You will have to see, but I believe that at 975 you can only roll out at the same strike for no debit. You can decide how far down you want to go and how much you want to pay to do it. Better to roll before the SP hits 975, but I think your 1050 will be safe and you can let everything just expire, or buy everything back to close at 90+% profit a few days early.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
You can! He mentioned that after he started this thread that he would pay everyone's taxes that owns a Jet....... /sQuestion - Can I hold Adiggs (who started this thread) liable for my tax bill next year? We are 5 days into the new year. If this keeps up, I'm going to be second to Elon on taxes paid....
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A number I think is more fun to look at if your broker offers it - is the value of the trades you made all last year.
Not the premiums received but the value of all the underlying and since it's TSLA - that number is very big for some of us!
Mine is a little over $400M for last year!
What is your reason to close the 1/7 1045/870s? Just making sure to lock in the gains in case the SP drops before Friday? Or to open up the cash/margin to open the 1/14 1100/980s?
Yeah to open up margin.
I could wait another few days until friday for $100, or set up something with higher return for next week.
Knightshade
Well-Known Member
Well, ideally you roll BEFORE you're at fully 50% ITM... just the wider spread means you can go lower before you get to that.... AT 50% you're probably looking at adding 1 week for the same strike and about even on cost, hoping the stock goes up next week.
If you'd rolled before that (say "only" 25% into the spread width) you'd have a lot more options, and what you'd roll to would depend on your situation and what you think will happen... for example (these are made up #s just to give you an idea of the type of choices) you might be able to roll a 25% into the spread spread to:
1 week out, same strike, pocketing another net credit of X dollars (if you think stock will bounce back decently)
1 week out, a little lower strike, pocketing another net credit of Y dollars- Y being less than X. (if you think stock will bounce but not a ton)
1 week out, an even lower strike, but at even cost (if you think stock will mostly go sideways or maybe even down a bit more)
How much lower you can do the strikes or how much credit will depend on a slew of factors including how far into the spread it is, where IV is, how much time value is left on current spread, etc...
There might be other options you find appealing depending on what's going on, current IV, current or upcoming news, and what you think the stock will do...including potentially adding more time, though I personally try to stick to weekly for BPS when possible.
scubastevo80
Member
Yes - roll both sides down. I'm making up numbers here, but lets say on 1/12 the stock touched down at $1055 and the -1050/+900's was showing unrealized losses. Consider rolling down to 1/28 -1030/+880 at a credit of $1. If you breach the upper strike, you may be rolling for less strike improvement and next to no credit i.e. -1045/+895. At some point, it will cost you to roll - somewhere around 50% between the sold and bought strikes.
Actual example when I started...
Opened 11/12 BPS -950/+875, credit of $3.25
Closed 11/12 BPS -950/+875 @ 16.99-5.95 = 11.04 (loss of ~$8)
Opened 11/19 BPS -900/+825 @ 27.63-14.59 = 13.04 (net credit of $2).
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Thanks. Right, I think it will be safe, but will watch carefully. Guess the thinking behind this play was correct and I won't have to worry about it this time.
It's hard to go back and read and understand past posts without the context of what was happening with the SP at that time. I plan to stay conservative but I'm sure I will be coming with more questions on trades that start to move against me.
That might be worth a consideration, but that would also come with the drawback of pushing my tax bill until whenever I close that position (possibly next year). Thanks for the suggestion.
I'm willing to bet yours is much higher - for example one trade -
25 contracts
-$1100 P (value of trade position $2.75M)
+900P (Value of trade position $2.25M)
Total trade value - of $5M
Just a fun way of looking at it - I'm guessing IBKR has that report.
Nice to say - "oh, yeah, I traded $400M worth of TSLA last year" at a BBQ
I'm glad to see you are quickly coming up to speed on spreads. You had the same problem I had, of having a lot of experience on regular Puts and Calls, and not realizing that spreads behave very differently when they start to go ITM. You make more income with spreads not by being aggressive with the strikes, but by opening more positions because you use less cash/margin for each contract.
1/14 BPS 25x -p1100/+p900 is 59k, not 5m
are you sober?
i suspect your New Year's party is not yet over and you are still wasted, hammered, plastered
ChefBoyardee
Member
Just closed the last of my positions that started as 1140/1100's and were rolled 4 times during Elon's selling. I was surprised to see the net total of all of that was +10% of my total account value. It doesn't always feel like you're doing well when the stock is moving against you, you're stressed, and you're playing defense. But that's the beauty of option selling - I was very very wrong about the SP and still made out better than holding shares.
On a side note, the rolls were only possible because I left a good amount of margin unused. I definitely recommend setting a percentage of your margin that you never touch unless absolutely needed. A sort of "emergency fund". As I've gotten more experienced with this I moved from 10 wide spreads and 90% margin, to 50 wide and 75% margin. I expect it will end up at 100-200 wide and 50% margin for the long haul.
On a side note, the rolls were only possible because I left a good amount of margin unused. I definitely recommend setting a percentage of your margin that you never touch unless absolutely needed. A sort of "emergency fund". As I've gotten more experienced with this I moved from 10 wide spreads and 90% margin, to 50 wide and 75% margin. I expect it will end up at 100-200 wide and 50% margin for the long haul.
1/14 BPS 25x -p1100/+p900 is 59k, not 5m
are you sober?
i suspect your New Year's party is not yet over and you are still wasted, hammered, plastered
This is how some of the shorter transactions get misrepresented in the news. They buy a bunch of puts, and the news reports the value as contracts*100*strike.
Value of the trade (25 * 100 * 1100) + (25 * 100 * 900) = $2.75M + $2.25M.
@UltradoomY ... that's the total option sales figure on Fidelity YTD report, correct? It is amazing when looked at from this perspective. I'd guess that less would be a more efficient use of capital. As a newbie only trading options since mid october, I ended 2021 with 15% return on total trades. Going to shoot for the same or better this quarter.
Relatedly: holding is equivalent to a buy and sell at the same price (sans tax implications).
So, if you multiply your account by the number of minutes (seconds?) the market is open ...
See what happens when I'm bored?
jan14 5x 1300/1400bcs for a nice premium. It's like I built my own iron condor +980p/-1100p/-1300c/+1400p.
Yes - some brokerages word it differently but that's the general idea.
If you trade a lot of contracts the number gets big fast.
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