Wiki Selling TSLA Options - Be the House

[FS_FRA]

What's the (consensus?) not-advice for rolling some ITM 4/22 CCs a week out?

Today (not much buy the rumor happening)
Tomorrow (hmmm.)
Thursday (sell the news?)

I've been licking my wounds on some terrible CCs (when the stock split ignited) which I had to manage in recent weeks. My wounded ego needed to be away from TMC for a bit Finally bought back half of them for a significant loss around recent highs ( I know - stupid, but there were reasons)..... rolling the other half weekly successfully for credit and strike improvement.

Just don't want to lose my shares.

Cheers!

 

[adiggs]

Anyone with open positions have thoughts on this week? I may roll my 4/22 BPS and BCS out a week on the 20th for credits since both are presently up (64% and 78% respectively). I may also write covered calls in the personal account 1-2 weeks out - still mulling over the strike price though.

I've got 900 strike puts and 1100 strike calls for this week. Both are profitable right now. I will probably hold these for the remainder of the day and close tomorrow. Maybe open next week positions tomorrow to take advantage of relatively high IV / IV crush after earnings.

I'm curious if some of you are playing earnings this week, and if so: how.

I currently have no expirations before May 20th, and many of those are sold puts so I'm hedged more bullishly than bearishly.

If we'd see a buy the rumor SP spike today or (more likely) tomorrow, I think I'll sell some covered calls (I think 4/22's, only 4/29 if premiums are way too low) to try and (ab)use the IV crush this Thursday/Friday.

Would love to pick strikes above $1150 at least, but more preferably above $1200. (20% out from current SP)

GLTA

My earnings play will be for next Friday positions. My earnings expectation is that Wall Street / investor community will greet it with a 'meh' or 'miss', long term investors will be excited about demonstrated progress against the long term story, and the shares will sell down afterwards.

I hope that Elon won't participate in the earnings call for succession planning reasons. I expect that he will participate, that he says something that short term investors view badly and long term investors get excited about (on top of the reaction in the paragraph above, that I expect whether Elon participates or not). The obvious example right now is that he gets asked Twitter related questions, and he answers with anything other than "this call is about Tesla; next". "But, but - how will you finance it? A: that will be covered elsewhere - this call is about Tesla Q1 results and Tesla forecasts, not my personal finances; next".

Worth noting that I'm predicting that past is prologue, and this earnings reaction will be the same as previous earnings release reactions (I'm going really far out on that limb there ).


So closing those 900 strike puts today or tomorrow before earnings is a good idea. Given my own thinking, I wait for a Thursday down day and open next week puts at that point.

The 1100 strike calls aren't as easy. They've still got $7 in value to decay by end of week. Do I close them early, take the $4-5 gain, and open new calls for next week now? Or do I wait?

Closing now to open next week, when I believe that right now is a relatively high share price, triggers my personal 'greed' meter. So I'll hold the calls today and probably tomorrow, and see what happens after earnings. I'm playing for a sub 1100 share price on Friday and high % gain, while expecting (and hoping) for a post release drop in the share price. If I'm right then my cc will earn less than they could have via early close and open for next week (more premium to decay on the IV crush and share drop on Thursday).

 

[adiggs]

What's the (consensus?) not-advice for rolling some ITM 4/22 CCs a week out?

Today (not much buy the rumor happening)
Tomorrow (hmmm.)
Thursday (sell the news?)

I've been licking my wounds on some terrible CCs (when the stock split ignited) which I had to manage in recent weeks. My wounded ego needed to be away from TMC for a bit Finally bought back half of them for a significant loss around recent highs ( I know - stupid, but there were reasons)..... rolling the other half weekly successfully for credit and strike improvement.

Just don't want to lose my shares.

Cheers!

My not-advice - I'm expecting both an IV crush and share price drop after earnings. It might not be all that big, but investor disappointment, some wall street help, and ongoing bad Macro Story leads me to that conclusion.

Depending on how DITM the cc's are (how much time value is in the position right now?) I would wait if possible and roll after earnings.

But if time value is already close to 0 then take the roll and use the IV crush and share price move down on Thursday for the position to improve.


Larger observation if you're a little ITM - say 1000 strike, then everything else being equal, the more of that time value that decays first, the better the roll will be later. If you've got 800 strike calls though, then time value is probably already ~0 and should be rolled. If I had 800 strike calls for this week, then I'd have rolled them last Thursday (keep DTE in the 5+ range) to minimize the possibility of early assignment. Which means that I would have already rolled them

In the 800 example I would also be looking at 2-4(+) week rolls in order to get a strike improvement.

 

[FS_FRA]

Depending on how DITM the cc's are (how much time value is in the position right now?) I would wait if possible and roll after earnings.

These are -960 strikes.

 

[samppa]

What's the (consensus?) not-advice for rolling some ITM 4/22 CCs a week out?

Today (not much buy the rumor happening)
Tomorrow (hmmm.)
Thursday (sell the news?)

I've been licking my wounds on some terrible CCs (when the stock split ignited) which I had to manage in recent weeks. My wounded ego needed to be away from TMC for a bit Finally bought back half of them for a significant loss around recent highs ( I know - stupid, but there were reasons)..... rolling the other half weekly successfully for credit and strike improvement.

Just don't want to lose my shares.

Cheers!

how deep ITM? There's a good chance of sell the news on thursday + iv crush.
But your risk of early assignment also grows if you hold til thursday..

 

[FS_FRA]

how deep ITM? There's a good chance of sell the news on thursday + iv crush.
But your risk of early assignment also grows if you hold til thursday..

-960 strikes

 

[OrthoSurg]

how deep ITM? There's a good chance of sell the news on thursday + iv crush.
But your risk of early assignment also grows if you hold til thursday..

We are all expecting a sell the news event. Like last time a drop of 8-10% maybe.
that is exactly why the SP will reach over $1200 and hit ATM within 2 weeks just to &$%@ us up.

 

[FS_FRA]

We are all expecting a sell the news event. Like last time a drop of 8-10% maybe.
that is exactly why the SP will reach over $1200 and hit ATM within 2 weeks just to &$%@ us up.

Actually, a SP of >1200 would help me out with another side topic (non-Tesla project).... but first to manage the -960cc.

 

[john tanglewoo]

I've got 900 strike puts and 1100 strike calls for this week. Both are profitable right now. I will probably hold these for the remainder of the day and close tomorrow. Maybe open next week positions tomorrow to take advantage of relatively high IV / IV crush after earnings.


My earnings play will be for next Friday positions. My earnings expectation is that Wall Street / investor community will greet it with a 'meh' or 'miss', long term investors will be excited about demonstrated progress against the long term story, and the shares will sell down afterwards.

I agree somewhat. I haven't been touching sold calls or puts the past week up until earnings. Vol hasn't quite been there, and I'm really not sure what the stock is going to do.

That being said, barring any significant catalysts, I'd expect the stock to trade down after earnings, and hopefully I can sell some puts at a nice premium

 

[UltradoomY]

We are in surprise upside territory though... please be careful with CC's.
I would suspect that announcement of Giga TX Model Y being available to order on the website to be included with the Q1 update. The source code is already there and it just needs to be turned on.
This along with reiterating guidance for the FY 22' could set off a fast bounce to $1150.
Right now we aren't getting a buy the rumor run up and so the chances of sell the news are lower. It wouldn't take much (macro permitting to give us a good pop)

 

[adiggs]

Actually, a SP of >1200 would help me out with another side topic.... but first to manage the -960cc.

You've got a lot of time value in those, and they're also pretty close to the money, so good rolls right now. This one is reasonably straightforward in my mind and is entirely dependent on your:
- how you think share price reaction will go for earnings
- your own objectives

If you're income oriented and want to minimize any risks, then a move up makes a non-desirable situation bad. Put another way, if shares are up from here, then right now is the very best roll available. Roll now. Even if the shares go down after earnings, risk is likely to have been mitigated (less stomach acid - one of the metrics I use to test positions).

If taking on a bit more obvious and immediate risk, and you're thinking down after earnings, then waiting for a good roll after earnings is a good choice.


Something that helps me in these situations is to setup the prospective roll (or rolls). What does a roll today look like, and thus what are you actually choosing between? With that info, do you like the 960 for this week expiration better or worse than the next week strike?

My own choice, using my own circumstances - I'm very happy with assignment at 1100+, while unhappy with assignment at 960. The risk of the share price running off and either taking awhile to come back, or not coming back, is too high given my income / dividend orientation - a week or even a month without income is preferable to a low price assignment. So for me - I would take the roll right now for a max strike gain. I would also consider a 2 week roll; if the 2 week roll got me to 1100 I'd be inclined to take that (all rolls subject to net credit; a personal rule). If I ended up taking assignment at 1100, then the 2 week rolled earned me $140/share or $14k / contract vs. assignment at 960. That'd be a great outcome! Most likely it would set up a better roll in 2 weeks than what I would otherwise have by waiting or rolling for 1 week.

My own bias though would be to the 1 week roll, just because my bias is to 1 week positions.


There IS an additional risk to rolling now that can be subtle. Rolling now to say the 1020 strike - the share price drops this week and you could have taken a 100% win on Friday, but you rolled so that didn't happen. Instead the share price goes up next week and you find yourself ITM next week as well.

This is an instance of the inherent difficulty with options - you need to be right about direction, timing, and magnitude. I find selling options easier and more successful for me, as I get a wider range of outcomes I can be right in.

 

[adiggs]

I agree somewhat. I haven't been touching sold calls or puts the past week up until earnings. Vol hasn't quite been there, and I'm really not sure what the stock is going to do.

That being said, barring any significant catalysts, I'd expect the stock to trade down after earnings, and hopefully I can sell some puts at a nice premium

ALso good choices, including good choices for me within my objectives.

I've ended up in a 900/1100 strangle by legging into it. I wasn't aiming for it, though I do like being in them in general, and this position in particular.


I got here via 1100 calls; that's a strike that I really like and am ready/willing to sell shares at, and as long as I can get a good premium for these options I'll sell them all day. In fact my previous position to this one was 1100 strike calls when shares were 1133 ($48 credit - mmm). If share price goes up to 1080 on Friday, then I'll take the high % win on these and sell 1100 strike calls for next week.

The 900 strike puts are just regular weekly income puts for me, with the additional proviso / protection that (almost) all are csp and can be rolled a long ways down on a really big drop. I consider the 900 share price to be relatively low and unlikely to go a lot lower ($800? - seems like a long reach over a single week or 2). I do have some 900/600 put spreads that aren't quite as flexible.


More broadly - this 1000 share price is something I like a lot. Its roughly in the middle where I think the shares are and will be trading, and that lets me sell somewhat aggressive positions on both sides.

 

[adiggs]

We are in surprise upside territory though... please be careful with CC's.
I would suspect that announcement of Giga TX Model Y being available to order on the website to be included with the Q1 update. The source code is already there and it just needs to be turned on.
This along with reiterating guidance for the FY 22' could set off a fast bounce to $1150.
Right now we aren't getting a buy the rumor run up and so the chances of sell the news are lower. It wouldn't take much (macro permitting to give us a good pop)

This is the other side of the coin and what I'm not positioned to take really good advantage of (I have too much in cash).

But for me - the income will be great on such a move and I optimize for income. As my wife and I have discussed, we can and do make $$ at any and every share price. We'll miss out on some of the benefit of a big ATH move that never comes back, and that won't be fun. Given the larger Macro Story I don't consider an ATH move without regression to the current range to be in the cards (famous last words - worst case the shares will be back in May). Which doesn't make me right!!!

These observations about the specifics that people see and the possible share price consequences is hugely valuable to me (thank you).

 

[FS_FRA]

You've got a lot of time value in those, and they're also pretty close to the money, so good rolls right now. This one is reasonably straightforward in my mind and is entirely dependent on your:
- how you think share price reaction will go for earnings
- your own objectives

Thank you. My bias is towards not loosing the shares.... I also feel safer on weeklies right now, as the crystal ball is a little less cloudy than 2-4 weeks out.

To get a net credit roll to 1100 I'd have to go out to August..... so: bird in hand = 2 in bush (i.e. I'll roll for max strike improvement at a credit to next week)

 

[adiggs]

So closing those 900 strike puts today or tomorrow before earnings is a good idea. Given my own thinking, I wait for a Thursday down day and open next week puts at that point.

I carried through and closed these 900 strike puts right at end of day trading. Roughly 9.50 in and 2.00 out. Most likely I would have earned more of that $2 tomorrow, but there isn't a lot to be earned and I like the optionality of being ready for a good new open.

If we have a big enough down day tomorrow then I'll have cash freed up to buy shares! Note that I expect tomorrow to be flat to up

 

[juanmedina]

I have $1080-1120 covered calls for this week and I sold some Netflix puts which were paying decently with Netflix at almost the 52w low and the IV is elevated.

wow I am glad closed my Netflix puts earlier today at 50% profit... -20% so far. Netflix BPS tomorrow?

 

[BornToFly]

Earnings estimates have not crept up like they usually do. We could see a massive beat tomorrow. I have 1250/1400 BCS that I’m slightly worried about for Friday. Also have 790/650 BPS that I believe are safer. We‘ll see….

 

[JustMe]

wow I am glad closed my Netflix puts earlier today at 50% profit... -20% so far. Netflix BPS tomorrow?

There’s an important lesson here folks!

 

[EV forever]

Hi @EV forever I was wondering what trades you’ve been doing lately and how it’s going.

Nice of you to ask - just been extremely busy at work and didn't have the time to post, although I have been scanning this thread regularly. I work in biotech and the product we developed over the last 9 years is finally close to approval - major feather in my cap, so not quite ready to retire yet.

My current positions put spreads +p770/-p970 expiring 22Apr in taxable account and +p975/-p1075 in IRA expiring 20May. Long and painful saga of how I got here - maybe some nuggets of learnings for others.

Just like many other folks here, I got in trouble on the wrong side of put spreads when the market and TSLA tanked. Since most of my margin in the taxable account is due to my long term hodl TSLA shares, I was secure in my calculations that TSLA could go all the way down to 650 before my margin would run out. That was absolutely true, but I forgot to account for early assignment. So I was caught with a boatload of +p925/-p1025 and +p975/-1075 with the SP tanking. First couple of weeks I was able to push these out doing small debit rolls. Then suddenly Fidelity early assigned 9 puts at 1075. Well, my account could not afford all the underwater spreads + the drop to 800s + getting 900 shares at 1075 - leading to a house call. So, I called Fidelity to sell the shares they had just assigned to me - at a loss. This released sufficient cash/margin to roll out the remainder by 1 week for a debit. The next week it was same story again - this time Fidelity early assigned (on Wednesday) 12 puts. Again, I had to call Fidelity to sell these as my account just showed a 'pending transaction' message.

Can you guess the problem with the situation above? Yep, you guessed it - the 2nd assignment became a "wash sale" since I these were effectively purchased within 30 days of selling the previous 900. But I didn't realize that, as the shares in my account showing as "pending transaction". So the loss on the 1200 shares is disallowed loss and cannot be claimed on taxes next year. Next week, I had another 17 puts assigned to me - which are also wash sale. (I don't fully understand this wash sale business - and don't have the time to figure it our for now)

Anyways, I had rolled out all the remaining put spreads to April 14th hoping for a bump up after P&D which I closed on April 5th for 75% profit. The last 1700 shares assigned, I kept with the intention of selling aggressive CCs against them. But now that these shares are with me for a weeks, well they are mine now and I am attached to them. So my plan of aggressive CCs is not really in place.

All in all, it has been a painful quarter. I am not that upset by the losses which were substantial - it was a gamble that was lost. I am more unhappy about the wash sale which disallows a major portion of these losses for tax write-off. We could have used these short term losses this year as my spouse has short term profits as he had to liquidate some employer stock options when he changed jobs.

I am back in the game since closing out the spreads after P&D report, this time keeping the spreads a bit wider at 200. Hoping to close the current positions out tomorrow or Friday. Not doing any CCs yet.

Keeping my fingers crossed for the ER tomorrow

 

[elasalle]

wow I am glad closed my Netflix puts earlier today at 50% profit... -20% so far. Netflix BPS tomorrow?

Selling some puts to buy some leap calls