Wiki Selling TSLA Options - Be the House

[adiggs]

Agree - do any of you that sell BPS/BCS or via other income generating strategies use the premium to purchase LEAPs? Is there a minimum amount of $ one would need to do this - assuming 1 LEAP contract? In a perfect world, I'd like to basically like to roll BPS/BCS around the current price and roll LEAPS up and out, but not sure how to do that efficiently. I've seen talk about preference to write DITM leaps, but not sure my parents will agree to put $20k+ at risk.

I've begun doing that (adding LEAPs from the income). I tend to make those additions on a less frequent basis. Rather than buying new leaps each week where I've got enough extra cash available, I evaluate now and then whether its time to add additional leaps. Something like a month to a quarter. And I'm particularly interested in more leaps if / when we've had a particularly large drop in the share price.

I purchase fairly deep ITM positions. Currently the 600 strike, whether 3-5 months out, or more like 24 months out. My goal is to buy as little extrinsic value as possible and as much intrinsic value. The intrinsic value, given a flat share price, will all be there at expiration where the extrinsic will be gone by expiration (again assuming a flat share price). I consider these deep ITM options to be quite low risk, at least in terms of complete loss of capital.

The deep ITM positions also support the sale of covered calls which is important to me.


There are also more speculative uses for leaps and others will need to comment on their dynamics and choice methodology. I'm of no help with those. These would be ATM or OTM type leaps. These are the ones that I consider more risky as I consider any purchased option. Whatever the strike of the option you're on a clock with them. Left on their own, they eventually reach expiration and extrinsic / time value goes to 0. One can be right about direction and magnitude of a share price move, but wrong about the timing and lose ~100%. Ask me how I know

So I stay away from these now.

Apple Car 2025 rumor to the rescue for all of us with covered calls.

There's the move I've been expecting the last few days and not getting. My 1110 calls appreciate the assist

 

[BornToFly]

All, looking for some not advice. BPS 900/950 for 11/26. Too close to the sun?

12/3 is giving much better value than 11/26. Usually for spreads it doesn't help much to go more than 10 days out in terms of weekly return. But I've started rolling BPS to 12/3 already. However, going farther out is definitely scarier with a narrow $50 spread. FYI, I did 700/900 for 12/3. I'm going to wait to build in the Iron Condor however. Too scary for me to go two weeks on those.

 

[Bunky]

All, looking for some not advice. BPS 900/950 for 11/26. Too close to the sun?

Pretty significant put wall at $1,000 for 11/26, for what its worth. You would be on the safe side of that if it holds up.

 

[adiggs]

All, looking for some not advice. BPS 900/950 for 11/26. Too close to the sun?

I can't comment about a $50 wide spread at that level - that would make me itchy. But if I were opening new put spreads today I'm pretty sure they would be that 950 strike. I'd be doing $200-$300 wide spreads, though that is a function of the income that I'm seeking while minimizing risk; the wide spreads opens up my range for management, as well as decreasing the rate at which I start losing money if/when I go ITM (because fewer contracts at $200 wide spread vs. $50 wide spreads - about 1/4th in fact).

I'd use that 950 strike as mentioned above - there seems to be a bias upwards in the share price, or at least flat, and there seems to be at least a couple of decent supports well above 950. In fact 950 might be the 3rd support that I can ID - 980 was recently tested. I figure 1000 will be a pretty good support, and 950 itself will also be a support (mostly the large option volumes that accumulate at these big strikes as that source of support).

 

[corduroy]

All, looking for some not advice. BPS 900/950 for 11/26. Too close to the sun?

12% OTM too close for my blood, especially until we have resolution of the EM stock sale. I'm looking at around 20% OTM to jump pack into BPS.

Update: still no new positions in TSLA, but I did pretty well selling BCS this morning on NVDA before the post earnings IV crushed. 85% profit in a couple hours.

 

[ninpb]

Sold 11/26 1205C in my IRA this morning which of course 5 minutes too early.
My options for this getting exercised is:
a. wheel
b. cash for buying 2024 LEAPS

Got spooked with yesterday and pre-market runup so I used the dip to 1088 this morning to BTC CC and actually made a small profit.
Lessons learned:
a. I rushed opening that CC yesterday for my own liking
b. The power of just one day theta

 

[ZeApelido]

New Definition of Stay At Home Dad

• "Work" full time well paying data scientist job
• With preschool closed, take daughter and laptop to playground.
• Provide snacks and loose supervision
• Sell 11/26 $920 puts in taxable account
• Buy Mar 23 1200/1400 call spreads in Roth

This is 2021 everyone.

 

[adiggs]

There's the move I've been expecting the last few days and not getting. My 1110 calls appreciate the assist

NOT-ADVICE

(Context) I have numerous -1110c leap covered calls for 11/19 expiration (diagonal spreads) which have obviously been right on the cusp at going ITM. Ideally I wait them out, possibly fairly deep into the trading day tomorrow as they cruise into an OTM close.

The challenge with waiting them out when I'm right at the money is I could be very wrong and the shares could instead jump to 1150 (or whatever) instead of dropping to 1080 as we're at right now. The other challenge is that rolling also carries a subtle risk, but one that will happen with some frequency - that the new position goes deeply ITM where waiting out the original position would have finished OTM. Any number of times we've seen situations where a roll is executed pre-emptively only to see the original position go OTM by expiration. However since we rolled, that position isn't resolved yet and the later expiration might be more dangerous.

This makes for yet another seesaw / balancing act to be made. Waiting too long can put you so deeply ITM that effective rolls are no longer available (ask me how I know). But waiting can also help a position go OTM and enable a full reset on the next position. Early roll can create a significantly better roll, but also opens up the risk of that big share price move against happening within the expanded timeline.

None of these choices are risk free - they're all balancing acts.

And back to this observation - at least with covered calls and cash secured puts, there is some additional window available while ITM where the effective rolls are still available.


My observation on my current predicament - if I'm actually willing to take assignment at $1110 (call strike) then I have quite a lot of leeway at what share price I need to roll. I put together a fake roll yesterday that suggested I could go $30 ITM ($1140 share price) and still get a $30 strike improvement and $1 credit on a 1 week roll. That sounds like a great outcome to me - at worse I sell shares for $30 more than I would have otherwise and collect a small payment to wait for the better sale price. As long as that's an acceptable roll and new position to me, then I don't need to decide at $1105 or $1110 whether to roll or not - I can wait for a $1140 share price before actually executing the roll. I probably roll earlier, but the point is that I have some additional breathing room.


Spreads and other additional sources of leverage shrink that window for effective rolls, as well as leveraging up the impact of the risk happening (going deeply ITM). That leverage needs to be understood and accounted for.

 

[Chicagoguy]

I have the following LCCs I had rolled up and out a couple weeks ago, when we were running up high and they were underwater and was wondering what non advice people have. They have a decent amount of profit and even though I could wait it out and let them decay more, I'm not sure how fast the run up will start once elon is done selling shares. I have:

• 12/10/21 lcc1300 (up 74%)
• 12/17/21 lcc1325 (up 75%)
• 1/21/22 lcc1425 (up 61%)

 

[adiggs]

New Definition of Stay At Home Dad

• "Work" full time well paying data scientist job
• With preschool closed, take daughter and laptop to playground.
• Provide snacks and loose supervision
• Sell 11/26 $920 puts in taxable account
• Buy Mar 23 1200/1400 call spreads in Roth

This is 2021 everyone.

I didn't see very much data science going on in that job (speaketh the former data scientist).

I'm sure you just forgot where that fits in with the busy play and trading time schedule.

 

[adiggs]

I have the following LCCs I had rolled up and out a couple weeks ago, when we were running up high and they were underwater and was wondering what non advice people have. They have a decent amount of profit and even though I could wait it out and let them decay more, I'm not sure how fast the run up will start once elon is done selling shares. I have:

• 12/10/21 lcc1300 (up 74%)
• 12/17/21 lcc1325 (up 75%)
• 1/21/22 lcc1425 (up 61%)

I'm a fan of early close and with being that far ahead, that's what I'd be doing.

Then again an obvious difference in our trading styles is that you're going further out in time than I do, so maybe hanging onto those is a good choice. There are many reasons not to take the early close.


The benefits I see to the early close (I go for 2/3rds to 4/5ths profit for the most part) are mostly:
- lock in that unrealized gain by realizing it. You can't lose money on a realized winning position Of course their are opportunity costs - you might miss out on additional profit.
- Get setup for a strong move up that enables a good entry for a new position.

That second benefit is a big one. I sort of assume that it'll be at least the next day, and possibly 2 or 3 days before I open a replacement. With the market as a whole being best modeled as a random walk with a slight upward bias, there is a strong pattern for an up day or 3, to be followed by a down day or 3. This early close / ready for new position approach makes good use of that random walk.


If you prefer those longer expiration positions, then you'll have to account for that in your own choices (and I can't help with that - I work 1-2 weeks out). But everything else being equal an early close on covered calls on a down day will be good. And opening new covered calls on an up day will be good (open into strength / shares up; close into weakness / shares down).


That last observation of yours about being unsure about how fast the run up will be (or how far) as things change - that's another reason for the early close. You've got an upwards bias on the share price in your own thinking (it sounds to me) and those covered calls are in front of that move. Watching a winning position turn into a big losing position after strongly considering an early close = painful. Ask me how I know .

Especially when the early close would have enabled opening a replacement position into that big move that turned the old position into a loser (= "gee I'm so smart (lucky)!").


Of course not-advice. We all make our own decisions, and experience our own consequences.

 

[adiggs]

I can't comment about a $50 wide spread at that level - that would make me itchy. But if I were opening new put spreads today I'm pretty sure they would be that 950 strike. I'd be doing $200-$300 wide spreads, though that is a function of the income that I'm seeking while minimizing risk; the wide spreads opens up my range for management, as well as decreasing the rate at which I start losing money if/when I go ITM (because fewer contracts at $200 wide spread vs. $50 wide spreads - about 1/4th in fact).

I'd use that 950 strike as mentioned above - there seems to be a bias upwards in the share price, or at least flat, and there seems to be at least a couple of decent supports well above 950. In fact 950 might be the 3rd support that I can ID - 980 was recently tested. I figure 1000 will be a pretty good support, and 950 itself will also be a support (mostly the large option volumes that accumulate at these big strikes as that source of support).

Is it just me or are we retesting 1080 repetitively this morning? I'd sure like it if 1080 starts firming up as a strong support level. Given that 1000 is the next strong support below that (my own guess / wishcasting, but its what I'm acting on), I'd still be using 950 or at most 1000 for any put sales (waiting for more proof that 1080 is an actual support).

I think its time to open some puts for next week!

 

[BornToFly]

Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

More off topic musings: I’m waiting for sub 1000 SP to pick up some shares. Tesla has always given multiple chances at buy points in the past. In case that doesn’t happen, I’m monitoring volatility to pick up spreads or calls if it drops. If all else fails, I’ll exercise some ITM Jan calls...

teslamotorsclub.com

The post by The Accountant makes me feel really good about wide BPS. Anything that goes ITM should be rollable until the SP takes off again. Makes me more nervous about calls however.

 

[st_lopes]

Closed my 1140/1240 and 1230/1280 BCS for 90-95% profit on the weakness over the last hour.

Still staring at my 1100/1150. Lesson. Don't chase premium in week by rolling closer to the money. My largest burns of the last two years of premium selling has been when I've rolled within the same week closer to the money. I could roll this position for a credit to 1160/1210 next week, but I'm holding out for now. I'll be babysitting it through tomorrow.

Opened my "conservative" IC for next week 850/900 1300/1350 11/26. Goal will be that based on price action tomorrow and Monday to then enter another batch of BCS and BPS at varying points of strength and weakness, once I close my remaining 11/19 BCS.

 

[ZeApelido]

I didn't see very much data science going on in that job (speaketh the former data scientist).

I'm sure you just forgot where that fits in with the busy play and trading time schedule.

Yeah I had a meeting, was listening to audio while trading

 

[BrownOuttaSpec]

12/3 is giving much better value than 11/26. Usually for spreads it doesn't help much to go more than 10 days out in terms of weekly return. But I've started rolling BPS to 12/3 already. However, going farther out is definitely scarier with a narrow $50 spread. FYI, I did 700/900 for 12/3. I'm going to wait to build in the Iron Condor however. Too scary for me to go two weeks on those.

11/26 is a Holiday week in the US. Less time to trade and maybe some traders are taking the week off from big moves so less premiums? I dunno

 

[Cherry Wine]

Still staring at my 1100/1150. Lesson. Don't chase premium in week by rolling closer to the money. My largest burns of the last two years of premium selling has been when I've rolled within the same week closer to the money.

1000x this.

 

[Chicagoguy]

I'm a fan of early close and with being that far ahead, that's what I'd be doing.

Then again an obvious difference in our trading styles is that you're going further out in time than I do, so maybe hanging onto those is a good choice. There are many reasons not to take the early close.


The benefits I see to the early close (I go for 2/3rds to 4/5ths profit for the most part) are mostly:
- lock in that unrealized gain by realizing it. You can't lose money on a realized winning position Of course their are opportunity costs - you might miss out on additional profit.
- Get setup for a strong move up that enables a good entry for a new position.

That second benefit is a big one. I sort of assume that it'll be at least the next day, and possibly 2 or 3 days before I open a replacement. With the market as a whole being best modeled as a random walk with a slight upward bias, there is a strong pattern for an up day or 3, to be followed by a down day or 3. This early close / ready for new position approach makes good use of that random walk.


If you prefer those longer expiration positions, then you'll have to account for that in your own choices (and I can't help with that - I work 1-2 weeks out). But everything else being equal an early close on covered calls on a down day will be good. And opening new covered calls on an up day will be good (open into strength / shares up; close into weakness / shares down).


That last observation of yours about being unsure about how fast the run up will be (or how far) as things change - that's another reason for the early close. You've got an upwards bias on the share price in your own thinking (it sounds to me) and those covered calls are in front of that move. Watching a winning position turn into a big losing position after strongly considering an early close = painful. Ask me how I know .

Especially when the early close would have enabled opening a replacement position into that big move that turned the old position into a loser (= "gee I'm so smart (lucky)!").


Of course not-advice. We all make our own decisions, and experience our own consequences.

thanks for the non advice

I definitely don't prefer these longer DTE CCs. When the SP was skyrocketed and we had no idea about Elon selling and every analyst was increasing their price targets and we all expect great Q4 results, I didn't want to take the chance at the time. Also, I was expecting a volatility crush since these were rolled during earnings when IV was high. That part of the plan worked and I do think the profit on these is good given they were down quite a bit.

 

[Yoona]

Agreed, looks like a great play @Yoona and I think you would be in good shape if you took it.

I'm barely above water after the Bernie Bottom Dump Off (6 digit option paper losses at TSLA 980 ) so I'm taking a few days off for new short options.

Margin will totally depend on concentration in other TSLA positions and if you have portfolio margin or regular margin.

Toss one in to find out for your particular account configuration.

I'll follow if I can.

so far, so good! almost a bullseye right now at sp=1090.55

 

[MXWing]

so far, so good! almost a bullseye right now at sp=1090.55

View attachment 734441

Awesome sauce. I am rooting for you to close both legs at 0.01. <3

Or would be funny if you were also

assigned 100 shares from exercise
deliver 100 shares from exercise