Wiki Selling TSLA Options - Be the House

[FS_FRA]

What a strange situation we are in:

- Premarket tanking towards 930s
- Max Pain fwiw $1000
- it's Tuesday
- Either it's a further ESD or not?
- Do the hedges continue their front-running?
- Do we get a relief day?

Questions over questions....

Do I need to keep my finger on the roll button for my 12/17 -900/700 BPS? Roll just the short put to "safety" ? Also: where is safety for Friday? 850?

I was not expecting to have to consider a roll, this week.

 

[Tempus]

Debating rolling my Dec 17 850-950 BPS out to Jan 7. I could get an easy $15/per on this move, which is pretty good for 3 weeks. It also lets me take a decent sized capital gains loss for the end of 2021 to offset some of my stellar gains...
It also lets me relax and ignore the day to day for the next week (which is nice, since i'm supposed to be on vacation next week). If we get a big move up between now and then, i can always close early and look for a new entry. The only real downside is if we continue down and stay down. With Q4 numbers and 2 factories likely to be open by then, it seems a decent gamble.

 

[BornToFly]

When I think about what usually happens going into the end of a strong quarter, is seems obvious that we close higher by the end of the week. However, "the market can be irrational longer than you can stay solvent" was ringing in my ears. Do I want to gamble? I decided the answer was "no" and bought to close my 1000 short legs for 12/17 and opened new 700/900 for 12/23. Now I can watch the SP climb back up and I can think about the all the money I just handed to someone else for no reason. (I was going to check in my shorts and see if I still had my balls, but this isn't about that. It's about not gambling and just taking small consistent wins).

 

[BornToFly]

What pisses me off is TSLA is down 1.6%, and the Jan 2024 1500 CC I want to buy back are actually more expensive than yesterday....

 

[strago13]

Etrade is weird. Much of their math is simply wrong. I pointed this out a few times and they admitted it. They didn't change anything. But theyfinally admitted it after trying to BS their way around it
The fact is you are stuck with how they do it.
Only option is to go to another broker

I was able to figure out eTrades rough formula by using this (https://www.tdameritrade.com/retail-en_us/resources/pdf/AMTD086.pdf). Page 11.

For Naked Puts, It is 40% (for TSLA) of the underlying stock less the out of money amount if any, plus 100% of the current market value of the options.

 

[Knightshade]

Debating rolling my Dec 17 850-950 BPS out to Jan 7. I could get an easy $15/per on this move, which is pretty good for 3 weeks. It also lets me take a decent sized capital gains loss for the end of 2021 to offset some of my stellar gains...
It also lets me relax and ignore the day to day for the next week (which is nice, since i'm supposed to be on vacation next week). If we get a big move up between now and then, i can always close early and look for a new entry. The only real downside is if we continue down and stay down. With Q4 numbers and 2 factories likely to be open by then, it seems a decent gamble.

Only thing else I'd say is if risk of early assignment if it dips significantly further in those 3 weeks... not super likely, but worth thinking about.

 

[juanmedina]

When I think about what usually happens going into the end of a strong quarter, is seems obvious that we close higher by the end of the week. However, "the market can be irrational longer than you can stay solvent" was ringing in my ears. Do I want to gamble? I decided the answer was "no" and bought to close my 1000 short legs for 12/17 and opened new 700/900 for 12/23. Now I can watch the SP climb back up and I can think about the all the money I just handed to someone else for no reason. (I was going to check in my shorts and see if I still had my balls, but this isn't about that. It's about not gambling and just taking small consistent wins).

I did that yesterday by closing some position with a lot of juice left in them but I have no regrets... I still made money and slept way better.

 

[EVCollies]

Rolled my 12/23 BPS -p910/+p710 to 12/31 -p900/+p700 @5.9 and grabbed a few more 12/31 -p900/+p700 @26 with the proceeds.

 

[BornToFly]

So I learned something recently. I went from opening BPS at the start of the week for end of week, to rolling the Thur/Fri before, to rolling a couple weeks out during the recent drop because the premiums were good. The problem with rolling a couple weeks out, is that you are more or less locked into your spread prices (not good), and there is still a lot of time value/theta (not good). For example: If you have a 750/950 that you want to roll with a week or two left, you can make good premium rolling to another 750/950, but not rolling to 700/900. However, when you are rolling with just two days left for the following week, when the original position is at 90+% profit (or there is no theta left), you now have the freedom to close it out and open an entirely fresh position. If the SP is behaving, like I thought it would at this point, being locked in is not a problem. But when the market is doing stupid things, it is better to be more nimble and just take the weekly contract route. So my plan moving forward is to stick with rolling on Thur/Fri for the following week with entirely new positions based on the current SP at the time of the new trade.

 

[UltradoomY]

So I learned something recently. I went from opening BPS at the start of the week for end of week, to rolling the Thur/Fri before, to rolling a couple weeks out during the recent drop because the premiums were good. The problem with rolling a couple weeks out, is that you are more or less locked into your spread prices (not good), and there is still a lot of time value/theta (not good). For example: If you have a 750/950 that you want to roll with a week or two left, you can make good premium rolling to another 750/950, but not rolling to 700/900. However, when you are rolling with just two days left for the following week, when the original position is at 90+% profit (or there is no theta left), you now have the freedom to close it out and open an entirely fresh position. If the SP is behaving, like I thought it would at this point, being locked in is not a problem. But when the market is doing stupid things, it is better to be more nimble and just take the weekly contract route. So my plan moving forward is to stick with rolling on Thur/Fri for the following week with entirely new positions based on the current SP at the time of the new trade.

Definitely - I get the idea of tax loss harvesting in a losing position by rolling it out to next year - being this close.
However, you can do better (IMO) strategy wise by rolling for an additional week only on Thursday so that the chance of early assignment is lower and you can be more nimble with selection.
Because most of the theta has burned - it is automatically worth less even at a lower SP than it was on Monday or Tuesday.
Helps with rolling ITM or OTM positions but most effective with ITM.
And there will be a reversal, whether that happens this week, next or in January but if you are locked into a long dated spread - your closing options are low since there is so much time value left.

The hardest part is the emotional side of watching your position go ITM and not stressing about it.
Time is your friend..... but you don't want to marry your friend and stay too long!

 

[bkp_duke]

Definitely - I get the idea of tax loss harvesting in a losing position by rolling it out to next year - being this close.
However, you can do better (IMO) strategy wise by rolling for an additional week only on Thursday so that the chance of early assignment is lower and you can be more nimble with selection.
Because most of the theta has burned - it is automatically worth less even at a lower SP than it was on Monday or Tuesday.
Helps with rolling ITM or OTM positions but most effective with ITM.
And there will be a reversal, whether that happens this week, next or in January but if you are locked into a long dated spread - your closing options are low since there is so much time value left.

The hardest part is the emotional side of watching your position go ITM and not stressing about it.
Time is your friend..... but you don't want to marry your friend and stay too long!

So, based upon this (and I don't disagree), what's the "not advice" for rolling my 930/980 BPS that expires on 12/17. Let more theta burn, with the risk of SP going even lower, or go for a roll at the first opportunity?

 

[vikings123]

So, based upon this (and I don't disagree), what's the "not advice" for rolling my 930/980 BPS that expires on 12/17. Let more theta burn, with the risk of SP going even lower, or go for a roll at the first opportunity?

You are basically at max loss so just let it ride? How many and what % of your portfolio is also important to consider.

 

[BornToFly]

So, based upon this (and I don't disagree), what's the "not advice" for rolling my 930/980 BPS that expires on 12/17. Let more theta burn, with the risk of SP going even lower, or go for a roll at the first opportunity?

I don't have advice on the current position, but my learning moment from my recent trades and your current position is to stay further from the SP on the weekly, and use a wider spread. I think you need to close narrow $50 spreads before the short leg gets ITM, otherwise you're gambling (because even if you are correct that the SP should be higher because you know about great earnings results/growth coming, the market might not respond correctly short term).

Edit: My not-advice is that if that was mine, I would close now and take the loss to avoid the risk of max-loss, even though it may end up OTM by Friday. Then forget about it and open a fresh trade without thinking about the old one.

 

[BornToFly]

You are basically at max loss so just let it ride? How many and what % of your portfolio is also important to consider.

Good point. I hadn't refreshed the ticker when I made my comment.

 

[Flehmenlips]

If the price gets low enough ($750-850), I am going to sell a $1,000 or $1,250 CCP and use the premium to buy shares (basically a bet on top of a bet lol...).

What is a CCP? I don't see it in the glossary. Thanks

 

[Tslynk67]

What is a CCP? I don't see it in the glossary. Thanks

Cash-covered put

 

[bkp_duke]

You are basically at max loss so just let it ride? How many and what % of your portfolio is also important to consider.

I don't have advice on the current position, but my learning moment from my recent trades and your current position is to stay further from the SP on the weekly, and use a wider spread. I think you need to close narrow $50 spreads before the short leg gets ITM, otherwise you're gambling (because even if you are correct that the SP should be higher because you know about great earnings results/growth coming, the market might not respond correctly short term).

Edit: My not-advice is that if that was mine, I would close now and take the loss to avoid the risk of max-loss, even though it may end up OTM by Friday. Then forget about it and open a fresh trade without thinking about the old one.

Thanks for the feedback. I'm definitely pushing near the max loss on these, and that hurts.

Given that, I may just wait and see if we have a bounce.

 

[UltradoomY]

So, based upon this (and I don't disagree), what's the "not advice" for rolling my 930/980 BPS that expires on 12/17. Let more theta burn, with the risk of SP going even lower, or go for a roll at the first opportunity?

Depends on what you think will happen?
If that was my position - I would roll it out to same strikes next week for a nice credit.... and do the same next week if needed.
Share price will come back soon but my soon and your soon will vary....
I am looking to roll on Thursday - so that the theta is mostly burnt and less risk of early assignment.

 

[intelligator]

Rolled 12/17 950/820 to 12/31 930/800 @ 10$ , can reassess next week. Have 950/830 that I am considering rolling to next week, revaluate then what to do next. Ideally, I'd want to close these, they aren't green though.

 

[Yoona]

So, based upon this (and I don't disagree), what's the "not advice" for rolling my 930/980 BPS that expires on 12/17. Let more theta burn, with the risk of SP going even lower, or go for a roll at the first opportunity?

sometimes, doing nothing is more profitable... but these are not normal TSLA times (ie elon selling, yearend coming up, omicron)

if that was mine, i would roll it asap and get out of the way even if net debit... i want lots of time to figure out a fix

making $ is not even the goal, it's avoiding early assignment

if it turns out that fri is >980, absolutely no regrets