Wiki Selling TSLA Options - Be the House

[Runarbt]

I sold 10x naked put $750 June2021 contracts - pocketed $120k. (use about 30% of my available margin).

Keeping this as cash for now, will sell 1 weekly put until I get shares assigned.
So, I am also interested in some tip on when to sell weekly puts, as you are cbh03.

I will at least wait for a nice MMD, but other than that? Anyone?

 

[gabeincal]

I sold 10x naked put $750 June2021 contracts - pocketed $120k. (use about 30% of my available margin).

Keeping this as cash for now, will sell 1 weekly put until I get shares assigned.
So, I am also interested in some tip on when to sell weekly puts, as you are cbh03.

I will at least wait for a nice MMD, but other than that? Anyone?

I roll weekly puts on Monday mornings and make decent money on them ($2-3k per contract), though aggressive strikes. I currently hold Feb 5 900s (that I could still roll at a gain and avoid being assigned). With that said, I have no idea what I'm doing and I'm learning as I go. Made $50k cash so far just in January selling puts and covered calls.

 

[ammulder]

Made $50k cash so far just in January selling puts and covered calls.

Very impressive. How many puts/calls do you have open at the same time for that kind of income?

 

[gabeincal]

Very impressive. How many puts/calls do you have open at the same time for that kind of income?

I sell 3 puts weekly backed by growing cash and margin. I also sell 8 covered calls in that account (sold them early jan for a mid-feb 945 expiry and that made only $18k. Learnt my lesson and will now do weekly for them also.)

Tax is gonna be annoying this year.

 

[Runarbt]

I made something similar, about $50k.
But I only sold naked puts.

I have about $700k in available in margin.
So far I have been a bit too agressive. I have during half of January had open 10-15x 750 puts a few weeks out. This has tied up 50-60% of the margin..

Closed all naked puts before ER, and opened the new june position mentioned above. This use $285k of my margin.

If we get a obvious over reaction dip, I will go agressive again and sell another batch with naked puts, but weeklies.

I really dont want to tie up more than 30% or so of my margin, long term.

 

[cbh03]

I roll weekly puts on Monday mornings

I thought that the best time to roll weekly puts is typically Friday due to almost no time value in the expiring put and maximizing the time value in the put you are rolling to. Warning: I have even less of an idea what I am doing

 

[gabeincal]

I thought that the best time to roll weekly puts is typically Friday due to almost no time value in the expiring put and maximizing the time value in the put you are rolling to. Warning: I have even less of an idea what I am doing

What you're saying makes sense. I will try to compare the results over weeks and see if it makes sense. It's just the weekends are too long and by Monday morning I'm keen to make $

 

[Runarbt]

I thought that the best time to roll weekly puts is typically Friday due to almost no time value in the expiring put and maximizing the time value in the put you are rolling to. Warning: I have even less of an idea what I am doing

This week, I had 5x $750 naked puts with expire tomorrow.

They lost 30% each day.

But no point holding them any closer than wednesday/thursday, as there were very little time value left. $1 each -$500 left.

25% drop monday gave $2500, tuesday gave $2000.

Might have gotten a better result closing all on monday, to sell next weeklies puts. More than double premium, and still 15-20% drop each day.

I didnt do this due to ER this week.

 

[cbh03]

This week, I had 5x $750 with expire tomorrow.

They lost 30% each day.

But no point holding them any closer than wednesday/thursday, as there were very little time value left. $1 each -$500 left.

25% drop monday gave $2500, tuesday gave $2000.

Might have gotten a better result selling all on monday, to buy next weeklies. More than double premium, and still 15-20% drop each day.

I didnt do this due to ER this week.

Interesting, thanks for the explanation. I think it was a good idea not to roll to early this week given the uncertainty surrounding the ER.

I have a single $805 put that expires today. I plan to roll it to Feb. 5 for a lower strike price in case we see an extended dip, while still be paid a credit. I want to be somewhat aggressive as I don't mind buying the shares if assigned.

 

[bxr140]

Can anyone comment on the likely direction of IV over the next few days now that the earnings call is over? Is it likely to be higher today, tomorrow, or next week?

It is most probable that IV will go down over the coming days/weeks, though magnitude and duration is always a bit uncertain. FTR, save for the early 2020 post-earnings (pre-covid) rally which spiked IV, all earnings in the past few years have seen a post-report decrease in IV.

I'm planning on selling a 1-2 week put (to get the wheel started) and am not sure when to sell (or even how to figure out when to sell). TIA.

I've had weekly 725/700 put credit spreads open for a few weeks now and earlier today I rolled them to next week. I'd normally go for a slightly farther expiry, but I don't want the associated stress so I'm keeping it short. ~$720-725 is a decent (not super strong) price point. I'll wait and see what happens with IV next week to see if I just close or roll again.

Very impressive. How many puts/calls do you have open at the same time for that kind of income?

From a perspective perspective, I made ~$550k in January (closed yesterday before the bell) buying TSLA calls. $208k capital, ~250% profit in 29 days, which (for better or worse) is actually where I was 10 days into the trade....

I could stop trading for 3 years and a parallel selling strategy still probably wouldn't catch up.

There is nothing impressive about selling options.

I thought that the best time to roll weekly puts is typically Friday due to almost no time value in the expiring put and maximizing the time value in the put you are rolling to.

As noted upthread a few times, Thursday AM is the traditional/typical time to roll weekly options. You usually don't want to roll earlier than that because you miss out on a ton of time decay. You also usually don't want to wait until Friday because often the following week's contract will actually have more time decay.

 

[Runarbt]

It is most probable that IV will go down over the coming days/weeks, though magnitude and duration is always a bit uncertain. FTR, save for the early 2020 post-earnings (pre-covid) rally which spiked IV, all earnings in the past few years have seen a post-report decrease in IV.



I've had weekly 725/700 put credit spreads open for a few weeks now and earlier today I rolled them to next week. I'd normally go for a slightly farther expiry, but I don't want the associated stress so I'm keeping it short. ~$720-725 is a decent (not super strong) price point. I'll wait and see what happens with IV next week to see if I just close or roll again.



From a perspective perspective, I made ~$550k in January (closed yesterday before the bell) buying TSLA calls. $208k capital, ~250% profit in 29 days, which (for better or worse) is actually where I was 10 days into the trade....

I could stop trading for 3 years and a parallel selling strategy still probably wouldn't catch up.

There is nothing impressive about selling options.

You did great! Congrats!

However - if SP hadnt gone up as much as it did - but trades sideways - selling puts would have made way more than your calls.
I am guessing we get a sideways to slight upwards rise the next months. I assume buying june calls will pay better still, than my sold puts. But I am happy with a calmer less stress filled next half year. :-D

 

[ReddyLeaf]

Anyone have a solid not-advice on which puts to sell on this dip?

I am looking at June $750 as a possibility.

Feel these are paying nicely, and at the same time should have a low probability of ending ITM.

Could have found short dated ones - but not sure its worth it for me, extra stress, possibilities for more dips etc.

This got me thinking. I didn’t want to give the MMs those last few $, but changed my mind based on your post. Thanks!
BTC 1/29 p800 at $4.75 (cleared about $47 on that )
STO 6/18 p800 at $131.00

Unfortunately, dumped my last 1/29 c840s at $11 today (bought 10 at $52.70, so almost $42 loss. Fortunately, I sold most of them on Monday for $69-70, so not a complete loss). Note to others: Sell calls on the Monday before news).

I’ve used some of the cash to buy up TSLA at $810-$835 in 10 shr blocks, slowly working my to filling another 100 shr block (not in a hurry, buying on dips).

On the other side of the wheel, waiting until Monday, but considering selling $1010-$1100 strike CC for 2/19. Thoughts?

 

[gabeincal]

You did great! Congrats!

However - if SP hadnt gone up as much as it did - but trades sideways - selling puts would have made way more than your calls.
I am guessing we get a sideways to slight upwards rise the next months. I assume buying june calls will pay better still, than my sold puts. But I am happy with a calmer less stress filled next half year. :-D

Why would you want any stress in your life when you make >$30k a month? I'm with you and will just keep on doing weekly / bi-weekly rolls until I can. No interest in longer expiry.

 

[sub]

Thank you for responding!

I definitely agree that nothing can compare to real world trading when emotions come into play versus taking fake money and blowing it. My thought process behind paper trading is just to mess up and figure out why, or win and figure out why. Also, paper trading takes the element of "I don't know how to even make a trade" out of the equation for me. When I first started looking into this I didn't even know how to figure out an options trade, let alone how to execute one. So I will say doing the paper trading has definitely helped in that regard. Once I start trading for real, I won't be using margin so that added layer will be avoided (for now) so in the event of a big loss I will just have a bad day instead of owing money I don't have and having an even worse day. The OA videos help me with the theory and mechanics of options since there can be a lot of moving parts involved between The Greeks, IV, etc.

Any advice you or anyone can give me will be extremely appreciated. Also, any knowledge I can bring here regarding wins or losses I will definitely post to help the ever growing conversation around Options. I appreciate you and everyone here taking the time to answer noobs like me as we all have to start somewhere.

Realize with the wheel that if your profits selling options does not at least equal TSLA going up in price, you'll slowly losing option selling power (not enough cash to sell puts, not enough cash to buy as many shares to sell calls). Spreads are always an option however.

Also, this was discussed a little above but here is one way to look at risk/reward. The market pays for risk, if there was no risk, there would be no reward because everyone would be doing the risk free trade which would take the profit potential to zero.

 

[Runarbt]

Why would you want any stress in your life when you make >$30k a month? I'm with you and will just keep on doing weekly / bi-weekly rolls until I can. No interest in longer expiry.

Ah.. you inspired me now.

I can handle some stress. ;-) Closed my june puts (slightly green), and sold monthlies instead. Aim at $30-40k a month, 50% more than my june choice paid.

 

[Runarbt]

Realize with the wheel that if your profits selling options does not at least equal TSLA going up in price, you'll slowly losing option selling power (not enough cash to sell puts, not enough cash to buy as many shares to sell calls). Spreads are always an option however.

Also, this was discussed a little above but here is one way to look at risk/reward. The market pays for risk, if there was no risk, there would be no reward because everyone would be doing the risk free trade which would take the profit potential to zero.

The solution is access to sell naked puts on margin.

 

[adiggs]

Even this far ahead of time, it looks like I could roll today to the $830 strike on Feb 18 for a roughly $3 credit (satisfying my net credit rule).

It's day after earnings now and the shares are down around $837 as I write. The net result of the share drop plus the corresponding IV drop, when looking at the Feb 19 roll options, is that I can roll to the 840 strike for a $2 credit, with $17 of time value remaining as well. I am choosing to continue waiting.

When I looked earlier I thought I had seen a roll to 850 for a $2-3 credit - that was a big enough difference that I was going to take that (and I would right now as well if it were still on offer).

 

[bxr140]

However - if SP hadnt gone up as much as it did - but trades sideways - selling puts would have made way more than your calls.

Nope. IV increase was inevitable going into earnings. Sideways trading with rising volatility on a long call position would have at least matched and most probably beat a sold put position's profit...a position that also would require significantly more capital.

Seriously, I'd encourage everyone to actually fact check their theories against hard numbers and self-evident market conditions instead of relying on speculation to drive their trading strategies.

Regarding "self evident market conditions", my entry point on that position was on strong indication that price would go up.
--Earnings was in a month
--Volatility was at a low
--The symmetrical triangle was fixin' to break out

That's it. It's not rocket science, it's not a dark art.

Circling back on actual numbers, for the noted position I followed a pretty basic strategy of opening up a 6 month long call, a month out of earnings, with the intent of closing it before earnings (so, holding for one month). Taking numbers for today and applying them to that strategy, if we consider the following two positions today:
--A July $1000 long call (~$150 OTM) @$121, requires $12.1k capital.
--A July $700 short put (~$150 OTM) @$94, naked requires probably $50k capital, cash covered obviously requires ~$70k

Factoring in a 15 point jump in IV (which is pretty small and a little less than the rise over my position) and sideways trading (stock at $850) in one month (2/26) the contracts are worth:
--$1000 +C = $122.3k (or, $1275 profit)
--$700 -P = $94.3k (or, $300 loss)

I don't know about anyone else, but I prefer profit to loss.

Why would you want any stress in your life when you make >$30k a month?

...because, with less stress buying occasional strong long positions, you can retire early and then have zero stress?

 

[Mokuzai]

Going into 2021 I had the goal of generating at least $5k/week by trading options. My employment was eliminated due to a merger but TSLA has made employment optional. Ended up with severance, bonus and unemployment so feels like I'm getting paid to take early retirement. Started looking into short strangles as an income generation strategy.

Basic strategy is on Wednesdays I'll sell calls and puts for the following week. If any leg is ITM on expiry day then I roll that leg two weeks out. I watch the market every day in case I need to react to something but basically only have to act one or two days a week to keep it going.

Started out looking about $75 above and below the trading price as my entry points. This ended up being way too close on the call side but fine on the put side as the SP rose through the early part of this month. This is mostly gut feel and also admittedly getting greedy on some of these premiums. If I were more concerned with getting close to $5k I could be playing much safer bets. The original call started at a $750 strike and it's been rolled twice in $10 increments and now at $770 for next Friday.

These are the trades so far and how it's tracking on a weekly income basis. For tomorrow I have a trading range of $750 - $950 so unless something big happens today/tomorrow I can let those expire worthless. This will be the first week since starting that I might not have to roll anything. Feb 5th has a trading range of $755 - $770 so I'll likely be rolling the call to Feb 19th.

I count the weeks as the expiration of the contract or the expiration that I roll into. Also have the SP low, high and close of the day I made the decision to see what environment I was working with at the time. For example on the 8th my $750 call was expiring with a trading range of $840-$885 but was still able to roll for a $6.50 net credit. On the 15th my $830 call was expiring and it closed at $826 but was too close for comfort so rolled to tomorrow's $950 for a $7.50 net credit.

Obviously not advice and I'm still learning (and profiting) from mistakes but this is working out pretty well for me so far. Though these things tend to work until they don't. I expect the gains will pull back some now that we're past earnings.

Also wanted to thank everybody in this thread for the "not advice". There is a wealth of knowledge, experience, successes and mistakes to learn from here.

 

[LN1_Casey]

I am thus far planning to let my $850 put expire this week, ITM or not. Come at me, MMs! I can sell calls just as easily!

Though I think the SP will probably be pinned at 845 tomorrow. That's about where the Max-pain is showing last I checked.