Wiki Selling TSLA Options - Be the House

[WattsHappening]

I'm new at this so can't speak to comparison with past periods. But it sure seems like 1/21 to 1/28 rolls were very good. I was happy to be able to do so today.

I assume it's due to IV with earnings being announced next Wed.

 

[Yoona]

1/21 BPS -p900/+p800 rolled to 1/28 (i still think 1/21 closing is >1000, but i was tempted by 1/28 prems)
1/21 BCS -c1200/+c1300 closed this morning at 46% profit (too early but no regrets)
1/28 BPS -p1000/+p800 rolled to 2/4 yesterday (to avoid stress from macros plus get nice 2/4 prems)
1/28 CC -c1300 (keeping this; i don't think in danger)

one thing that i am very happy about this year is the change from 50 into 100- and 200-width spreads, they indeed make management less stressful. The pros/cons have been discussed to death here so i thought i'd give it a try - glad i did and thanks to all for the not-advices

in other news...

• the process of incorporating a Business Trust is ongoing - hoping to sign in 10 days; this is for the goal of reducing personal income taxes and giving salary/income/dividends to family members without violating income-split rules
• i have one exciting announcement to make sometime May (4 months from now) - wait for it!

 

[corduroy]

It was pointed out in the main thread, but bears repeating here:

QQQ is on the 200 day MA. If it breaks below that, we could see significant continued downward momentum across the board.

Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

Strange sensors on top with mirrored glass on the outside and definitely different software running in the car. Likely lidar sensors for testing. Tesla has been using them for a while.

teslamotorsclub.com

I'm pretty bearish right now with the overall macros. I think it's possible we could be dragged down another 10-20%. I'm still feeling good about selling BPS even in a declining market. I think I can stay ahead of a decline with conservative OTM puts. Selling calls, you never know how far the SP could run up, but with puts it will eventually get to a point where the SP is so ridiculously detached from the stellar fundamentals, and the spring is wound so tight that buyers will step in. Anyone's guess is as good as mine how low that could be. I could see us dropping back into the 700s with a macro crash, but at that point I might sell my house, move to a rental, and put all the proceeds in 1/24 leaps.

 

[traxila]

Is this just me (late to the party), or are the rolls from 1/21 to 1/28 incredibly good ? I don't think I have seen this much difference in premiums for 1 week, but maybe I was I just not noticing before.

Is this just high IV going into 1/26 earnings and will IV collapse after earnings ?

Yes, it is about earnings. This is common.

Not unique to TSLA. All high flyers have pumped up IVs for earnings. And yes the IVs collapse mostly afterwards. Great opportunity to sell options.... just make sure you pick the right side or hedge properly.

 

[Right_Said_Fred]

If I hadn't stuck myself into a bad put spread then I'd have been selling put spreads right through this and continuing to make money each week. I'd have probably sold 800/1000s the day after the P&D reaction (instead of the 950/1100s I sold the day of). And every week since then I would still have been selling winning positions, with each position going down as the share price drifts down.

I'm not sure it's necessarily bad to have positions that go ITM or even far ITM, compared to staying ahead of the stock price with positions that are far OTM. Especially with naked puts I can get more premium by rolling positions that are ITM than I can by opening new positions that are far OTM. I have some -p1030 which have for several weeks now been giving me premiums of $20-25 for just rolling them out by one week. To earn the same premium with puts that are far OTM I need three to four weeks.

Ofcourse the premiums you get for rolling decrease the deeper a position goes ITM, but it needs to be 150-200 points ITM to give worse premiums than you get for opening new ones that are far OTM (with the IV we've had the last few months).

This doesn't work well with spreads, which I why I stick to naked puts.

 

[kabin]

It's sometimes tough to trade momentum (hodl) stocks around earnings for a volatility crush as expected moves (IV) are underestimated - the opposite of what option brokerages tell you. It can be a sucker bet. I try to setup earnings trades with 2x the expected move but I've learned to be pretty selective.

And then sometimes volatility doesn't collapse post earnings like one typically expects - resulting in a directional trade where you hope you picked the correct direction.

But today it's more about risk-off, lower P/E multiples, companies that generate cash, and moderately high volatility. It's gonna be an interesting earnings cycle.

 

[adiggs]

I'm not sure it's necessarily bad to have positions that go ITM or even far ITM, compared to staying ahead of the stock price with positions that are far OTM. Especially with naked puts I can get more premium by rolling positions that are ITM than I can by opening new positions that are far OTM. I have some -p1030 which have for several weeks now been giving me premiums of $20-25 for just rolling them out by one week. To earn the same premium with puts that are far OTM I need three to four weeks.

Ofcourse the premiums you get for rolling decrease the deeper a position goes ITM, but it needs to be 150-200 points ITM to give worse premiums than you get for opening new ones that are far OTM (with the IV we've had the last few months).

This doesn't work well with spreads, which I why I stick to naked puts.

That's my plan on the call side - selling reasonably close to the money (in or out) calls using shares or purchased calls as the backing.

I've been thinking about going back to naked puts instead of put spreads. I think I'll fire 1 up and give it a month or two of being really aggressive with the strike. Do you find that you're setting next week's position towards the end of this week, wherever the share price is heading? The cautionary note I have from my own experience is that the definition of "far ITM" changes as IV goes down. I've been far enough ITM that I couldn't get a strike improvement while $80 / 10% ITM last Feb/March when I was expecting to still be able to roll for at least minimal strike improvement.

But I hear ya - with a wide enough range to roll effectively (strike improvements and/or largish credits), then why not eh?


I rolled some 1010 calls expiring this week to 1050 calls expiring next week with a $10 credit earlier today. The shares were around 1015 at the time. I was mostly trying to get my strike up high enough that it would be within range of a roll up to 1100 in the event of a big move up. And the $10 credit made that an easy decision. I mention it as illustration on the call side of the same idea.

 

[OrthoSurg]

C.f post in investor thread

asking friends here to know if is a good time to sell all my other stocks,
and go 100% TSLA. I would be 80% buy and hold shares and 20% LEAPS.


I have about 1M in various stocks ranging from TQQQ, vanguard ETFs, nvidia, BTCC, ETHH, XPEV, BYD, NIO, ARKK, ARKW, ARKF , etc which have all underperformed TSLA. With the recent TSLA pullback, I am thinking about liquidating all my holding and purchase Jan 2024 LEAPS.
I was ordering what is the rationale behind the good strike to chose, the right IV to get in. Would tomorrow be a good time? Wait a little bit more? Sell more long dated Puts instead? Use all that cash to sell weekly cash covered Puts?

 

[st_lopes]

C.f post in investor thread

asking friends here to know if is a good time to sell all my other stocks,
and go 100% TSLA. I would be 80% buy and hold shares and 20% LEAPS.


I have about 1M in various stocks ranging from TQQQ, vanguard ETFs, nvidia, BTCC, ETHH, XPEV, BYD, NIO, ARKK, ARKW, ARKF , etc which have all underperformed TSLA. With the recent TSLA pullback, I am thinking about liquidating all my holding and purchase Jan 2024 LEAPS.
I was ordering what is the rationale behind the good strike to chose, the right IV to get in. Would tomorrow be a good time? Wait a little bit more? Sell more long dated Puts instead? Use all that cash to sell weekly cash covered Puts?

@sroh had a great response citing Brad Ferguson’s 500c Jan 2024 as looking attractive

When I buy leaps I usually buy them near ATM and calculate how much leverage different strikes give me based on the amount of capital I want to deploy.

Though many have (non)advised going DITM as a good balance of risk reward.

I have also made horrible leap purchases on ARKK and LMND (2x OTM from the recent peak in Feb) that I have vowed to never repeat. For some reason I didn’t stop and apply what I’ve learned from following TSLA.

 

[FlamingPIG]

C.f post in investor thread

asking friends here to know if is a good time to sell all my other stocks,
and go 100% TSLA. I would be 80% buy and hold shares and 20% LEAPS.


I have about 1M in various stocks ranging from TQQQ, vanguard ETFs, nvidia, BTCC, ETHH, XPEV, BYD, NIO, ARKK, ARKW, ARKF , etc which have all underperformed TSLA. With the recent TSLA pullback, I am thinking about liquidating all my holding and purchase Jan 2024 LEAPS.
I was ordering what is the rationale behind the good strike to chose, the right IV to get in. Would tomorrow be a good time? Wait a little bit more? Sell more long dated Puts instead? Use all that cash to sell weekly cash covered Puts?

I am considering selling all my non TSLA (very small, around 100k) to have more cash to sell TSLA puts.

I'm planning to close all my 5 +1000/1500 1/2022 and 6 600 3/2022 LEAPS a week after earnings regardless which direction it go (probably up is much, much higher than down I think).
May wait till March to close to some that will be long term.

All of this action is to have a small hedge against a possible chance of recession + more cash to sell puts.

If a small chance recession do happen, shares will be fine because it doesnt have a time limit. LEAPS however may not be. It would be a great time to buy LEAPS.

Decision, decision,,,,, fun!

 

[Tyler34]

C.f post in investor thread

asking friends here to know if is a good time to sell all my other stocks,
and go 100% TSLA. I would be 80% buy and hold shares and 20% LEAPS.


I have about 1M in various stocks ranging from TQQQ, vanguard ETFs, nvidia, BTCC, ETHH, XPEV, BYD, NIO, ARKK, ARKW, ARKF , etc which have all underperformed TSLA. With the recent TSLA pullback, I am thinking about liquidating all my holding and purchase Jan 2024 LEAPS.
I was ordering what is the rationale behind the good strike to chose, the right IV to get in. Would tomorrow be a good time? Wait a little bit more? Sell more long dated Puts instead? Use all that cash to sell weekly cash covered Puts?

Ive aimed for .85 delta in the past, but with the stock seemingly depressed right now, I could make a case for going to .75 delta.

 

[EVCollies]

Is this just me (late to the party), or are the rolls from 1/21 to 1/28 incredibly good ? I don't think I have seen this much difference in premiums for 1 week, but maybe I was I just not noticing before.

Is this just high IV going into 1/26 earnings and will IV collapse after earnings ?

I agree, will likely roll my 1/28 BPS to 2/4 tomorrow for same strikes at about 6.5.

C.f post in investor thread

asking friends here to know if is a good time to sell all my other stocks,
and go 100% TSLA. I would be 80% buy and hold shares and 20% LEAPS.


I have about 1M in various stocks ranging from TQQQ, vanguard ETFs, nvidia, BTCC, ETHH, XPEV, BYD, NIO, ARKK, ARKW, ARKF , etc which have all underperformed TSLA. With the recent TSLA pullback, I am thinking about liquidating all my holding and purchase Jan 2024 LEAPS.
I was ordering what is the rationale behind the good strike to chose, the right IV to get in. Would tomorrow be a good time? Wait a little bit more? Sell more long dated Puts instead? Use all that cash to sell weekly cash covered Puts?

I just sold all my non-TSLA stocks except for SP500 Index that I put 2/3rds of my options proceeds.

Not sure about the roll - I just opened a -$970/+$900 BPS for $9 each for 01/21 - not many but a little whiskey money never hurts....

Dang, I bet that $9 buys more than this bottle...

 

[euro2012]

Forgive my noobie question, but for those who are already rolling your 1/28 positions to 2/4, are you not paying high IV to get out of the 1/28 position and thereby reducing the potential for the roll? Would it not be better to wait until after ER, assuming the IV drop would be greatest on the 1/28 contracts, or do I have that incorrect?

 

[ChefBoyardee]

Forgive my noobie question, but for those who are already rolling your 1/28 positions to 2/4, are you not paying high IV to get out of the 1/28 position and thereby reducing the potential for the roll? Would it not be better to wait until after ER, assuming the IV drop would be greatest on the 1/28 contracts, or do I have that incorrect?

If your position is fully ITM the high IV actually helps will the roll. An ITM put credit spread is basically the equivalent of an OTM call debit spread

For OTM positions, yeah rolling from high IV to low IV would lower the credit you bring in from the roll

 

[strago13]

I have 1/21 980 and 950 puts which I am hopeful that I can close today so I can take advantage of the nice premiums for 1/28. Fingers crossed, TSLA cooperates today.

 

[EVCollies]

Forgive my noobie question, but for those who are already rolling your 1/28 positions to 2/4, are you not paying high IV to get out of the 1/28 position and thereby reducing the potential for the roll? Would it not be better to wait until after ER, assuming the IV drop would be greatest on the 1/28 contracts, or do I have that incorrect?

Agree, I roll much more into the future than most here but I think it gives me better safety. Was able to roll 1/28 -p970/+p770 to same strikes 2/4 @ 8.25 this morning.

 

[Drezil]

• i have one exciting announcement to make sometime May (4 months from now) - wait for it!

Is it a huge party for all of us on your private island? It sure is!!

 

[jeewee3000]

Went ahead and sold a "gambly" BPS for next friday:

-1025p/+875p @43.3 = +28% return on capital at risk in 7 trading days.

Reasoning:
- I see TSLA holding around $1000 because of FOMO below
- I imagine Powell will try to calm the markets next wednesday
- I imagine the TSLA ER to outperform the current "priced in" expectations. Not betting on a huge rally but rather a not dropping below the low $1000's.
- Worst case, if this goes awry, I can roll profitably till $950.

Go TSLA. (I was planning not to have skin in the game for this ER but hey, this price action seems so unnatural with a beat that big coming up)

Don't try this at home.

@TheTalkingMule : this is my equivalent of you loading up on short term yolo calls.

 

[scubastevo80]

Checking just now @ $1025 for strike improvement going out to 2/4 from 1/28 and I can't even go up $5 from -1050/+960 to -1045/+955 without incurred a debit. Guess we'll be riding these into next week before making a decision on what to do.

 

[UltradoomY]

Checking just now @ $1025 for strike improvement going out to 2/4 from 1/28 and I can't even go up $5 from -1050/+960 to -1045/+955 without incurred a debit. Guess we'll be riding these into next week before making a decision on what to do.

Definitely ride it out, you have a whole week of theta to burn.