Wiki Selling TSLA Options - Be the House

[MP3Mike]

So toward the bottom of the dip I rage sold a set of 11/26 940/990 BPSs, and then closed them out at a ~76% profit just before close. I had already closed out most of the 11/26 890/940 BPSs that I opened last Thursday at a ~80% profit before the drop.

If I had more time to watch things I think I would ran afoul of the margin day trading limit while making a lot more money. But I don't want to get too greedy.

 

[generalenthu]

Was a very volatile and high volume day, meaning I didn't get to see as much of my tracker as I'd have liked.

But one thing that was expected was the presence of a large number of spread trades. A lot of them were call / put spreads, but a fair bit of calendar and diagonal spreads in there.

Per the FT article and even otherwise as folks know here, options move the stock. it will be useful to filter out the spread orders from here and see if the non spread orders trigger hedging and subsequent moves.

Probably not the right thread to discuss that and will take it elsewhere. But just posting some thoughts as all the options players are here.

But to bring it back on topic there are a ton of vertical spreads in the tape today and these are small width. Clearly they didn't get the @adiggs memo that wider is better.

 

[traxila]

NOT-ADVICE

Something I learned recently is that margin calls aren't necessarily all that big of a thing. In one account I've got nearly as much cash as I have margin available. As a result I have been in margin call territory against positions that are fully cash secured (seriously). If I'd flagged the trades as cash instead of margin (not the default) then that wouldn't have happened.

However in the margin call details (and this is clearly all automated) there is the margin call along with information about the status. It tells me the date the margin call was isssued, the date by which cash or some other activity is needed to resolve the margin call, and the amount of that cash to resolve the margin call.

When these situations have arisen for me, the margin call shows up and is also immediately (or the next day) flagged as MET as I had more than enough cash already on deposit to cover the margin call. As in so much more that the underlying position could have been assigned and paid for by the cash on hand with no margin loan needed, but I didn't need that much.

I've intentionally pushed myself into negative margin territory to see what this would look like. That's really not advice but with the large cash balance I had it was quite informative to see what margin calls look like. I learned that as I'm opening positions (such as short puts), those positions are counted against margin balance first and then the on hand cash. Were I to be assigned on those short puts, then I'd be spending the cash first, with any remainder showing up as a margin loan.

I also learned that Fidelity will extend me a stupidly large amount of credit (margin) should I want to take advantage of it. Like 5x the level that I consider aggressive already. I'm not even a little bit tempted to take them up on that offer!

So margin calls are not all that big of a thing if you actually have huge amounts of cash in the account that is not being counted against the margin. Got it.

I had an account liquidated without warning in the past. Seemed like a big thing to me at the time.

Wish I had had stacks of cash in the account.

 

[adiggs]

So margin calls are not all that big of a thing if you actually have huge amounts of cash in the account that is not being counted against the margin. Got it.

I had an account liquidated without warning in the past. Seemed like a big thing to me at the time.

Wish I had had stacks of cash in the account.

You missed the "necessarily"

Yeah - margin calls can be brutal. I've never had one of the brutal variety and plan to keep it that way.


But I don't like trading using most or exclusively margin - I prefer using the margin to take on a little bit extra if you will.

 

[bkp_duke]

You missed the "necessarily"

Yeah - margin calls can be brutal. I've never had one of the brutal variety and plan to keep it that way.


But I don't like trading using most or exclusively margin - I prefer using the margin to take on a little bit extra if you will.

As my TSLA position keeps concentrating in Fidelity, I keep getting these calls. They are annoying, but nothing "bad" so far.

Previously, Fidelity would give me 40% margin credit against the TSLA shares in the account. Now it is down to 27.5%.

What is annoying is that they keep letting me make trades based upon the free cash in the account, then once I open up TSLA options positions, they initiated a margin call b/c of "increased concentration". Grr.

I would go 100% cash, but this particular account is taxed, and the TSLA shares are old enough that cashing them out would really push up the tax bill.

 

[chiller]

As my TSLA position keeps concentrating in Fidelity, I keep getting these calls. They are annoying, but nothing "bad" so far.

Previously, Fidelity would give me 40% margin credit against the TSLA shares in the account. Now it is down to 27.5%.

What is annoying is that they keep letting me make trades based upon the free cash in the account, then once I open up TSLA options positions, they initiated a margin call b/c of "increased concentration". Grr.

I would go 100% cash, but this particular account is taxed, and the TSLA shares are old enough that cashing them out would really push up the tax bill.

FYI I'm getting 50% margin in my TSLA-only account at IB.

 

[ReddyLeaf]

Well, a dump from $1180 down to $1112 can help!

I used that dip to close out ALL my short calls (1100 &1200 strikes) and to roll 20x p1100 to next week (+$21) and add 5x p1100 +$41

This was a purely instinctive move to get out of a pickle I had put myself into - I don't rule-out still selling covered calls, but it's going to be way above the SP from now on

I also used the dip and closed out my 12/03 -c1200s for about 50% profit (nearly perfect timing, came back from an errand, saw the drop at 13:50 and pounced). These weren’t sold at the best time, so happy to exit at a decent profit. Unfortunately, selling puts and calls around the same time as a strangle or straddle, means that those sold p1200s are now FITM. I’m willing to accept the shares, but will roll if the SP rises enough next week. Must follow @adiggs advice and only sell into strength. Selling puts with $20-$40 premiums sounds great until the SP tanks $100.

 

[TheTalkingMule]

Looks like we're pinned to max pain on the nose in the AH. With even lower volume tomorrow and short day Friday, I suspect we'll dip again then rebound to exactly here by close 11/26.

Gonna close out my stupid 12/10 $1170c and 1/24 $1300 so I can start fresh on selling near the money calls when we recover to $1170 early next week.

Utter failures abound this week, but thankfully only lost opportunities due to forced rolling and not huge chunks of money. Learning quite a bit!

Safest moves are yet again selling $100 width BPS 22-27% OTM for 2-4% 7-8 trading days out. If I can get in a rhythm matching these with 5-10% OTM covered calls I don't mind executing..... we'll be in good shape!

 

[traxila]

Elon back in town.

Real Time Insider Data - DATAROMA - Investing

Tomorrow too?

 

[Tslynk67]

Looks like we're pinned to max pain on the nose in the AH. With even lower volume tomorrow and short day Friday, I suspect we'll dip again then rebound to exactly here by close 11/26.

Gonna close out my stupid 12/10 $1170c and 1/24 $1300 so I can start fresh on selling near the money calls when we recover to $1170 early next week.

Utter failures abound this week, but thankfully only lost opportunities due to forced rolling and not huge chunks of money. Learning quite a bit!

Safest moves are yet again selling $100 width BPS 22-27% OTM for 2-4% 7-8 trading days out. If I can get in a rhythm matching these with 5-10% OTM covered calls I don't mind executing..... we'll be in good shape!

Dumb question, but you're closing calls that were NTM today to open more calls NTM, why?

You might get lucky, but the experience of the vast majority here is that selling calls leads to losses. Of course, past performance isn't indicative of future, but I'm sure going to be cautious going forwards, or at least have a clear plan. Example, imagine I buy 40x c1000 LEAPS, then sell 12/3 lcc1350's against them - that strike is unlikely to got ITM by the end of next week, so looking at ~$15k pocket-money, but if for some reason the SP flies up there, I have ~$1M profit from the rise in the LEAPS

So either sell calls that make consistent income (albeit "gravy), or huge profits in a short time-frame, that's my goal

 

[samppa]

well, never a dull day with TSLA, yesterday's stock move was really a bit nuts.
Some work on my positions:
- rolled BPS 11/26 -p1100/+p1000 to 12/03 -p1100/+p1000. Credit $12, decided to keep the strikes the same, I believe this dip will be over soon after Elon has finished selling. And a lot of good catalysts coming.
- closed the rest of my 11/26 BCS -c1100/+c1150. In the end I took about $1100 loss/contract here, closed on the dip. Lots of theta but felt like this was the safest decision.. also I did not want to roll these, as per above reasons.
- On monday, I had flip-rolled half of those call spreads to 11/26 BPS -p1200/+p1250. Early morning spike, I filled this out to Iron fly, sold BCS -c1250/+c1300. Credit $3.50/contract. Same amount of contracts. Then on the dip to 1070, I closed this call leg for $0.75/contract. Got a nice $2.75/contract trading these calls. Now this Iron fly (or more precisely, it's only a bull put spread that is ITM) has cumulative credit of $45.02. It's obviously at max loss, which is now around $5 ($50-45). Premarket is green, so if I can sell those call legs again and complete the fly once more, I should have saved these from a loss. Do not ask me about opportunity cost.. it's been an interesting recovery, but I would not want to do this with a major position. This is 5 contracts.

- sold BPS 12/03 -p1095/+p1045 for $23.8 on the dip.. this was just juicy
- sold BPS 26/11 -p1050/+p850 for $11.68, this was also just juicy

 

[CHGolferJim]

I don't think I've actually lost on these short calls that went ITM, they were all underwritten by calls/LEAPS, which went up a bundle, and I also closed those out, was net gains, but a lot less net gains that might have been... I'm updating the Holy Spreadsheets, I hope to have answers soon...

Extent of “losses” seems to depend on how you do the math (organize spreadsheets) — whether you silo elements of trading as I‘ve been doing previously, or look at trading strategies in a more integrated way. Several comments from people in recent weeks, and the need for some psychological space from the debacle of rolling DITM covered calls in Oct/Nov, has lead me to a new approach of evaluating 2021 and probably future options trading as the sum of 3 elements:

• CC premiums (which are now net negative for the year with STO/BTC/rolling)
• capital gains of shares that I let assign
• gains on long calls and LEAPs

When I talked about losses, that was from looking at the first column only. The total of the three is still a grand amount that (combined with core share gains) has freed my approach to spending and gifting, which will hopefully continue to work for years.

I think this is legit rather than a gimmick as it reflects the breadth of my trading (yeah, I need to learn about puts and spreads, but at the moment am constrained from trading most of that in the Roth at my broker who has many other qualities).

 

[Tslynk67]

Extent of “losses” seems to depend on how you do the math (organize spreadsheets) — whether you silo elements of trading as I‘ve been doing previously, or look at trading strategies in a more integrated way. Several comments from people in recent weeks, and the need for some psychological space from the debacle of rolling DITM covered calls in Oct/Nov, has lead me to a new approach of evaluating 2021 and probably future options trading as the sum of 3 elements:

• CC premiums (which are now net negative for the year with STO/BTC/rolling)
• capital gains of shares that I let assign
• gains on long calls and LEAPs

When I talked about losses, that was from looking at the first column only. The total of the three is still a grand amount that (combined with core share gains) has freed my approach to spending and gifting, which will hopefully continue to work for years.

I think this is legit rather than a gimmick as it reflects the breadth of my trading (yeah, I need to learn about puts and spreads, but at the moment am constrained from trading most of that in the Roth at my broker who has many other qualities).

Very simple for me, I only consider realised gains/losses - although I mentally think of rolled transactions as a single entity, especially when trying to salvage a crappy trade, in reality they are separate, and get recorded as such in the Excel - a spread is simply a separate buy and sell, with an associated sell and buy, no sleight of hand

 

[TheTalkingMule]

Yeah, I guess it doesn't make sense without some detail. I need to raise cash between now and April, so as SP creeps up to $1200(my 2025 target lol) I'm fine with one or two covered calls executing. That's my plan from now until there's any major correction pullback below $1000. Sell very conservative(18-27% OTM) BPS weekly depending on the recent SP/MM action, then also sell a few covered calls at various strikes near the money. Again depending on the SP action and MM/macro moods I sense that week.

If a few CC's execute above $1200, fine. If a few of the more conservative ones execute above $1250(or $1300 after 4Q earnings) that's fine as well. I'll simply plan on rebuying on the next dip or be content with the cash at a $1.3T+ valuation if the rocket continues. My problem with the $1105 strikes and now the $1170 I rolled to, is that they're at unacceptable strikes for execution. I'm new to this and planned poorly.

With SP around $1050 last week, I thought "aggressive" would be selling $1105c for 11/26. The logic being that MM's would be able to keep SP below the logical max pain of $1100 with ease in a lower volume holiday week as they always seem to be able to do. Thought I got the number wrong, panicked and rolled, then it turned out likely right. The even more HUGER mistakes I made were:

1) Not being OK with execution. At $1105, I'm more than $125 off very recent highs and somehow forgot I'd be furious if I missed that extra gravy at execution. Emotional mistakes in the heat of the moment trying to catch an upward swing in SP to sell calls at a strike that days later feels like peanuts. I retrospect, I should have seen a SP $55 BELOW max pain as sub-optimal.

2) I didn't look around. We're verging on December and 4Q numbers loom large. Don't even need to recap all the other positive triggers in the mail for now thru Feb. Why on Earth would I be OK selling a few hundred shares in this valley with $125 peaks on either side and perhaps worse?

Basically I'm learning on the fly, keeping myself out of any real trouble, and trying to get a feel for when to sell what. It's unlikely I'll be of any mechanical help to folks in this thread, but I do think I have an above average feel for TSLA price action that could be helpful and is IMO under-utilized in the "Wheel World". As I get more comfortable limiting losses and rolling where appropriate, I hope to help out here with estimating rational % OTM on either end from week to week.

 

[JustMe]

TSLA falling right back to the $1070 support level that it bounced off yesterday. This looks like a key level to me and I’m not sure which way we’ll go. But I expect a significant move up or down today.

If it breaks through, I think we could go all the way down to $1,000 again.

Be careful out there

 

[BornToFly]

TSLA falling right back to the $1070 support level that it bounced off yesterday. This looks like a key level to me and I’m not sure which way we’ll go. But I expect a significant move up or down today.

If it breaks through, I think we could go all the way down to $1,000 again.

Be careful out there

Bad macros and Elon selling is a lot of downward pressure.

 

[elasalle]

Added some 12/3 $1250 for ~ 7.50

20EMA of $1073 (+which kind held yesterday)
Thinking either today or Fri there will be reversal .

+you by calls, MM need to hedge and buy the shares ... time to reverse the gamma squeeze

 

[scubastevo80]

Big money on the 12/3 BPS side this morning. Just rolled my 11/26 900/750 to 12/3 885/750 for a credit of $8. I'm sure the volatility will remain (IV over 100% on these), but I think 20% cushion on the downside at these premiums is worth it for 6.5 trading days. I'm going to close my o/s BCS on Friday and will review as needed. These have been giving me scares and I think the breakout risk is to the upside, so I'm likely not going to write anything under a $1300 level.

 

[corduroy]

I sold some 12/3 BPS -850/750s @$4 Probably too early again today, if so I'll add more.

 

[tradenewbie]

Originally didn't plan to do anything this week, but finally sold a few BPS -850/+650 for $6 premium,