For me it is <9 (Ideally rolling Thursday/Friday for the following Friday). Not happy that I had to roll to 1/28 on the dip last week and Monday.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
I like this idea about put spreads / puts. That is pretty easy for me to incorporate into my own trading and thinking, and I rather like naked puts anyway. I've perma-rolled a set of those for nearly 5 months early in 2021, and I didn't know nearly as much then as I do now about how to handle those rolls well. Should the need arise I expect I can do a lot better than I did last time.
I think you've put a nice collar around where we'll end this week, and possibly into next..don't forget to take profits though when you hit your targets - which you hopefully, have.
All of these could pay off in the next couple days,
What's everyone's rule about taking profits?
I'm already looking at 70% profit on my jan14 1000/800bps. I'm thinking about taking it at 80% but that's probably going to be tomorrow, missing out on 20% of what I think are sure profits?
But then again, nothing is sure nowadays.
I'm already looking at 70% profit on my jan14 1000/800bps. I'm thinking about taking it at 80% but that's probably going to be tomorrow, missing out on 20% of what I think are sure profits?
But then again, nothing is sure nowadays.
Depends what the motivitaion is, free up margin, take a break, use the credit. Personally, I would think sure profits right now are 70% ...
If in doubt, do half.
Take profits on half, let the other half run.
bkp_duke
Well-Known Member
Not advice, but for me it's not a hard and fast %, but a look at "am I better in this position, or better in a new position".
Sometimes, 70% if fantastic, sometimes, not as much.
scubastevo80
Member
Depends - typically once our positions have hit north of 80% they're closed or rolled. If it is before Thurs/Fri the week of expiry, we're closing. If we get a 50% return in <1 day, we're also closing those (i.e. today we wrote 1/14 -940/+890 @ $2.35 at 9:42am and closed at $0.99 at 11:40am.
In your scenario, if you are happy with the return and you think it will take quite a bit more price movement to eek out that other 10%, I'd consider closing. If it were me, I'd close to lock profit and eliminate the risk of the stock dropping 6% in the next 3 days and incurring losses. If TSLA opened down 2% tomorrow, I'd write another BPS 10% out of the money and collect the 2-3 days of premium before considering a roll.
bkp_duke
Well-Known Member
We definitely aren't trending with the indices, etc. Someone is spending a lot of money keeping this capped.
That's fine by me, just keep winding the spring tighter. Anyone ever seen a coil spring launch off a strut? Yeah, like that.
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Thanks everyone. I set up a sell order once 70% profit was reached, which it did just now.
I also sold the single Feb25 800p I had to manage my margin, for a small profit.
Now it's just waiting where my Jan21's positions will go:
I also sold the single Feb25 800p I had to manage my margin, for a small profit.
Now it's just waiting where my Jan21's positions will go:
- 1x 1050/980bps
- 1x 1100/980bps which I rolled from this week's
- 5x 1200/1300bcs
I just closed my BPS at 90% profit 890/840 but this is after closing my underwater BPS early on Wednesday so I end up with a 1/3rd of what I had last week late on Monday on realized profits 
. I have no other positions other than 01/14 1170cc's and I wonder if I should wait for IV to pick up with ER around the corner to open more positions.
. I have no other positions other than 01/14 1170cc's and I wonder if I should wait for IV to pick up with ER around the corner to open more positions.
Part of my consideration about closing early is that when I early close I also set myself up to be entering the new position sooner. With an open into strength, and close into weakness guidance (personal rule) I would open puts on a down day and close those puts on an up day. When the shares are up and leave me with a reasonably good profit, then the early close sets me up to open a new position tomorrow when the shares reverse (or the day after). Of course they don't always do that, but it works out well for me in practice. I've even had the early close opportunity (that I took) just in front of a big reversal on the same day, enabling me to re-enter the same or better position later the same day. That's always fun!
I try to avoid targeting a specific return before I close - too many other things going on that can yield a loss after being ahead. So its a judgement call based on all the stuff going on in the moment.
That being said when I'm sizing up my larger results and strategy, my working assumption is that I'll be closing at 2/3rds over a large number of trades. That has meant early closes as low as 25%, frequently 50%, usually 2/3rds, and a big move can push me into the 80/90% range before I can get to the early close (oh darn).
I roughly never allow a position to actually go to expiration, paying .10 or so regardless to positively close rather than leaving the options to be closed by my broker over the weekend. By 'never' I mean that I've gone to expiration 1 or 2 times in ~2 years for the experience of seeing what happens
mickificki
Member
CPI will be released tomorrow 5:30AM (west coast time) so there could be a lot of volatility.I just closed my BPS at 90% profit 890/840 but this is after closing my underwater BPS early on Wednesday so I end up with a 1/3rd of what I had last week late on Monday on realized profits
a 1/28 930/830 bps is going for $12.30. Not terrible imo...900/800 is $8.80.
jeewee3000
Active Member
Great to read different views on "trading rules". It show how each individual develops his/her own style that works for them.
Some double dip. Some never do.
Some take profits early to hop back in again, some want to trade less.
Some go very far OTM with a large part of their cash, some take agressive stances with a small part of their cash.
My personal rules at the moment (still tuning):
-never let a spread get further than 50% ITM, in other words roll on time
-don't be affraid to let cc's exercise and play the wheel if it comes to it. Better than rolling cc's forever.
-have multiple trades going of varying risk and varying DTE. I like to generate some 'sure' returns by having far OTM BPS three to four weeks out (if opened at a local low you can easily get 1-2% return per week, if not more) and then trade more "gambly" weekly BPS positions that can be rolled by widening the spread using extra cash on hand.
- to accomplish the latter: ALWAYS leave dry powder untouched (preferably 30%, at minimum 10%). Only open new riskier positions when older positions are closed in order to not sell spreads against all cash.
One of my weak points IMO is that I never close losing bps, I just roll them out. Also, I never roll for a debit.
It's probably cause I want all trades to "win", and my capital to keep growing. Even if it means I receive next to no income from options for weeks. I still have a day job and can wait out any dip. But that makes me a pretty lousy options trader I guess.
Some double dip. Some never do.
Some take profits early to hop back in again, some want to trade less.
Some go very far OTM with a large part of their cash, some take agressive stances with a small part of their cash.
My personal rules at the moment (still tuning):
-never let a spread get further than 50% ITM, in other words roll on time
-don't be affraid to let cc's exercise and play the wheel if it comes to it. Better than rolling cc's forever.
-have multiple trades going of varying risk and varying DTE. I like to generate some 'sure' returns by having far OTM BPS three to four weeks out (if opened at a local low you can easily get 1-2% return per week, if not more) and then trade more "gambly" weekly BPS positions that can be rolled by widening the spread using extra cash on hand.
- to accomplish the latter: ALWAYS leave dry powder untouched (preferably 30%, at minimum 10%). Only open new riskier positions when older positions are closed in order to not sell spreads against all cash.
One of my weak points IMO is that I never close losing bps, I just roll them out. Also, I never roll for a debit.
It's probably cause I want all trades to "win", and my capital to keep growing. Even if it means I receive next to no income from options for weeks. I still have a day job and can wait out any dip. But that makes me a pretty lousy options trader I guess.
I have a few simple rules, but I've really enjoyed reading others...
TL;DR -
TL;DR -
- Start super simple, super conservative, ask simple questions, read every new post on this thread, refer to the options glossary
- learn slowly as you never know if you got lucky or are smart.
- Start super conservative and super simple. Example: BTO (Buy to Open) a call ITM (In the Money) for at least a month out when we hit the 50MA. Watch it like a hawk until you can see how IV works and theta burn.
- STC (Sell to Close) it when it hits a target that you feel you can live with. Doesn't matter if it goes up or down; you'll learn something about the options market, TSLA and yourself.
- Now do the opposite by STO a DOTM (Deep out of the Money) covered call. Example: STO a call when SP hits and ATH like 30% higher. Repeat hawkish watching, BTC (Buy to Close) when you feel like you can live with it.
- Learn
- Do that many times getting just a bit more aggressive until you get a bad feeling in your stomach.
- Don't do that again! But learn about rolling to ease the gut pain...
- Get assigned and learn
- Give the harder stuff a try with the same methodologies...
- Try puts and try "The Wheel"
- Try BCS
- Try BPS
- TRY ICs
Yep, it was a typc with the C and O.
My only success with double dipping happens when a spread closes early at 80% profit due to a very green day and a red day happens soon after encouraging me open an new BPS. Rolling early for a double dip has never worked.
It's been educative reading through all of the trading rules. I find my approach in parts in most of them. Thanks to the authors for putting in the time.
There is one thing that catches my eye in most cases: tax - and the implication it has for my trading approach:
- being subject to capital gains tax (26ish %) in Germany on all trading profits (there is no long-term/short-term), coupled with a low cost-basis for my TSLA shares ($127 currently**), means under no circumstances do I want to be assigned a call, or have to sell shares to cover a failing trade
- so, no Wheel for me
- no swing trading in TSLA, as there is no LIFO, only FIFO when assessing cap gains for tax
- there is even a limit to the amount of losses I can offset against profits in Germany***
I wish I could trade freely as some of you (like in Belgium or Netherlands).....
**of course the most TMC solution to this is continuing to buy and HODL to increase the cost-basis until the cap gains tax implication doesn't matter anymore
*** this is currently being contest infront of the highest courts in Germany, as the loss-limit is €20.000 - I'm ignoring this implication, as I believe it will be amended @Drezil have your heard of an update on this?
Also, as I trade in US$, but live in €, I have to be mindful of the fact that a crash of the US$:€ would have dire implications on any cash I hold at IBKR. Currently with the strong US$, I'm happy, but a return to $1.40 to € from the current $1.13 would hurt.
There is one thing that catches my eye in most cases: tax - and the implication it has for my trading approach:
- being subject to capital gains tax (26ish %) in Germany on all trading profits (there is no long-term/short-term), coupled with a low cost-basis for my TSLA shares ($127 currently**), means under no circumstances do I want to be assigned a call, or have to sell shares to cover a failing trade
- so, no Wheel for me
- no swing trading in TSLA, as there is no LIFO, only FIFO when assessing cap gains for tax
- there is even a limit to the amount of losses I can offset against profits in Germany***
I wish I could trade freely as some of you (like in Belgium or Netherlands).....
**of course the most TMC solution to this is continuing to buy and HODL to increase the cost-basis until the cap gains tax implication doesn't matter anymore
*** this is currently being contest infront of the highest courts in Germany, as the loss-limit is €20.000
- I'm ignoring this implication, as I believe it will be amended @Drezil have your heard of an update on this?Also, as I trade in US$, but live in €, I have to be mindful of the fact that a crash of the US$:€ would have dire implications on any cash I hold at IBKR. Currently with the strong US$, I'm happy, but a return to $1.40 to € from the current $1.13 would hurt.
jeewee3000
Active Member
I've been thinking about converting a substantial part of my TSLA shares to cash in order to generate capital by weekly/biweekly OTP BPS selling.
In a perfect world where you could time everything perfectly, you'd make this switch after a huge SP rally, hoping to sell at a local top.
The main consideration is "can you get a safe minimum weekly return that outperforms the stock in the long run?".
In the short term the stock can rally hard and no amount of safe spread selling will net you similar results. On weeks where TSLA is down, even by a large amount but not insanely large, the cash based approach will win out hugely.
After running some numbers, I'd like to present them here in order to get some feedback.
Currently a 2% weekly return seems doable with safe spreads. Safe in my mind is either very wide (+650p/-1050p-) or far OTM (+750p/-900p). Both of these will net me more than 2% return. Combining the safety nets of width and distance OTM is more difficult. After all, once you get too far OTM (below 850 for example) the premiums are basically the same in $ value, even if you go $100 further OTM. So a super safe +500p/-900p will not get you the desired weekly returns to outperform the stock in the long run.
By the way, the reason I have 2% minimum in the back of my mind is because, starting from $1068 SP today this would mean the stock would have to reach over $2900 by end of 2022 in order for the cash route to be less profitable.
At 1% weekly returns HODLING seems safer: the SP only needs to go to around $1800 by year end and that is within the possibilities IMO. ($2900 is also 'possible' but way more unlikely if you ask me).
Also, if you get minimum 2% per week you might go over some other weeks. There are relatively safe spread to be found with 3% weekly returns as well, and if you can get some of these in from time to time (depending on the current position of the SP withing the trading channel) it truly seems difficult for the stock to outperform cash.
Of course, if I were to do this, I'd have very strict rules in order to preserve capital, way stricter than I'm currently trading options. To scratch the "trading itch" I think I would use (for example) 2/3 of my cash for safe income generation and the other 1/3 could act as a seperate options trading (virtual) account like I'm doing now. (Right now my balance is: 3/4 TSLA HODL , 1/4 cash which I grow with options).
Another benefit of going cash is recession. IF there were a recession and the markets all give back 30%, I could buy back more TSLA than I sold. Of course this is A) timing the market which I don't believe anyone is capable of and B) a non-argument since the opposite can happen as well: a 2 year bull market after you convert to cash in which your stock returns would've been higher than "safe" options selling. So this argument seems to only matter if you convert TSLA to cash on ATH.
Pardon my ramblings, I'm just sharing my internal reasoning. I've been dipping my toes into this thread and option selling since May 2021 and checking my returns (+5% per week on average) I notice they are much higher than I expect the stock to gain (in the long term, short term anything can happen for example if FSD were to release or something). I am aware of the fact that this is only true for TSLA option selling. I've dipped my toes into selling options for other underlying, but these returns are abysmal compared to TSLA. Volatility and volume are king.
I started out very small in May (only $15k cash or so). After some learning I (on purpose) let a cc expire and I've been using that cash for option selling also.
Now I'm wondering if I should convert some more shares but I keep thinking there must be a catch. As we always say: If the risk is unclear, it's because you didn't look hard enough.
Therefore I would appreciate some feedback regarding my thought process and mainly:
- is 2% per week truly possible on consistent basis? Or higher, lower?
- what risks am I not seeing?
- will the TSLA options market dry up in a couple of years when TSLA stabilizes? WDYT?
Good day to all.
In a perfect world where you could time everything perfectly, you'd make this switch after a huge SP rally, hoping to sell at a local top.
The main consideration is "can you get a safe minimum weekly return that outperforms the stock in the long run?".
In the short term the stock can rally hard and no amount of safe spread selling will net you similar results. On weeks where TSLA is down, even by a large amount but not insanely large, the cash based approach will win out hugely.
After running some numbers, I'd like to present them here in order to get some feedback.
Currently a 2% weekly return seems doable with safe spreads. Safe in my mind is either very wide (+650p/-1050p-) or far OTM (+750p/-900p). Both of these will net me more than 2% return. Combining the safety nets of width and distance OTM is more difficult. After all, once you get too far OTM (below 850 for example) the premiums are basically the same in $ value, even if you go $100 further OTM. So a super safe +500p/-900p will not get you the desired weekly returns to outperform the stock in the long run.
By the way, the reason I have 2% minimum in the back of my mind is because, starting from $1068 SP today this would mean the stock would have to reach over $2900 by end of 2022 in order for the cash route to be less profitable.
At 1% weekly returns HODLING seems safer: the SP only needs to go to around $1800 by year end and that is within the possibilities IMO. ($2900 is also 'possible' but way more unlikely if you ask me).
Also, if you get minimum 2% per week you might go over some other weeks. There are relatively safe spread to be found with 3% weekly returns as well, and if you can get some of these in from time to time (depending on the current position of the SP withing the trading channel) it truly seems difficult for the stock to outperform cash.
Of course, if I were to do this, I'd have very strict rules in order to preserve capital, way stricter than I'm currently trading options. To scratch the "trading itch" I think I would use (for example) 2/3 of my cash for safe income generation and the other 1/3 could act as a seperate options trading (virtual) account like I'm doing now. (Right now my balance is: 3/4 TSLA HODL , 1/4 cash which I grow with options).
Another benefit of going cash is recession. IF there were a recession and the markets all give back 30%, I could buy back more TSLA than I sold. Of course this is A) timing the market which I don't believe anyone is capable of and B) a non-argument since the opposite can happen as well: a 2 year bull market after you convert to cash in which your stock returns would've been higher than "safe" options selling. So this argument seems to only matter if you convert TSLA to cash on ATH.
Pardon my ramblings, I'm just sharing my internal reasoning. I've been dipping my toes into this thread and option selling since May 2021 and checking my returns (+5% per week on average) I notice they are much higher than I expect the stock to gain (in the long term, short term anything can happen for example if FSD were to release or something). I am aware of the fact that this is only true for TSLA option selling. I've dipped my toes into selling options for other underlying, but these returns are abysmal compared to TSLA. Volatility and volume are king.
I started out very small in May (only $15k cash or so). After some learning I (on purpose) let a cc expire and I've been using that cash for option selling also.
Now I'm wondering if I should convert some more shares but I keep thinking there must be a catch. As we always say: If the risk is unclear, it's because you didn't look hard enough.
Therefore I would appreciate some feedback regarding my thought process and mainly:
- is 2% per week truly possible on consistent basis? Or higher, lower?
- what risks am I not seeing?
- will the TSLA options market dry up in a couple of years when TSLA stabilizes? WDYT?
Good day to all.
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