.

If I went and said “man it sucks that my put spreads are ITM” I’m pretty confident that I’d get “you’re not a TSLA investor because you don’t HODL only” and “it’s been proven by X, Y, and Z that anybody who sells options loses all their money” and “you may think you’re doing well but it’s only a matter of time before you lose the rest” and “nobody listen to this guy and his terrible ideas but just HODL” and so on.

I don’t necessarily agree that they *wish* to see option traders lose, but there’s certainly no love for options trading, and seemingly not even acceptance really, outside of those who are on this thread also.

IMO HODL is not investing either. If you are only buying and never selling that is saving, not investing. Investing is the movement of money, not the parking of money.

 

[traxila]

What is your target profit on those puts?

This is a great question. Technicals don’t even exist yet, although I am being told there is a lower BB somewhere around 140. I was betting that yesterday would be a reversal day, and it appears in premarket I may have been correct, but even yesterday there was such a wide SP range, where do you actually short? Answer for me was to hit it at 160 and then ladder up in 2 point option increments. I was underwater a good amount by EOD.

I would think that 120 will be in play in short term (by EOW?), but the time spent there could be exceedingly short. One would think that if I just held over the life of the put into Dec this thing would calm down enough to test 100, but crazy is as crazy does. It will be a while before an earnings report really crushes the SP IMO.

Plan is to ladder out the same way I laddered in. Profit % will not be eye popping as I went ITM to counteract the crazy premiums. Hoping to start at 40% and go from there.

Easier when you sell options, right? Take the 70 or 80 percent and run .

 

[mongo]

IMO HODL is not investing either. If you are only buying and never selling that is saving, not investing. Investing is the movement of money, not the parking of money.

The money (from capital raises at least) is used in the company to grow it, thus investing (risking capital for chance of growth). Eventually, you pull the money out to use it. If you never ever pull out the money, that is donating. If you don't trade in and out until retirement or the money is needed to be spent, that is holding.

 

[scubastevo80]

Question for the options pro's - any not advice for trading in/around holiday weeks like the Thanksgiving week where the market is closed for a day and has a short day following? Good/bad experiences writing options with expiry that Friday? Anything else to consider?

 

[jeewee3000]

Been a while since I updated you all.

I got burned with the Elon tweets-drop on my BPS'es (1050/1150 and 950/1050).

I waited too long too roll since I expected a quick rebound but ended up with ITM BPS positions.

After weighing my options and considering my current situation (very busy at work the coming weeks, little time for weekly options) I decided to put it out of my mind for now and rolled the positions to march 2022 for a decent credit by increasing the spread widths.

Now I'm holding:
900/1050 BPS
1000/1150 BPS
expiring 18th of March 2022. (this strike price has high liquidity and low spread in bid/ask)
This locks up most of my free cash (+/- 75%). I don't sell options against margin so no worries there.

Reasoning is:
A) if the SP is above $1150 by march these all expire worthless and I'm out of the hole
B) if the SP is below $1150 by march I can re-evaluate and either close or roll again, spreading widths again.

Either way I don't have to follow TSLA as closely the next few months. Yes, I'm missing out on opportunity cost, but I really felt I needed a breather from heavy options selling since I flew too close to the sun sometimes. I'm trying to learn from my mistakes and will probably settle for more OTM strikes when I get back in the saddle.

I am selling covered calls now and then in the meantime, just for gravy. Gravy I can use in march to widen my spreads should I need to. (I hope not. I figured march should be safe since we will have Q4 monster earnings baked in heavily by then).

Also, I need cash in may 2022 for renovations so if all goes according to plan I can free up my available cash completely when the BPS'es expire worthless in march.

Another thought: IF we would soar to the moon well before march I can try and roll some BPS'es forward (in time) to higher strike prices and let them expire worthless. This is only on the table if we go far beyond the current ATH, let's say if we breach $1300/$1400 with ease.

The only real risk in my strategy is early exercise by the put option holder, but I view the chances as very very slim. And if it happens, it happens. I just won't be too happy about it. (I would have to sell core shares to get shares assigned, but won't go broke).

The whole endeavour made me more open to even wider spreads and/or cash secured puts that can be rolled/managed way easier. Now I'm kind of dependant on the SP by march.

My move might not have been the most efficient or smart but the roll gave me a certain credit equal to a weekly 0,1% gain on my cash or so, which is still an OK return. I preferred a hands off solution instead of having to buy back and then working my way up again with weekly doses of stress. Mind over money. I'm sleeping better now.

GLTA. See you around. I might be posting less in the meantime but I keep following the thread as much as possible to gain insight from others mistakes .

 

[Right_Said_Fred]

Update on my positions:

- Early last week I rolled 20 p1000 11/12 to p950 11/19 for 10.50 credit (during the big crash).
- Late last week I rolled them back up to p1000 for 9.50 credit (when the stock seemed to stabilize).
- On Monday I rolled the 20 p1000 11/19 to 11/26 for 14.00 credit (when it looked like the stock was going to shrug off the blues).

All these actions were based on where I thought the stock might go next, which is not exactly how you should trade. But fortunately it is now going the direction I was expecting (which is likely pure luck).

I'm also short 5 c1250, 5 c1350 and 5 c1450 for this Friday.

 

[Cherry Wine]

I've rolled my 12/17 $1200 covered calls (originally 10/29 $1050s) forward and down to 11/26 $1085s to try and capture a lot of theta burn over the next few days in the hope of closing them out at a small loss. Easy to say in hindsight that I should have just been rolling these forward at the same strike, but I had no idea where we'd be seeing a correction from - whether that was $1200 or $1500, for example - and was more content to roll up and out than just out.

I'm selling -$1030/+$750 spreads against the $1085 CCs at a credit of $65.00 per share. Aggressive, but I'm more worried about having to roll the CCs than the puts.

Welp, I tried to get out of my original 10/29 $1050s, but my plan failed. I had an opportunity to buy the 11/26 $1085s back at $10.00 per share on Monday, and in hindsight, I should have just taken the L and bought them, but I was waiting for a better price. Now I've had to roll them back out to 12/17. I will continue to sell aggressive puts against them.

 

[CHGolferJim]

I have 021822 850CC that I've been rolling along. Thinking of just letting them go at that time. But also looking to turn those into a short straddle. Selling 021822 850P is a about $49 now. So lost would be below $800 by then. Looks like good premium if I'm okay keeping the shares. Anything else I'm not seeing? If it does hit, I do intend to fund it by selling current shares.

I was looking at my 031822 $900CC this morning — been following same path as you. Noticed I could:

• roll to 052022 $900 and uncover 2 for a net gain of $22k ($32 CG - $10 roll cost), or
• roll to 052022 $960 to capture unrealized capital gain, and purchase new shares (# to be assigned) to confine the loss to ~$100 (vs. BTC ~$225)……should have done this last week.

Any thoughts?

 

[Right_Said_Fred]

In Autumn of 2019, when the stock was hovering just above 400, my brother sold 15 calls 800 for Jan 2023 (for which he got 100.00 credit each). That covered 1500 of his 2000 shares. He felt that after the big run-up (he had already 5x his investment) the stock would take a long breather, and certainly would not double again soon. The timing was unlucky though, as the S&P 500 announcement followed shortly after and Tesla the company continued to deliver.

He has since been reluctant to look at the stock and the options, regretting his decision. Recently I evaluated his position. Buying back the calls was much too expensive, but it turned out he could roll them out by one year to January 2024 and raise the strike from 800 to 960 without paying any premium. So he did that today. If they ever get exercised he will get 240k more for those 1500 shares.

 

[jeewee3000]

In Autumn of 2019, when the stock was hovering just above 400, my brother sold 15 calls 800 for Jan 2023 (for which he got 100.00 credit each). That covered 1500 of his 2000 shares. He felt that after the big run-up (he had already 5x his investment) the stock would take a long breather, and certainly would not double again soon. The timing was unlucky though, as the S&P 500 announcement followed shortly after and Tesla the company continued to deliver.

He has since been reluctant to look at the stock and the options, regretting his decision. Recently I evaluated his position. Buying back the calls was much too expensive, but it turned out he could roll them out by one year to January 2024 and raise the strike from 800 to 960 without paying any premium. So he did that today. If they ever get exercised he will get 240k more for those 1500 shares.

In 2024 he will be able to roll again. It's just not very efficient but it's better than nothing.

 

[elasalle]

In 2024 he will be able to roll again. It's just not very efficient but it's better than nothing.

Jan 25 leaps are available in Sept 23

as long as option is there to roll , I don’t give up on my CCs

Using Other People’s money to buy more time and let the underlying grow is what has worked for me
Cheers!!

 

[ABC2D]

Hi all,
I'm still new at the spreads and still learning - thank you all for posting their trades, thoughts, and ideas.

I have a more rudimentary, for most around here, question. I'm going to start the wheel with cash secure puts weekly for close to SP strikes to earn some pennies, and, if get assigned, get some shares. Is there a weekday in which STO for next weekly strategically better than other? Any input is appreciated.

Thank you

 

[Bunky]

Ok $1,100 call wall, lets see what your made of.

EDIT:

 

[FS_FRA]

My 1105 CC looking pretty poor right now :-(

Didn't really want to have to manage this when I sold them in the 900s on Monday.

I guess a roll to somewhere is in order. Cost for this would wipe out weeks of gains made with BPS

For cap-gains tax reasons I really don't want to have the shares called away.

Not-Ideas?

 

[Cherry Wine]

Ok $1,100 call wall, lets see what your made of.

Papier-mâché, apparently.

 

[stealthyc]

My 1105 CC looking pretty poor right now :-(

Didn't really want to have to manage this when I sold them in the 900s on Monday.

I guess a roll to somewhere is in order. Cost for this would wipe out weeks of gains made with BPS

For cap-gains tax reasons I really don't want to have the shares called away.

Not-Ideas?

Just roll up and out