Wiki Selling TSLA Options - Be the House

[UltradoomY]

Suggestions for good LEAP buys?

Seems like a perfect opportunity.

The January 2024 $1k leaps at $242 each - breakeven is $1242 a buck under our ATH of $1243 from earlier this year.
and if you sell 200 shares right now you can get 7 of them - with a couple of bucks left over.

If you want to sell LCC's against them... that's a whole different story.

 

[Zhelko Dimic]

My expectation is I'll beat 12% like a drum. The point though is that is all that's needed.

Thanks for the pointer to QYLD. I'd never heard of that previously - I might need to do some research.

QYLD seems like a suboptimal idea. Look at 5 year chart, compare to QQQ and figure out their strategy and you'll see why I'm saying that.
In the bull market, they lose assets as expressed in units of holding, in bear market their yield is likely to drop.
I've looked in the past at the BMO short covered income based on Canadian Banks and came to the same conclusion.

 

[juanmedina]

Suggestions for good LEAP buys?

Seems like a perfect opportunity.

2024 DITM.... Papafox suggested the 400 strike. I am just not sure if this is a good opportunity because I feel really bearish. How long can a bear market last?

 

[EnzoXYZ]

What do you all do with a Hertz buys, Elon sells situation? I sold CC's at 980 the week of the Hertz announcement and got called and then sold 1120 puts and got slaughtered by Elon selling shares. A white swan week followed by a black swan, not likely to happen again, but if it can, it will. I sold the shares after the market got way ahead of the calls, but I've pushed the 1120 puts out, not wanting to pay a premium. I think I should take the hit, but I've gotten more money moving the puts out, then I would get selling CC's at 1120.
Have you been good about taking losses early on big moves and slowing down if you hit a bad streak?

Definitely a good point had I been doing more aggressive strikes. I too had 980 cc in one of my IRA. I believe I rolled 4-5x and it expired worthless. I guess I’m seeing this in two different viewpoints- I was always able to roll out since I was at far enough out strike and I haven’t been caught in a bad situation.

I have been the worse at taking losses early To the point I never did yet in my 1.5 years of options experience. I roll to the next week or two weeks and have so far worked. I always believe the price will come back in line up or down.

 

[Knightshade]

2024 DITM.... Papafox suggested the 400 strike. I am just not sure if this is a good opportunity because I feel really bearish. How long can a bear market last?

I mean it "can" last however long.

But historically, on average, they last less than a year... (somewhere between 9-12 months depending whose averages you use)...

 

[Yoona]

US says Russia has added 7,000 troops along Ukraine border, despite claims of pullback

Russian forces massed along Ukraine's borders have increased by approximately 7,000 troops in recent days, the United States alleged Wednesday evening, despite claims from Moscow it was pulling back.

www.cnn.com

i normally don't trust news media, but this one makes me want to be extra cautious

i will be up at the 4am pre-market... if it's bad or the day is ugly, i may reconsider tomorrow's STO and just sit on the bench

past 3pm, i decided to STO 3/4 -p820/+p720, 15 DTE $15.70 credit over 2 weeks

• 875 seemed like strong support (3 attempts to breach it today, sp still there AH ~874 right now)
• there's plenty of time to roll
• there's lowerBB for support
• there's 200SMA for support
• there's 3/4 -p850 wall for defense (and 2nd highest put volume today)

if BTC once it reaches @50%, ~$4 credit per week is good enough

 

[CHGolferJim]

I’m struggling to see much relevance for moving averages and other TA support levels — we are being buffeted by 3 factors, none of which have happened in the last 200 days: 1) an interest rate inflection not seen for decades, 2) winds of war, and 3) massive operating results and profit leverage.

 

[traxila]

2024 DITM.... Papafox suggested the 400 strike. I am just not sure if this is a good opportunity because I feel really bearish. How long can a bear market last?

First, we should officially enter a bear market. Hasn't happened yet.

 

[vikings123]

The January 2024 $1k leaps at $242 each - breakeven is $1242 a buck under our ATH of $1243 from earlier this year.
and if you sell 200 shares right now you can get 7 of them - with a couple of bucks left over.

If you want to sell LCC's against them... that's a whole different story.

I know this is not the LEAPS thread but can you expand on what you mean by whole different story? I'm already doing this in my IRAs on a weekly basis so want to make sure I'm not missing anything.

IV for 2024 leaps has dropped from 62.5% to 57.5% over the last month for that particular strike. Historically, the lowest IV seems to have been Sep 2021 right around 46%.

I recently rolled over my employer's 401K to my Trad IRA and Roth IRA. The 725K cash just hit my accounts today and looking to deploy this cash but in no rush given the macro situation but also don't want to sit on the sidelines too much. I was looking at potentially using this cash to buy $600 Jan 24 leaps and sell weekly calls.

Any non-advice from folks here?

 

[adiggs]

Definitely a good point had I been doing more aggressive strikes. I too had 980 cc in one of my IRA. I believe I rolled 4-5x and it expired worthless. I guess I’m seeing this in two different viewpoints- I was always able to roll out since I was at far enough out strike and I haven’t been caught in a bad situation.

I have been the worse at taking losses early To the point I never did yet in my 1.5 years of options experience. I roll to the next week or two weeks and have so far worked. I always believe the price will come back in line up or down.

Mostly adding this for everybody else - the roll forever dynamic on puts and calls is only available to share backed cc and cash secured puts. There are close cousins of the roll forever dynamic available via light levels of margin and particularly DITM and long dated leaps, but those are no longer quite in that camp of rolling forever.

With credit spreads, either put or call, those resolve as cash (assuming you're selling more spreads than you can take assignment and retain the assigned results). And the spread dynamic changes the profit and loss dynamic. Wide spreads create a window near the short strike and ITM that still behaves like like being short that option but not in a spread. So while you can't roll forever, you can at least roll similarly while ITM on the spread.

As you get deeper and deeper ITM, the spread dynamic takes over and it changes. The primary change is that rolls of the spread start requiring debits in order to maintain the strikes and buy time, where the naked option (csp or cc) will generate at least a small credit when rolled for more time. Once you get this deeply ITM you "on the clock" so to speak. Each week you are either feeding more money into the position, putting more money at risk, and/or worsening the position by rolling it deeper ITM in order to collect a credit.

Also the csp or cc can be rolled further out in time for larger and larger credits, bigger and bigger strike improvements, or both while spreads can fall into places where the credit / debit is the same whether rolling 1 week or 3 months (the time value on the sell side equals the time value on the buy side).


I've been in a roll forever situation that actually ran for about 5 months. Mostly my roll forever situations have taken that same 5 times / 5 weeks to resolve positively in my favor, but roll forever really can turn into forever. The most obvious circumstance that we all worry about is our call strikes at 900 with shares on a tear that goes to 1500 and never returns to the current ATH in the 1200 neigborhood.

 

[adiggs]

I know this is not the LEAPS thread but can you expand on what you mean by whole different story? I'm already doing this in my IRAs on a weekly basis so want to make sure I'm not missing anything.

IV for 2024 leaps has dropped from 62.5% to 57.5% over the last month for that particular strike. Historically, the lowest IV seems to have been Sep 2021 right around 46%.

I recently rolled over my employer's 401K to my Trad IRA and Roth IRA. The 725K cash just hit my accounts today and looking to deploy this cash but in no rush given the macro situation but also don't want to sit on the sidelines too much. I was looking at potentially using this cash to buy $600 Jan 24 leaps and sell weekly calls.

Any non-advice from folks here?

My not-advice is to go more deeply ITM on the leap purchases, given that your intent is to sell weekly calls against them.

The reason is that if / when the share price gets closer and closer to that strike price, the more that time decay and IV change affects the price of those purchased calls. The problem when this starts happening is that the time decay and IV changes between the two can be enough different that you are gaining or losing money at enough different rates from the changes in the share price that it becomes a problem. Other people will have more technical terms and description of the dynamic - this is just a conceptual idea that I hadn't really thought through until this week.

This dynamic is one of the important reasons to me why I'm moving back to share backed covered calls. Mostly I got too aggressive with some purchased calls (June - too soon, 750 strike - too close) so I could sell LOTS of covering calls.

 

[Max Plaid]

No pain, no gain, right? More like More pain, no gains...

Not strictly true, this horrible price action actually helped me close out a pile of ITM calls, still some -c875's for tomorrow, which had tons of time-value that refused to go home, but everything else closed out, including some 875 puts that were getting too close for comfort - I do not want to be ITM on puts right now, I took the small loss early

I think I mentioned a while back I'd bought 5x $GOOGL J24 C3000 LEAPS, with them down 30% I added another 5x today to give some leverage and reduce my cost basis. Selling calls against these has been a pleasure, the stock moves half the speed of $TSLA, much more relaxed. Profitable too - despite the 30% drop in the underlying LEAPS, I've managed to take about the same $ value in call premiums to match, so when it eventually reverses, there'll be some profits - if it carries on like this I will have a cost-basis of zero before the split in July, and then 200x J24 c150's to sell calls against, which will surely help pay the rent

On top of war and pestilence we had a hawkish FED guy spouting off today - Bullen I think is the name - he gets a lot of air time, I guess because the Hedgies, banks and Wall Street are pushing for this correction and he helps them achieve it

Is everything priced in yet? No idea. Stay safe out there folks!

 

[corduroy]

QYLD seems like a suboptimal idea. Look at 5 year chart, compare to QQQ and figure out their strategy and you'll see why I'm saying that.
In the bull market, they lose assets as expressed in units of holding, in bear market their yield is likely to drop.
I've looked in the past at the BMO short covered income based on Canadian Banks and came to the same conclusion.

At the risk of going off topic... I held RYLD (which sells CCs on the Russell 2000, vs the Nasdaq 100 for QYLD) for 10 months last year. I collected about .25/share every month and sold for almost break even. It worked out pretty good for low risk, set and forget, dividend income. I might do it again sometime.

 

[Yoona]

No pain, no gain, right? More like More pain, no gains...

Not strictly true, this horrible price action actually helped me close out a pile of ITM calls, still some -c875's for tomorrow, which had tons of time-value that refused to go home, but everything else closed out, including some 875 puts that were getting too close for comfort - I do not want to be ITM on puts right now, I took the small loss early

I think I mentioned a while back I'd bought 5x $GOOGL J24 C3000 LEAPS, with them down 30% I added another 5x today to give some leverage and reduce my cost basis. Selling calls against these has been a pleasure, the stock moves half the speed of $TSLA, much more relaxed. Profitable too - despite the 30% drop in the underlying LEAPS, I've managed to take about the same $ value in call premiums to match, so when it eventually reverses, there'll be some profits - if it carries on like this I will have a cost-basis of zero before the split in July, and then 200x J24 c150's to sell calls against, which will surely help pay the rent

On top of war and pestilence we had a hawkish FED guy spouting off today - Bullen I think is the name - he gets a lot of air time, I guess because the Hedgies, banks and Wall Street are pushing for this correction and he helps them achieve it

Is everything priced in yet? No idea. Stay safe out there folks!

wait
is.this.lycanthrope.
welcome back!

 

[kabin]

QYLD seems like a suboptimal idea. Look at 5 year chart, compare to QQQ and figure out their strategy and you'll see why I'm saying that.
In the bull market, they lose assets as expressed in units of holding, in bear market their yield is likely to drop.
I've looked in the past at the BMO short covered income based on Canadian Banks and came to the same conclusion.

I agree. Short calls tend to be a loser with bear markets and increasing volatility.

 

[vikings123]

Question for anyone using Fidelity as their broker:

What level of options trading is required to sell covered calls against LEAPS? I'm new to Fidelity and currently approved for level 2 options trading for my IRA. Thanks.

 

[ChefBoyardee]

Taking a look at high growth stocks across the board, it looks like the correction is over. Some stocks were in a bubble. Tesla was in a bit of a bubble too - the pop to 1200 on not much news wasn’t really warranted. But across the board look at where things are sitting - Tesla back at the trendline, ark type stocks gave up all of their gains, etc.

More signs of correction to proper value
With earnings, stocks are tanking or popping like 10-20%. It feels like investors are taking a second look at each of their holdings rather than being complacent and lumping them all together. This feels like the last part of the correction, assigning the correct value to each stock after things got so out of whack last year (e.g GameStop, Arkk)

Macros
I think given how long institutions have been rotating out of growth, how long we've been talking about inflation, the likelihood assigned to rate hikes, the likelihood assigned to a Ukraine invasion, etc. It seems like most of the bad macro news is priced in. The headwinds will last for a while but don't think we'll have any more panic selling.

TLDR:
I think the selloff is over, but I don't expect things to rocket back to ATH's. I think this was a massive correction and growth stocks are closer to proper value now than a few months ago. I'm bullish but also running Iron Condors rather than pure BPS.

 

[adiggs]

Question for anyone using Fidelity as their broker:

What level of options trading is required to sell covered calls against LEAPS? I'm new to Fidelity and currently approved for level 2 options trading for my IRA. Thanks.

Option 2 + Spreads Trading
Pretty sure this combo also requires the IRA margin (which only, in theory, enables making trades using unsettled funds).

 

[CHGolferJim]

I’m struggling to see much relevance for moving averages and other TA support levels — we are being buffeted by 3 factors, none of which have happened in the last 200 days: 1) an interest rate inflection not seen for decades, 2) winds of war, and 3) massive operating results and profit leverage.

G. Black adds a 4th factor, sectoral rotation out of stocks that benefited from Covid

 

[scubastevo80]

Opened 3 I dare you call debit spreads for today +900/-910 at $1 when the stock was at $865. Nasdaq is up and hoping the MMs give up after about an hour and we march toward $900.

Update: greedy again. This was up 50% earlier, and is now down 75%. I didn't follow my 50% rule and now I'm paying. Thankfully this was a $300 "learning" experience to see how options move on the day of expiry.