Wiki Selling TSLA Options - Be the House

[UncaNed]

Inflation question... If somebody owns LEAPS... won't higher inflation raise the share price, thus disproportionately leveraging the value of those LEAPS at a rate higher than the rate of inflation? So shouldn't inflation be a LEAP owner's friend? Asking because I just looked at this-

Politico - "The Fed's Doomsday Profit" (it's not about LEAPS, just inflation)

 

[TheTalkingMule]

87% year-over-year growth sure makes it hard for the market to play dumb on 4Q21 earnings potential. We should see some mega-volatility/FOMO tomorrow. Too early for me to be looking at CC strikes that I wouldn't mind seeing execute, but I'm ready to pounce on some BPS at market open for sure.

Anyone have thoughts on an opening net credit for -$1050/+$950 BPS(basically at the money) for this week's close? It was about $26-27 at close last week, was thinking of setting an order at $22. I'm feeling confident in a worst case scenario for those being the need to roll for more premium over the next few weeks waiting for earnings to be announced.

And I guess a general question on what's best for selling BPS on an IV spike if we see +5% share price by 9:33am? Might the crazy volatility add even more premium to the point where you can sell that very same BPS strikes at nearly the same net credit?

I'll probably do both for the learning experience. Sell a few BPS at open with GTC limit orders(I'm too scared to just throw in a market order at open), then sell a few more after the open does it's thing.

If we somehow drop, or even if call premiums just look good, it's shares to LEAPs for sure this time.

 

[TheTalkingMule]

Any here considering buying more calls at open tomorrow? this feels like the day after the split announcement. The stock could run up for days.

Normally I would scream YES, but the furthest I'm willing to lever up these days with any significant resources is selling shares for LEAPs. If we dip tomorrow or in the coming weeks I'll be reverting to my gameplan in the Rage Conversion thread.

 

[Yoona]

there are 3 key words that i need to staple into my forehead for 2022; they are excerpts from the book "The Millionaire Next Door" that i am reading right now which i am translating into options-speak:

1. self-discipline (on staying far OTM; don't be tempted by money flashing in front of you) - "Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline."
2. defense (of capital, don't lose it by gambling) - "The foundation stone of wealth accumulation is defense, and this defense should be anchored by budgeting and planning."
3. sacrifice (the better premiums, don't chase them) - "...being a well-educated, high-income earner does not automatically translate into financial independence. It takes planning and sacrificing."

 

[GeoX750]

I for one lost about $3 Million (erasing about 2 months of BPS income) on -1000/+1050 BCS (Bear Call Spread) that I had sold after we hit the ATH on the Friday before, thinking there was no way we were going to blow 10% past the previous ATH. Go back and read all the posts from that week and the week after. Your spread is different - it isn't a Bear call spread if you bought a 1100 and sold a 1200.

Thanks (and MikeC and InTheShadows too) for the responses. I can't imagine handling some of these trade sizes. The willingness of everyone here to share their knowledge makes this a great thread.

I have been nursing along (rolling) Covered Calls at -$970c for a few weeks. Does not look I will be able to close it without a significant loss, so rolling out and up while trying to make some of it back with BPS and Jan 2023 Leaps. Given the P&D numbers and earnings on deck, there is probably little hope in salvaging the CCs (or lose half my shares), so thought I would get aggressive with ITM BPS at -1150p/+1080p.

Have never sold ITM BPS before, but given my view of the growth of the SP, the return/risk seems appropriate.

 

[JustMe]

I’m holding 3x 1100/1300 bcs for 1/7. I just put in a market buy order for the short leg. I don’t expect we will reach 1300 by Friday but I might make a few bucks by selling the 1300c later. Who knows.

I have a lot more bps for this week. I thought hard about flipping the bcs to bps, but that felt dangerously unbalanced. Pretty happy with where I’m at overall, options wise. This week will be a good opportunity to de-leverage a bit.

I expect tomorrow closes at 1090-1130, Friday 1180-1200. If Austin opens this week, add $50 to those predictions.

 

[JustMe]

Thanks (and MikeC and InTheShadows too) for the responses. I can't imagine handling some of these trade sizes. The willingness of everyone here to share their knowledge makes this a great thread.

I have been nursing along (rolling) Covered Calls at -$970c for a few weeks. Does not look I will be able to close it without a significant loss, so rolling out and up while trying to make some of it back with BPS and Jan 2023 Leaps. Given the P&D numbers and earnings on deck, there is probably little hope in salvaging the CCs (or lose half my shares), so thought I would get aggressive with ITM BPS at -1150p/+1080p.

Have never sold ITM BPS before, but given my view of the growth of the SP, the return/risk seems appropriate.

If you have several CCs, another option would be to roll all but one of them 1 month out or so and use the proceeds to buy one of them back. Then you can sell OTM CCs on the one you rescued and use those funds to roll one of the ITM ccs up week by week.

You’ll have to consider the consequences if the sp breaks out to an ATH in the near future though.

 

[BornToFly]

Thanks (and MikeC and InTheShadows too) for the responses. I can't imagine handling some of these trade sizes. The willingness of everyone here to share their knowledge makes this a great thread.

I have been nursing along (rolling) Covered Calls at -$970c for a few weeks. Does not look I will be able to close it without a significant loss, so rolling out and up while trying to make some of it back with BPS and Jan 2023 Leaps. Given the P&D numbers and earnings on deck, there is probably little hope in salvaging the CCs (or lose half my shares), so thought I would get aggressive with ITM BPS at -1150p/+1080p.

Have never sold ITM BPS before, but given my view of the growth of the SP, the return/risk seems appropriate.

Why are you getting aggressive with ITM BPS? Are you trying to replace shares you may lose on the CC? BPS aren't for share replacement (why buy the 1080 if you have enough cash to buy the shares?). I get aggressive with naked Puts because I either want the shares, or I know I can roll ITM Puts for ever without assignment (by rolling early). Aggressive BPS that are ITM can potentially cause you to lose a lot of money, because they become difficult/impossible to roll without a debit/loss once the SP breaches the mid-point of the spread. The next three weeks should have the SP climb so an aggressive BPS will PROBABLY work out, but be very honest with yourself that it is a gamble with significant risk (what if Russia invades Ukraine, Omicron shuts down Shanghai, etc.). Some of us have a lot of money at risk, but we are trying to limit the gambling aspect as much as possible by NOT being too aggressive with spreads. I had years of experience with naked Puts and early success with BPS, I got too confident, and then got a major burn turning into an iron condor with a BCS right before Hertz week and a very rare and dramatic increase in market cap. Think of spreads as rock climbing without a rope - no matter how good you are, sooner or later you WILL fall if you keep climbing the hardest routes - stick to bouldering....

 

[SinghCo]

Still learning. I’ve been following and updating table below based on where I believe the intrinsic value of the stock should be (~1,500). I find it takes emotions out of it and put things in perspective (first row is current stock price). I put in a few CC last week of 1360 for example (will sell first thing if there is not a huge jump tomorrow, otherwise will sweat it out the whole week haha). I am willing to buy if <950 so my put is only 2.5% away.

 

[GeoX750]

Why are you getting aggressive with ITM BPS? Are you trying to replace shares you may lose on the CC? BPS aren't for share replacement (why buy the 1080 if you have enough cash to buy the shares?). I get aggressive with naked Puts because I either want the shares, or I know I can roll ITM Puts for ever without assignment (by rolling early). Aggressive BPS that are ITM can potentially cause you to lose a lot of money, because they become difficult/impossible to roll without a debit/loss once the SP breaches the mid-point of the spread. The next three weeks should have the SP climb so an aggressive BPS will PROBABLY work out, but be very honest with yourself that it is a gamble with significant risk (what if Russia invades Ukraine, Omicron shuts down Shanghai, etc.). Some of us have a lot of money at risk, but we are trying to limit the gambling aspect as much as possible by NOT being too aggressive with spreads. I had years of experience with naked Puts and early success with BPS, I got too confident, and then got a major burn turning into an iron condor with a BCS right before Hertz week and a very rare and dramatic increase in market cap. Think of spreads as rock climbing without a rope - no matter how good you are, sooner or later you WILL fall if you keep climbing the hardest routes - stick to bouldering....

Not share replacement, because I don't want any TSLA shares to be assigned. My average cost basis is $50, so cap gains would be painful.

Rather, I was thinking the higher premium from the ITM BPS could be used to partially offset the high price of BTC (now over $100/share for 4x contracts) if I have to eventually realize the loss on the CCs to keep my shares. Thinking that there is only a small chance that I could not lose on both the BPS and closing my CCs

I will consider the naked Puts and also thinking about flipping the next roll to Puts. The 4x Put contracts would exhaust cash in the brokerage account, so that's why I was thinking buying the long position at +1080p.

I also have iron condors with the BCS side at +$1230c this week and +$1300c the following 2 weeks that I am starting to worry about on the upside.

Great suggestion reading the thread from October 25th. Crazy how many factors somehow aligned back then (Hertz, price hikes, upgrades) to create such a storm. It's good perspective and learning to keep caution.

 

[Yoona]

maybe it's just me, but i am not yet 100% convinced about 1/7

without seeing some kind of pattern the next few days, hard to tell if cruising or liftoff

the hedgies have tremendous to the SP to maxpain

happy to be wrong!

but this is not advice, i'm just a bit gun-shy to start the year...

 

[vikings123]

Friendly warning: I see a lot of new posters in this thread and I believe it’s important to reiterate the inherent risks of option trading. Please read the first few posts on this thread again.

Please be careful especially with spreads and margins, always know what your worst possible scenario is. Don’t try to copy trades of some of the more experienced traders on here. Happy Trading

 

[BornToFly]

Still learning. I’ve been following and updating table below based on where I believe the intrinsic value of the stock should be (~1,500). I find it takes emotions out of it and put things in perspective (first row is current stock price). I put in a few CC last week of 1360 for example (will sell first thing if there is not a huge jump tomorrow, otherwise will sweat it out the whole week haha). I am willing to buy if <950 so my put is only 2.5% away.

Personally, I don't use what I believe to be the intrinsic value of the stock, because the market can be wrong for so many years (like 2014-2019...). I use what I think is the absolute bottom the SP will go now (which was around 850-900 until the delivery numbers released earlier today). So I sold wide spreads with short leg at 900 without much fear for most of December. Now I think the new floor is 1,000, so I'm moving everything to 800/1000 until earnings. If we climb a lot, I will start going 20-30% below the new ATH because there will probably be a springtime pull back I would rather not have to run from with ITM BPS. That means I will certainly be leaving some money on the table, but Yoona's 3 rules are what I'm trying to trade by going forward.

 

[OrthoSurg]

maybe it's just me, but i am not yet 100% convinced about 1/7

without seeing some kind of pattern the next few days, hard to tell if cruising or liftoff

the hedgies have tremendous to the SP to maxpain

happy to be wrong!

but this is not advice, i'm just a bit gun-shy to start the year...

My puts were all in the 890 or less safezone

I was not expecting to see 900 ever again.

Now I am tempted to move into the 990 zone. With all the Good news and those incredible numbers. I don’t see 1000 even with the recall news.

I am not so sure about what strike to choose my CCs. Will probably wait till Friday before opening for 14/1 week.

 

[samppa]

Now I'm really considering buying some lottery tickets.. say 1100 calls for february 4th.

Don't usually buy options, but earnings will be awesome.

Amazing numbers! Go Tesla!

 

[adiggs]

there are 3 key words that i need to staple into my forehead for 2022; they are excerpts from the book "The Millionaire Next Door" that i am reading right now which i am translating into options-speak:

1. self-discipline (on staying far OTM; don't be tempted by money flashing in front of you) - "Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline."
2. defense (of capital, don't lose it by gambling) - "The foundation stone of wealth accumulation is defense, and this defense should be anchored by budgeting and planning."
3. sacrifice (the better premiums, don't chase them) - "...being a well-educated, high-income earner does not automatically translate into financial independence. It takes planning and sacrificing."

Love that book - first read it about 30 years ago. Its been in the back of my mind and providing some guidance for a long, long time.

Thanks (and MikeC and InTheShadows too) for the responses. I can't imagine handling some of these trade sizes. The willingness of everyone here to share their knowledge makes this a great thread.

I have been nursing along (rolling) Covered Calls at -$970c for a few weeks. Does not look I will be able to close it without a significant loss, so rolling out and up while trying to make some of it back with BPS and Jan 2023 Leaps. Given the P&D numbers and earnings on deck, there is probably little hope in salvaging the CCs (or lose half my shares), so thought I would get aggressive with ITM BPS at -1150p/+1080p.

Have never sold ITM BPS before, but given my view of the growth of the SP, the return/risk seems appropriate.

Others have said this as well - be sure you understand the risks as well as the rewards. The rewards are clear enough. But what if the shares stay at $1057 for the week and don't take off until next Monday (or at all). That ITM BPS will also be lined up for a $70 per share loss minus the premium. The premium is certainly high enough so it won't wipe out all of your cash.

Or is this with margin?


Also think about your own objectives. If you're in this for income / 'dividends' as many of us are, is that position consistent with an income mentality?

NOT-ADVICE
If you're wanting to take advantage of a really big move the simplest way is to purchase some calls. You still have a defined loss but now you also have an undefined gain available. It can be as big as the shares move.

 

[Mokuzai]

Anyone have thoughts on an opening net credit for -$1050/+$950 BPS(basically at the money) for this week's close?

I have some -$1050/+$1000 BPS for this Friday. Was pretty nerve wracking last week but feeling pretty good about it now with the P&D report. Also on Friday bought a handful of $1100 Calls for this Friday...not sure how to play those on when to exit but we'll see. Of course this could all go against me but hoping for the best considering the magnitude of this beat.

 

[Oil4AsphaultOnly]

whoa. after-hours TSLA is trading at 1129 now!

Edit: I'm going to decide whether or not to sell 1/7 20% OTM BCS after the first hour. If it shows signs of strength, will hold off on any trades until close of market.

 

[samppa]

87% year-over-year growth sure makes it hard for the market to play dumb on 4Q21 earnings potential. We should see some mega-volatility/FOMO tomorrow. Too early for me to be looking at CC strikes that I wouldn't mind seeing execute, but I'm ready to pounce on some BPS at market open for sure.

Anyone have thoughts on an opening net credit for -$1050/+$950 BPS(basically at the money) for this week's close? It was about $26-27 at close last week, was thinking of setting an order at $22. I'm feeling confident in a worst case scenario for those being the need to roll for more premium over the next few weeks waiting for earnings to be announced.

And I guess a general question on what's best for selling BPS on an IV spike if we see +5% share price by 9:33am? Might the crazy volatility add even more premium to the point where you can sell that very same BPS strikes at nearly the same net credit?

I'll probably do both for the learning experience. Sell a few BPS at open with GTC limit orders(I'm too scared to just throw in a market order at open), then sell a few more after the open does it's thing.

If we somehow drop, or even if call premiums just look good, it's shares to LEAPs for sure this time.

If I opened an almost ITM put spread, I would use a wider spread. $200 or even $300 wide. Then the long leg becomes so cheap, that even if stock moves against you, you have a lot of room for rolling.

with -1050/+950 rolling becomes hard at around 1000.. and we all know how hard tsla can crash with no reason at all.

I have 01/07 bps -1100/+800 that was a roll from before christmas.. looking good right now.

And still hold 500 shares that were put to me at 1250 (itm short puts after stupid decisions), gonna hold on to those for now. I'll sell one lot if we hit 1200.

 

[AquaY]

I'm just waiting to see what the FUD machine can cook up in the next 15h or so . . .