Wiki Selling TSLA Options - Be the House

[jeewee3000]

Just to be clear, when I'm referring to my weekly returns, it's against my total portfolio, I always measure against that, because ultimately this is what I want to see grow. Also, a 25% return on an ATM $5 wide BPS that got lucky, that's wouldn't be very indicative of anything, for me at least

So imagine I have $5million and I sold yesterday those 35 12/10 -p1055's @$15 = $52500, ~1% of portfolio

And as mentioned a few times, annually I'm looking for 2x portfolio, which with 1-2% weekly I consider doable, even with a losing week thrown in from time to time

That is a good objective benchmark in your case since you've sold all your core TSLA shares.

For me that benchmark is misleading and not relevant since my portfolio consists of around:

+ 75% shares
+ 25% cash / options

So when I measure my returns from options, I'm looking at returns on that 25% stake in my portfolio. As long as the amount of shares is unchanged, I view that position as having lost/gained nothing when the stock drops or rises.

Just a different perspective.

(To add to this, I do look at % return on capital per trade/spread as well (like @adiggs) since I want to get a feel for "what is a reasonable return I can get with relatively "safe" trades).

 

[jeewee3000]

Reason for my method of "gains calculation" is mainly the ease of comparison to stock price gains.

If I notice I can grow my cash (way) more quickly than by holding shares, I'm considering a full switch to cash like you did. But first I want more practice with options to see if I can do this long term.

My greatest doubt with all this is: if the members of this thread are making huge weekly/monthly gains consistently, why aren't we all billionaires? (Or why aren't there way more billionaires, since people have been doing options trading before Tesla (like the Tastytrades guys, they don't seem uber-wealthy). Therefore I can't imagine that for example @Yoona is going to keep up the %gains for years to come. If so, he/she would start to show up on the Forbes list of 100 most wealthy people, which I find unlikely. Same goes for you (@Lycanthrope ): if you casually 2x your capital each year, and you're already around $5M, then in 8 years you'll have 1.28 billion USD. I find that unlikely, but then I wonder why.

Possible answers:
A) people become more risk averse as their wealth increases and the % gains drop
B) the options game is a fools game and will provide us with huge losses to cancel out (most or some of) our gains longterm
C) people use their money IRL and therefore never grow their portfolio past a certain cap, well below the billions
D) I'm naive and there are lots of secret billionaires running around

Probably D , but by all means please share your thoughts on this.

 

[Chenkers]

My greatest doubt with all this is: if the members of this thread are making huge weekly/monthly gains consistently, why aren't we all billionaires?

I was making huge weekly gains until a couple of weeks ago when I got a bit greedy. Nearly out of the woods now though and still up a huge amount overall. The lesson is to take it gradually by being conservative and not continually push yourself near the limits.

What we are doing can only work up to a certain scale before we start distorting that segment of the market. That's why a lot of the really big players move to the indexes. But there's still a lot of room for growth from where things are now.

I also prefer it when people talk about percentage gains against their overall portfolio. It doesn't matter to me what mix of options/stock/cash a portfolio is, it all boils down to a Net Liquidation Value and that's the real goal post imho. It gets too confusing when people try to measure gain just against the at risk component of a trade. So what if someone makes a 25% return on the risk of an individual trade, if they are only risking a tiny proportion of your overall portfolio.

 

[jeewee3000]

It gets too confusing when people try to measure gain just against the at risk component of a trade. So what if someone makes a 25% return on the risk of an individual trade, if they are only risking a tiny proportion of your overall portfolio.

Both are useful though, as either one doesn't tell the full story.

If I have 900k in shares and 100k in cash, and I get a 10k weekly return from selling BPS:
- I've increased my portfolio by 1%
- I've spent my capital in a way to get a 10% return

If you only state you got 1% gains with BPS, I'd think you're playing very conservatively. OTOH if you get 10% weekly returns on BPS you're pretty agressive.

But I do agree that in the big picture (aka "portfolio growth") the %gains against portfolio is more relevant. (I just like keeping core shares that I pretend are not even there until 2030 as I see that as my surefire way to accumulate wealth by then, whilst I don't fully trust my abilities in options for the same purpose yet. Purely personal reasoning. I want to bet on two ponies: the core shares and options trading. If both are succesful in the long run, all the better.)

 

[InTheShadows]

That is a good objective benchmark in your case since you've sold all your core TSLA shares.

For me that benchmark is misleading and not relevant since my portfolio consists of around:

+ 75% shares
+ 25% cash / options

So when I measure my returns from options, I'm looking at returns on that 25% stake in my portfolio. As long as the amount of shares is unchanged, I view that position as having lost/gained nothing when the stock drops or rises.

Just a different perspective.

(To add to this, I do look at % return on capital per trade/spread as well (like @adiggs) since I want to get a feel for "what is a reasonable return I can get with relatively "safe" trades).

My spreadsheet tracks both. I have a column for weekly trading gains and a column for portfolio gains. I since I changed things up in July when we started discussing in depth bps strategies here I have not had a negative trading week. I have had multiple negative portfolio weeks though from stock price gyrations.

My weekly trading % calculations are calculated by dividing weekly gains by week ending portfolio minus the weekly gains.

That way that number removed the weekly gyrations as well.

 

[traxila]

Reason for my method of "gains calculation" is mainly the ease of comparison to stock price gains.

If I notice I can grow my cash (way) more quickly than by holding shares, I'm considering a full switch to cash like you did. But first I want more practice with options to see if I can do this long term.

My greatest doubt with all this is: if the members of this thread are making huge weekly/monthly gains consistently, why aren't we all billionaires? (Or why aren't there way more billionaires, since people have been doing options trading before Tesla (like the Tastytrades guys, they don't seem uber-wealthy). Therefore I can't imagine that for example @Yoona is going to keep up the %gains for years to come. If so, he/she would start to show up on the Forbes list of 100 most wealthy people, which I find unlikely. Same goes for you (@Lycanthrope ): if you casually 2x your capital each year, and you're already around $5M, then in 8 years you'll have 1.28 billion USD. I find that unlikely, but then I wonder why.

Possible answers:
A) people become more risk averse as their wealth increases and the % gains drop
B) the options game is a fools game and will provide us with huge losses to cancel out (most or some of) our gains longterm
C) people use their money IRL and therefore never grow their portfolio past a certain cap, well below the billions
D) I'm naive and there are lots of secret billionaires running around

Probably D , but by all means please share your thoughts on this.

Laws of relatively large numbers apply in this case.

At some point you back off and stop risking it all. Suddenly you come to understand what capital preservation is. Outside of some ambitious lifestyles that some people want to lead, what is the difference between 10M, 30M and 300M? For a large percentage of people who live luxurious lives without any material wants, the answer is none, especially if you do not live in an area where the cost of living is off the charts.

The vast majority of my gains have come from holding (ok and aggressive call buying that has since stopped working like it used too…). Now nibbling around the edges generates weekly gains that not too long ago would have been eye popping for me. I have enough volatility just holding my core TSLA shares. Don’t want to be grinding my teeth over my BPS and BCS positions.

I am not good at being rich. I still remember what it means to have a negative net worth. People who become billionaires trading stocks usually have the mental ability to handle losing it all, because they can just make it back if they have too. The trading described on this forum here is a bit like playing good poker - if you are thinking about how much money you are putting in the pot then you are not playing well. That should not matter for your strategies.

Anyway, yeah for a lot of people a lot of money is nice, but tripling or getting 20X the amount that you had already labeled as more than enough just a couple of years ago is not that important. You find other things that take up your time.

 

[scubastevo80]

Reason for my method of "gains calculation" is mainly the ease of comparison to stock price gains.

If I notice I can grow my cash (way) more quickly than by holding shares, I'm considering a full switch to cash like you did. But first I want more practice with options to see if I can do this long term.

My greatest doubt with all this is: if the members of this thread are making huge weekly/monthly gains consistently, why aren't we all billionaires? (Or why aren't there way more billionaires, since people have been doing options trading before Tesla (like the Tastytrades guys, they don't seem uber-wealthy). Therefore I can't imagine that for example @Yoona is going to keep up the %gains for years to come. If so, he/she would start to show up on the Forbes list of 100 most wealthy people, which I find unlikely. Same goes for you (@Lycanthrope ): if you casually 2x your capital each year, and you're already around $5M, then in 8 years you'll have 1.28 billion USD. I find that unlikely, but then I wonder why.

Possible answers:
A) people become more risk averse as their wealth increases and the % gains drop
B) the options game is a fools game and will provide us with huge losses to cancel out (most or some of) our gains longterm
C) people use their money IRL and therefore never grow their portfolio past a certain cap, well below the billions
D) I'm naive and there are lots of secret billionaires running around

Probably D , but by all means please share your thoughts on this.

I think you have all different flavors here. Some folks started much earlier than others, other folks day trade and can watch the tape versus those who can possibly only check on bathroom breaks. I'm not in the millionaire club as we didn't enter or follow TSLA aggressively until I was able to roll a company 401k to a rollover IRA. Separately, helping my parents with options trading didn't start until the first week in November. My understanding was basic and to be honest, I'm not looking to be a trader - just to make some additional income for way OTM. Their gains - a whopping $605/week on average, but the $2k a month, if sustainable, is meaningful for their retirement.

 

[JustMe]

I think you have all different flavors here. Some folks started much earlier than others, other folks day trade and can watch the tape versus those who can possibly only check on bathroom breaks. I'm not in the millionaire club as we didn't enter or follow TSLA aggressively until I was able to roll a company 401k to a rollover IRA. Separately, helping my parents with options trading didn't start until the first week in November. My understanding was basic and to be honest, I'm not looking to be a trader - just to make some additional income for way OTM. Their gains - a whopping $605/week on average, but the $2k a month, if sustainable, is meaningful for their retirement.

There’s a lot to be said for an additional safe and steady income stream, however modest.
Heck, that’s millions per month more profit than some billion dollar market cap companies that we poke fun at around here.

 

[UltradoomY]

Reason for my method of "gains calculation" is mainly the ease of comparison to stock price gains.

If I notice I can grow my cash (way) more quickly than by holding shares, I'm considering a full switch to cash like you did. But first I want more practice with options to see if I can do this long term.

My greatest doubt with all this is: if the members of this thread are making huge weekly/monthly gains consistently, why aren't we all billionaires? (Or why aren't there way more billionaires, since people have been doing options trading before Tesla (like the Tastytrades guys, they don't seem uber-wealthy). Therefore I can't imagine that for example @Yoona is going to keep up the %gains for years to come. If so, he/she would start to show up on the Forbes list of 100 most wealthy people, which I find unlikely. Same goes for you (@Lycanthrope ): if you casually 2x your capital each year, and you're already around $5M, then in 8 years you'll have 1.28 billion USD. I find that unlikely, but then I wonder why.

Possible answers:
A) people become more risk averse as their wealth increases and the % gains drop
B) the options game is a fools game and will provide us with huge losses to cancel out (most or some of) our gains longterm
C) people use their money IRL and therefore never grow their portfolio past a certain cap, well below the billions
D) I'm naive and there are lots of secret billionaires running around

Probably D , but by all means please share your thoughts on this.

Something to consider aside from what others have mentioned about capital preservation past a certain point, is that there are an absolutely staggering amount of HNW individuals.
High Net Worth individuals that are reported are over 47M.
That's 47 Million people that are worth more than $1M USD.
That's just reported, and doesn't include people that are part of royal families, money that is in a trust, money that is cut up into more than one place (off shore accounts), business wealth and value.
Simply put, there are a LOT of people, with a LOT of money. They are not usually the ones you find on a forum though and if they are, they shouldn't be telling you about it....
And for a reference - the founder of Tasty Trade has a reported net worth of $150M- just because he wears a dumb hat (IMO) doesn't mean he's broke....
Not being cheeky - just thought it's worth mentioning that this is doable, for long periods of time as long as you stay consistent with your "Investment Thesis" and don't get greedy!
(edited for clarity)

 

[traxila]

Something to consider aside from what others have mentioned about capital preservation past a certain point, is that there are an absolutely staggering amount of HNW individuals.
High Net Worth individuals that are reported are over 47M.
That's 47 Million people that are worth more than $25M USD.
That's just reported, and doesn't include people that are part of royal families, money that is in a trust, money that is cut up into more than one place (off shore accounts), business wealth and value.
Simply put, there are a LOT of people, with a LOT of money. They are not usually the ones you find on a forum though and if they are, they shouldn't be telling you about it....
And for a reference - the founder of Tasty Trade has a reported net worth of $150M- just because he wears a dumb hat (IMO) doesn't mean he's broke....
Not being cheeky - just thought it's worth mentioning that this is doable, for long periods of time as long as you stay consistent with your "Investment Thesis" and don't get greedy!

I have never seen the stat that there are 47million people worth more than 30M USD.

This is what I could find:

Ultra high-net-worth individual​

From Wikipedia, the free encyclopedia

Not to be confused with High-net-worth individual.
Ultra-high-net-worth individuals (UHNWI) are defined as having a net worth of at least US$30 million in constant 2018 dollars.[1][2] It is the wealth segment above very-high-net-worth individuals (>$5 million) and high-net-worth-individuals (>$1 million). Although they constitute only 0.003% of the world's population (less than 1 in 33,000), they hold 13% of the world's total wealth.[3] By 2017, there were 226,450 individuals designated as UHNWI, representing an increase of 3.5%, with their combined total wealth increasing to $27 trillion.[4]

Big difference between a couple hundred thousand UHNWI and 47 million.

Where did you get your numbers from? Thanks!

 

[FS_FRA]

Opened 12/17 BPS -900/+700 @ $4 more or less at the open.

 

[UltradoomY]

I have never seen the stat that there are 47million people worth more than 30M USD.

This is what I could find:

Ultra high-net-worth individual​

From Wikipedia, the free encyclopedia

Not to be confused with High-net-worth individual.
Ultra-high-net-worth individuals (UHNWI) are defined as having a net worth of at least US$30 million in constant 2018 dollars.[1][2] It is the wealth segment above very-high-net-worth individuals (>$5 million) and high-net-worth-individuals (>$1 million). Although they constitute only 0.003% of the world's population (less than 1 in 33,000), they hold 13% of the world's total wealth.[3] By 2017, there were 226,450 individuals designated as UHNWI, representing an increase of 3.5%, with their combined total wealth increasing to $27 trillion.[4]

Big difference between a couple hundred thousand UHNWI and 47 million.

Where did you get you numbers from? Thanks!

Sorry, was using google - I typed it wrong - I meant high net worth but got my numbers mixed up with Ultra HNW - there are more than 47M HNW (over $1M) and plenty of UHNW individuals. - will edit post.

 

[jeewee3000]

Couldn't help myself: sold 12/17 -1000p/+940p @$13.1 upon the opening drop.

 

[BornToFly]

Couldn't help myself: sold 12/17 -1000p/+940p @$13.1 upon the opening drop.

Where is the Big Balls emoji?

 

[FS_FRA]

Opened 12/17 BPS -900/+700 @ $4 more or less at the open.

Impeccable FOMO timing....

 

[scubastevo80]

We put on 12/17 BPS 890/790 and 900/820 today. I still think $900 is a safe level a week out and these two netted me $3.15 and $4.50 respectively (the first was trade was placed when TSLA was down ~1.5% today and the second was when it crossed the 3% mark). If we get some magical positive 12/9 news and move upward, we'll likely close these out. Otherwise, we'll ride them into next week to roll for the following week.

 

[bkp_duke]

More BPS on the dip this AM. 900/950. So lovely to see them already profitable.

 

[BrownOuttaSpec]

Just grabbed some BPS 12/17 800/900 @ $4.70. Although it is "close" to the SP (for me) I feel that it is far enough behind 2 other put walls and we are positioned for some good news in the next few days.

 

[jeewee3000]

and we are positioned for some good news in the next few days.

Anything particular in mind?

 

[Discoducky]

I'm in for 5 of the 850/950 Dec 17th $10 premium