Wiki Selling TSLA Options - Be the House

[MP3Mike]

Well I cleared the call for now by selling some shares and adding some cash... So now on what to do next...

• 5/6 975 CC: Roll for maximum strike increase today before the possible split details are released, or let them ride until Monday?

Then in my IRAs:

• 5/6 940 CCs
• 5/6 1000 CCs
• 5/6 1005 CCs
• 5/6 1030 CCs

I'm thinking about a roll of the 940s to 5/13 975s for $1 and leaving the rest. But I'm doubting myself a lot right now.

 

[sonofjorel]

I do have enough cash available that I could probably save myself from this margin call, but I'm not sure it is worth it. The majority of the positions that I have left are 5/20 1000/1100 BPSs and I'm not sure that we would be at least to $1050 by then such that I could roll it and save it. Assuming of course, that they aren't assigned early, though there is more interest in these strikes so it should be less likely. (And it would mean giving up some spending/purchases that we had planned and want to continue with.) I've also got 5/6 975 CCs on the shares that will have to be gotten rid of so I can sell shares, so it hurts on the way up and down...

What are people's not-advice; do you think that is there a reasonable possibility that we get to $1050 by 5/20? Looking at the option interest it looks possible, but that will likely be different when we get updated data tomorrow. And who knows what will happen between now and then.

Is converting your account to portfolio margin an option? It could increase your available margin in order to get rid of the margin call for the time being depending on how E*trade calculates risk based on your holdings.

 

[BornToFly]

Well I cleared the call for now by selling some shares and adding some cash... So now on what to do next...

• 5/6 975 CC: Roll for maximum strike increase today before the possible split details are released, or let them ride until Monday?

Then in my IRAs:

• 5/6 940 CCs
• 5/6 1000 CCs
• 5/6 1005 CCs
• 5/6 1030 CCs

I'm thinking about a roll of the 940s to 5/13 975s for $1 and leaving the rest. But I'm doubting myself a lot right now.

Because they aren't spreads, you typically see good rolls even a little ITM. Next week could be more of a market blood bath and those might be safe. Maybe roll up the 940 for next week...?

 

[scubastevo80]

Wrote 5/6 BCS 1095/1175 this morning when stock was around $930 for $1.80. This one is up 69% already but I'm likely going to hold and close out next week above an 80% gain given I don't think we see any end of day strength here. My 5/6 BPS which I rolled is up 55% (-780/+700) and I'm likely to also watch this one. I'm more inclined to close this out earlier than the BCS given Elon selling, macro pressure, etc.

 

[BornToFly]

Regarding the subject of CCs. I have CC on some of my shares for December with 1200 strike. Worth $80 right now. I've thought about buying them back because I hope the SP will be a lot higher than 1200 in December, but I don't know if it will be over 1200 and I need the money now. I do know it would cost me $80 right now to get rid of them. If we are close to 1200 in December, I will be able to roll them out 1-2 years and raise the SP significantly for free. Worst case scenario, I pay the $80 (that I could pay now) in December on the roll to help get to the strike I want 1-2 years out. But if I have to do that, it means the SP is so high that Margin is no longer an issue.

 

[mongo]

Regarding the subject of CCs. I have CC on some of my shares for December with 1200 strike. Worth $80 right now. I've thought about buying them back because I hope the SP will be a lot higher than 1200 in December, but I don't know if it will be over 1200 and I need the money now. I do know it would cost me $80 right now to get rid of them. If we are close to 1200 in December, I will be able to roll them out 1-2 years and raise the SP significantly for free. Worst case scenario, I pay the $80 (that I could pay now) in December on the roll to help get to the strike I want 1-2 years out. But if I have to do that, it means the SP is so high that Margin is no longer an issue.

What about:
Buy the calls back
Sell 10% as many shares to get cash
Buy calls to replace sold shares?

 

[BornToFly]

What about:
Buy the calls back
Sell 10% as many shares to get cash
Buy calls to replace sold shares?

Shares give me margin, calls don't.

 

[mongo]

Shares give me margin, calls don't.

First two steps get you cash while removing the CCs (delta positive above 1200)
The extra bought calls were for profit exposure (delta neutral).
But I may not understand the situation.

 

[BornToFly]

First two steps get you cash while removing the CCs (delta positive above 1200)
The extra bought calls were for profit exposure (delta neutral).
But I may not understand the situation.

I tried putting your plan into the margin calculator. I pretend to sell shares, buy back the CC, and then replace the shares with Jan '24 500 strikes. I get an instant margin call. I do have more cash sitting there, but not enough.

 

[BornToFly]

I tried putting your plan into the margin calculator. I pretend to sell shares, buy back the CC, and then replace the shares with Jan '24 500 strikes. I get an instant margin call. I do have more cash sitting there, but not enough.

If I buy Jan 24 1200 calls, then there is only a slight decline in margin available, but I don't like the idea of risking permanently losing my shares if the SP is below 1200 in 2024. If I sell all the shares instead of 10%, then the margin looks much better, but again, I'm risking too much for my taste, and then I have a major Capital gains problem. (On the other hand, the cash will protect me from getting a margin call if the SP keeps dropping. I will have to think about this more)....

 

[Drezil]

Today the market dumps.. that mean we rebounce monday, right? .... RIGHT??

 

[mongo]

I tried putting your plan into the margin calculator. I pretend to sell shares, buy back the CC, and then replace the shares with Jan '24 500 strikes. I get an instant margin call. I do have more cash sitting there, but not enough.

Oh, i was thinking buying Dec 1200s since SP over that was the concern with the CCs.
If inital:
-10 Dec 1200 $80
1000 shares $880
Buy back calls: -$80k
Sell 100 shares: +$88k
Buy Dec 1200: -$8k
Net:
900 shares
1 Dec 1200
Unless the 100 shares help your margin out

 

[JustMe]

Well I cleared the call for now by selling some shares and adding some cash... So now on what to do next...

• 5/6 975 CC: Roll for maximum strike increase today before the possible split details are released, or let them ride until Monday?

Then in my IRAs:

• 5/6 940 CCs
• 5/6 1000 CCs
• 5/6 1005 CCs
• 5/6 1030 CCs

I'm thinking about a roll of the 940s to 5/13 975s for $1 and leaving the rest. But I'm doubting myself a lot right now.

You can get a lot of cash by rolling those CCs out by a few months. You could use the proceeds to close one or more troublesome positions that you don’t like and open safer ones

I did this in desperate times and it saved my bacon.

 

[adiggs]

Well I cleared the call for now by selling some shares and adding some cash... So now on what to do next...

• 5/6 975 CC: Roll for maximum strike increase today before the possible split details are released, or let them ride until Monday?

Then in my IRAs:

• 5/6 940 CCs
• 5/6 1000 CCs
• 5/6 1005 CCs
• 5/6 1030 CCs

I'm thinking about a roll of the 940s to 5/13 975s for $1 and leaving the rest. But I'm doubting myself a lot right now.

For actual cc's (share backed or far OTM, high DTE calls), the way I think about those cc when they go ITM is this:
- I can take assignment (or just BTC the call and simultaneously STC the backing) at the cc strike, or I can roll.
- On the roll, I ask myself the question - do I like ending the position at the cc strike, or do I like the new position better.

I.e. - if I'm DITM but can roll for a $1 credit and $10 strike improvement by adding a week, that is like earning $11 if I take assignment next week. I'll mostly take that deal, but actual analysis and decision making is more complete than just that.

EDIT to add: its important that the roll be for a credit. If you take debits here, and then later the option goes OTM, then those strike improvements aren't realized gains and you're only left with the credit or debit.


My quick off-the-cuff reaction - those look like cc's that are going to expire worthless in a week. As cc's those are all OTM by a minimum of $67 (closing prices is going negative on the day now).

Maybe those are short puts? Maybe I'm just missing something.

 

[adiggs]

Another day, another lesson in taking good opens and closings when presented. This morning when I checked in, we were +$50 or so at that point. Good time to close the 750 strike puts I had open, as well as sell some new cc. The new cc would probably have been 1050 strikes (shares were $930 at that point); maybe a little closer to 1000, but with the share price relatively low, I stay relatively far / conservative on the cc so I can more effectively roll up with the share price if it decides to run up fast.

Note that while my expectation is a month of more down than up (shares in the 800s and 900s, with maybe a visit to the 700s) I still plan for and prepare for being wrong and it goes the other way on me. With my dividend-like income focus I want to avoid being too directions in the options sales, while maintaining a reasonably strong upwards bias in the overall account via share ownership.


Anyway I looked at closing those puts and decided not to. I also thought briefly about opening cc and decided not to. I got distracted by other stuff, and now I return to find the shares down slightly on the day.

I did just now open additional 750 strike puts for next Friday at around 4.30. Those are the puts I would have closed this morning around $2. Had I done so I'd be opening replacements right now and have made an open / close cycle on the puts on the same day.

Had I opened the cc's this morning those would almost certainly have cratered in value, and I'd go into the weekend holding only 750 strike puts. That's how its working out anyway, but I didn't get the cc profits, and I didn't get the profit from cycling those existing 750 strike puts.

Ah well.


The reinforcement learning, again, is take the good opens and closes when they come along. On the plus side - holding onto the 500 strike insurance puts has worked nicely.

 

[JustMe]

I, for one, am tired of learning lessons

 

[MP3Mike]

For actual cc's (share backed or far OTM, high DTE calls), the way I think about those cc when they go ITM is this:
- I can take assignment (or just BTC the call and simultaneously STC the backing) at the cc strike, or I can roll.
- On the roll, I ask myself the question - do I like ending the position at the cc strike, or do I like the new position better.

My quick off-the-cuff reaction - those look like cc's that are going to expire worthless in a week. As cc's those are all OTM by a minimum of $67 (closing prices is going negative on the day now).

Maybe those are short puts? Maybe I'm just missing something.

The "CCs" in the IRA are backed by a combination of shares and LEAPs. And while there was a good chance that they would expire worthless next week, I didn't want to deal with them so I took advantage of the drop at the end of the day to roll the under $1000 ones and close the others. So now all I have left are:

Taxable:

• 5/13 $1005 CCs (I likely would have closed instead of rolling to here, but I didn't have the available margin.)
• 5/06 $850/900 BPSs
• 5/20 $810/860 BPSs
• 5/20 $1000/1100 BPSs (BTW these are a result of "saving" half of the bad CCs a while back. It looks like I would have been better off just managing the CCs instead of flip/rolling them to BPSs. But you can't predict these things...)

IRAs:

• 5/13 $975 CCs
• 5/13 $1010 CCs

All of the closes were at a net profit with all of the prior rolls taken into account. I can open new CCs next week if it looks like it would be a good idea.

Of course, because of the drop I will get another small margin call next week, but I'm hopeful that the macros will be good and it will clear itself. (The AH trading is already making it better.)

A close over $900 next week would help greatly to release the margin held on the 850/900 BPSs...

 

[scubastevo80]

Over each of the last 6 weeks we've had about a +/-5% day somewhere between Monday and Wednesday. In each of those scenarios, if you would've written BCS (on an up day) or BPS (on a down day) between the closing price and respective high or low that day, with 5 or less DTE, you could have made money being no more than 5% from your closest strike. I also went back to October and this seems to hold true, but I'd challenge someone to find a week where this didn't actually work. Next week, I may tweak my rules to the following given macro environment and irrational TSLA stock movements (e.g. today). I may also do more digging to see if there's an IC play here (perhaps 10% same direction, 15% in opposite direction of the big move).

(1) No BCS/BPS consideration unless a 5% move occurs, and trade close to 4pm
(2) Check to ensure IV north of 100%
(3) Reduce distance of closest leg from 20% to 10%
(4) Max 5 DTE (technically 4 if I'm trading EOD and Monday is effectively over)

Once we get some stability in macros/inflation, Q2 P&D numbers and earnings, and/or a resolution to Russia/Ukraine, I'll go back to my conservative rules.

 

[BornToFly]

The "CCs" in the IRA are backed by a combination of shares and LEAPs. And while there was a good chance that they would expire worthless next week, I didn't want to deal with them so I took advantage of the drop at the end of the day to roll the under $1000 ones and close the others. So now all I have left are:

Taxable:

• 5/13 $1005 CCs (I likely would have closed instead of rolling to here, but I didn't have the available margin.)
• 5/06 $850/900 BPSs
• 5/20 $810/860 BPSs
• 5/20 $1000/1100 BPSs (BTW these are a result of "saving" half of the bad CCs a while back. It looks like I would have been better off just managing the CCs instead of flip/rolling them to BPSs. But you can't predict these things...)

I'm sure you know this, but for newer players: The problem with BPS, is that you really have to manage/roll before mid-spread is breached (which is why staying far OTM is more important with spreads than with naked Puts). Hoping/praying the stock reverses is not a strategy that will work long term (meaning you might get away with it for a few weeks, but eventually you will get a full loss). Hopefully we will know when the stock split will happen by Monday. If the SP stays above 900, great. Otherwise I would be rolling the 850/900 to after the stock split date ASAP. Same with the 810/860 if 860 is breached. The 1000/1100 is more of a problem, because the 1000 strike will potentially lose value on you differently than the 1100. Last night the difference was $90 for a $100 spread. I would roll that to December (probably the safest date this year) as soon as you can if the numbers look good to you, or if the full loss is acceptable on that one, wait and see what happens by the 20th.

 

[CHGolferJim]

I had bought 5x 20/5 1200 calls 6 months ago. Had to close them from margin call on the start of the Ukraine war but I am still 50% sure the stock price will raise over 1200 on 20/5 just to piss me off from closing that position. Deeply wish it for you.

Me, too. I sold 2 at -45%, and could have closed out the remaining 3 at -25%, but had hoped to do better. Almost worthless now, so might as well hold over the next 3 weeks. Maybe I’ll figure out how to roll them to have a chance of recovering something.