Wiki Selling TSLA Options - Be the House

[corduroy]

After reflecting on a full year of trading (450 closed trades, still a noob but maybe level 2 noob) I'd have to say the most valuable skill I have learned is not split flip reverse rolls or some other advanced technique, but the strategy/art of doing nothing. When I first started trading, a day like today would have freaked me out, leading me to make bad choices - which I frequently made in the past. It is not easy seeing your BPS position down 500% like one of mine today, but the more it happens the more I get accustomed to that emotion and the more I can stay rational. One thing I read when I first started trading options was that risk tolerance is like a muscle, it must be exercised to get bigger. I really believe that.

I've seen this play out enough now to hold off on any action, and that majority of time the position will right itself (majority, not always). Assuming of course that there was enough of a buffer when you opened the position, because doing nothing doesn't work when flying close to the sun.

 

[generalenthu]

There were some posts a few days ago by @Discoducky regarding the high open interest in the 1/21 expiries. This is a leaps series and a lot of OI got accumulated, though gamma is not unusually high. This open interest will have to be sold off, rolled out, or exercised in the next few days. I see this action from the retail holders of these strikes as a moderate headwind and a primary driver of the weak relative action last couple of days.

I am also generally bullish given the implications of the P&D report, and especially the action once the earnings date gets announced. So the way I took advantage of it was the bit unusual -1200 C for 1/21 vs +1300 C for 3/18.

Ideally the stock floats up from here to 1200 by 1/21, once the majority of the open interest gets resolved in the next week or so. I do expect next week to be weak, and hence giving only a moderate amount of room to 1200. If we do get rippy, I am comfortable rolling it out past earnings for decent premiums. Potentially beyond the 1300 strike. This net position is theta positive here, which I like.

I also have a little more than usual of -1000 puts for the next couple of weeks, with a few more added today, so that I can mitigate the risk of a rip by taking gains on these and adjust the -1200 calls. Next 10 days should be interesting. Time to buckle in.

 

[Cherry Wine]

There were some posts a few days ago by @Discoducky regarding the high open interest in the 1/21 expiries. This is a leaps series and a lot of OI got accumulated, though gamma is not unusually high. This open interest will have to be sold off, rolled out, or exercised in the next few days. I see this action from the retail holders of these strikes as a moderate tailwind and a primary driver of the weak relative action last couple of days.

I am also generally bullish given the implications of the P&D report, and especially the action once the earnings date gets announced. So the way I took advantage of it was the bit unusual -1200 C for 1/21 vs +1300 C for 3/18.

Ideally the stock floats up from here to 1200 by 1/21, once the majority of the open interest gets resolved in the next week or so. I do expect next week to be weak, and hence giving only a moderate amount of room to 1200. If we do get rippy, I am comfortable rolling it out past earnings for decent premiums. Potentially beyond the 1300 strike. This net position is theta positive here, which I like.

I also have a little more than usual of -1000 puts for the next couple of weeks, with a few more added today, so that I can mitigate the risk of a rip by taking gains on these and adjust the -1200 calls. Next 10 days should be interesting. Time to buckle in.

Just to clarify: are you saying that you think the 1/21 OI will act as a tailwind or a headwind?

 

[generalenthu]

Just to clarify: are you saying that you think the 1/21 OI will act as a tailwind or a headwind?

Meant headwind. Thanks for the catch. Correcting it in the original.

 

[adiggs]

I sold 10x 1/14 -p1000/p900 on Monday and it's obviously way down. So I rolled the long leg down to 800p - I got a credit of $2 to make a safer spread.

Worth also noting in case it isn't clear - the change from a $100 wide spread to a $200 wide spread also increased your margin commitment / cash reservation to 2x what it was previously. This is a good reason to not use everything one has

 

[UltradoomY]

Wow- today was busy!
Purchased 300 long term shares with gains from last year @ an average of $1040. Yay me!
Bought $1100 strike 03/22 calls for $70 each.. yay me!
Rolled my -$1145 P’s to next week $1135 strike for $3 each
Opened next week -$1000/+$800 BPS for $20 each.
If we stay under $1100 tomorrow will be looking to load some 06/22 $1100’s around $140 each
Have plenty more dry powder and room if we continue down and will keep adding until Q4 earnings- will deleverage 50% depending on SP at that time to see if we sell the news or not

 

[Knightshade]

Worth also noting in case it isn't clear - the change from a $100 wide spread to a $200 wide spread also increased your margin commitment / cash reservation to 2x what it was previously. This is a good reason to not use everything one has

All part of the balancing act...

If I use 30% of my margin to back $100 spreads how does that risk compare to using 60% of my margin to back $200 spreads? -and sub margin or cash % and spread width with various other numbers...

Then add "what % OTM" as a third variable while you're at it... fun ballet of risk decisions.

 

[LightngMcQueen]

May be slightly OT for our US friends, but for the rest of us whose home currency is not USD, I finally decided to try Norbert's Gambit in order to convert some USD to CAD and back-again (was moving funds between different accounts). It was shockingly straightforward and seems to be a very simple way to save on the FX spread that many brokerages take (very quietly... often 1-2% of your cash amount... each direction).

In this particular case I was moving $200k CAD, which on a round trip would have cost nearly $8k CAD in FX conversion fees. With Norbert's Gambit, it came down to just under $200 (ECN fees and commission on trading the DLR.TO and DLR.U.TO ETF). The only risk appears to be the opportunity cost of time in market. You do need to wait for the trades to settle before funds can be deployed in their new currency.

Source: Norbert's Gambit: The Cheapest Way To Trade US Dollars

To add to that:
- It takes up 4 business days ... DLR needs to settle (2d) and then journaling of DLR -> DLR.U has to settle (2d).
- I'd tried once or twice to be smart and use HXS/HXS.U pair for currency conversion, hoping that I will maintain SP500 neutral position during 4 days the transaction takes place. Unfortunately HXS.U had much wider spread costing me "the stupid tax". Conversely using DLR and being out of market for 4 days can also easily cost few % so it is pick your poison type of situation .
- every Norbert gambit is a potentially taxable transaction (T5008) which you may need to report and Questrade will upload to CRA ... the gain or loss that is reported is due to small exchange differences between dates of buying and selling DLR.

- Given the above today I bit the bullet and bought TSLA.TO denominated in CAD ... will convert it to proper TSLA once market stabilizes.

BTW There is no need for Norbert Gambit with IBKR as they charge fair currency conversion rates.

 

[Cattledog]

View attachment 752715
I think the whole market could be in trouble if we breakdown through this yearly trend, but, hopefully, we'll bounce up from here

Would be 6th time since initial establishment of the channel. Let's hope so.

 

[OrthoSurg]

I was too bullish, too many Puts sold. Too many positions. I was not expecting the stock to drop down in 3 days after a sharp rise. I will stay 30% OTM I am better at that strategy.

 

[InTheShadows]

Had a trading error today that I ended up calling TDA and while on the phone with them I figured out what happened.

At 10:17 this am I attempted to roll my 8 1/7 BPS -1050/950 to 1/14 BPS -1040/940 for a nice credit.

TOS on my phone, I selected the two legs and hit the roll button. This by default rolls out one week same strikes.

I did this and because I wanted to roll each down $10 I went into the legs and rolled them down. $10 credit. Sweet. Send.

It filled after 15-20 seconds while I was updating my trade journal.

The day goes on. And at 3 I look at all my positions and notice in that account I have a total of 6 legs of puts open. I scratched my head and looked at my margin and it was close to where I expected it to be. This confused me even more. 4 legs for 1/7 and 2 legs for 1/14.

While I was on the phone with TDA I noticed that I had a set of -940/1040 for tomorrow. Told them thanks and hung up and closed out an iron condor for tomorrow, -1050/1040/950/-940

When I modified the original roll to roll next weeks strikes down, I rolled this weeks close order down and ended up opening an entirely new position.

So be careful out there. Had the stock continued to dive like it was when I attempted to roll down and out it could have been a disaster.

I’ll also try to remember to confirm the accounts positions now after I get the trade executed notice.

 

[BornToFly]

I was glad to see when I landed that the SP had recovered. Need to fly more and see if there is cause and effect I can tap into for the future....
I'm still a little upset with myself that I didn't close the 850/1050s for tomorrow on Monday for a profit when I opened the new positions for 1/14 (instead of having to close for a loss today - but I didn't see the big drop coming on Monday, I wanted to squeeze more money out of the position, and I had enough Margin before the drop happened). Still holding a lot of positions for 1/14 that I will continue to watch for now. I figured pre-earnings would be a time to be aggressive and make a lot of money, but I'm learning that if my spreads get ITM and I have to manage, those extra profits can go out the window quickly.

 

[Flehmenlips]

All part of the balancing act...

If I use 30% of my margin to back $100 spreads how does that risk compare to using 60% of my margin to back $200 spreads? -and sub margin or cash % and spread width with various other numbers...

Then add "what % OTM" as a third variable while you're at it... fun ballet of risk decisions.

It is truly a dance!

 

[Flehmenlips]

Had a trading error today that I ended up calling TDA and while on the phone with them I figured out what happened.

At 10:17 this am I attempted to roll my 8 1/7 BPS -1050/950 to 1/14 BPS -1040/940 for a nice credit.

TOS on my phone, I selected the two legs and hit the roll button. This by default rolls out one week same strikes.

I did this and because I wanted to roll each down $10 I went into the legs and rolled them down. $10 credit. Sweet. Send.

It filled after 15-20 seconds while I was updating my trade journal.

The day goes on. And at 3 I look at all my positions and notice in that account I have a total of 6 legs of puts open. I scratched my head and looked at my margin and it was close to where I expected it to be. This confused me even more. 4 legs for 1/7 and 2 legs for 1/14.

While I was on the phone with TDA I noticed that I had a set of -940/1040 for tomorrow. Told them thanks and hung up and closed out an iron condor for tomorrow, -1050/1040/950/-940

When I modified the original roll to roll next weeks strikes down, I rolled this weeks close order down and ended up opening an entirely new position.

So be careful out there. Had the stock continued to dive like it was when I attempted to roll down and out it could have been a disaster.

I’ll also try to remember to confirm the accounts positions now after I get the trade executed notice.

Yikes. I feel the pain. So easy to make dumb mistakes when in a hurry to execute. And sometimes, the platforms can be confusing on what exactly is happening. I have had similar issues on TDA, where I thought a vertical roll was executed and was working on sending another trade and suddenly the alert notified me that a trade just executed that I thought had already executed, and well, you know... be careful and pay attention to all of the details.. Good times, love this thread!

 

[Flehmenlips]

That should pay well for you. I made 116% on a 12/14 purchase of 031822C1100 (as SP climbed from $950 to $1100; sold 3/4 of it 12/27 at +100% and the rest on 1/3 at +140%), and I'm looking at buying 052022C1200 tomorrow AM. Recommend setting limit orders to sell at specific levels and being flexible as new information is revealed, and take profits - they can disappear in a moment. This is how I rage buy!!

Great feedback. Much appreciated. I have had incredibly bad luck with short term calls, hoping this call is more successful!

 

[ABC2D]

Futures are green so far, let's see what tomorrow brings

 

[wooter]

Interesting theory from Papafox that the SP is being held back because of ITM calls for 21/01

Papafox's Daily TSLA Trading Charts

TSLA chart above QQQ chart above Papafox's daily trading charts are an effort to keep the TMC community up to date with pertinent data and charts so as to provide a quick reference and an archived source for when you might like to study what happened one trading day in the past. The charts...

teslamotorsclub.com

 

[FS_FRA]

Frankfurt opening green so far €944 = US$1067

 

[JustMe]

Based on the price action over the past five days I think it’s safe to project the closing price today will be between $900 and $1,200. You can thank me later if you profit from this forecast

 

[Yoona]

i will be cautiously optimistic for now and stay weekly. Why? It's because i still clearly remember the 1st 3(?) weeks of 2021 where SP spiked from 720+ to 900. I was "earning" my annual salary on a daily basis. Then, SP crashed and it took 9 months to recover.

3 things, s'il vous plait (please):

1. be cautious until 1/21 (see Papafox's note this morning). We have to be guarded in trades if we want to be successful.
2. this week is deja vu of early Jan 2021 where the gains quickly went awol. Circumstances were different back then, but it's still an unexpected wipeout.
3. my 2022 is off to a very good start... this week's all-cash acct realized gain is:

wait for it...

yet another proof that cash beats HODL

in other news: yesterday STO BPS 1/14 -p900/+p800. I decided on -p900 (delta 7) because that's the 2nd-highest IO and volume in the afternoon; -p1000 (delta 24) i thought was very risky even though there was $123k more credit, so i am positioning my capital to hide farther back. The 950 wall and the 1000 wall are my 2 bodyguards. Really, really tempted by -p950, though, but i am thinking the extra $123k 'lost opportunity' insurance from black swan is my defense from losing capital.

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from my library... Robert T. Kiyosaki, author of Rich Dad, Poor Dad :

"People’s lives are forever controlled by two emotions: fear and greed."

"Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep."

"I meet so many people who spend their lives chasing the big deal, or trying to amass a lot of money to get into a big deal, but to me that is foolish. Too often I have seen unsophisticated investors put their large nest egg into one deal and lose most of it rapidly... There is always risk, so learn to manage risk..."