Wiki Selling TSLA Options - Be the House

[ZeApelido]

Here's a thread where I try to find academic evidence about the possible profitability of selling the options.

Expected Option Returns

Hopefully this thread is appropriate although it is meant to be generalized Expected Option Returns discussion. I'm not looking for anecdotal evidence but academic research. I'm interested if there is scientific evidence to suggest that writing options could have higher risk adjusted return...

teslamotorsclub.com

I don't think you need a thread, the answer is a clear a definite "yes" when done based on a long term view of a stock.

Have a look at my study of covered calls

Wiki - Selling TSLA Options - Be the House

Textbook MaxPain says Friday close $650-660. If I had money or margin, selling p650 & c660 sure looks like a pretty sure bet. Unfortunately, I’m pretty much tapped out. I could sell a couple more CCs. Hmmmm. Too late today, maybe tomorrow.

teslamotorsclub.com

If you don't think the stock will 4x or higher in one year, then you can get higher returns by selling covered calls than just holding the stock outright. Yes, you will not profit as much if the stock balloon rapidly, but you will profit more if the stock grows moderately, stays flat, or declines.

Selling puts is bullish, it is simply an alternative to holding the stock with different financial tradeoffs. The tradeoff again is limited upside, but you make more (than holding shares) if the stock only increases moderately, stays flat, or declines.

You should explore option profit calculator to understand tradeoffs. Take if I sold a Jun 24 $600 put

TSLA Naked Put (bullish) calculator

TSLA Naked Put (bullish) Calculator shows projected profit and loss over time. Writing or selling a put option - or a naked put - has a limited but immediate return but exposes the trader to a large amount of downside risk. It is suited to a neutral to bullish market.

opcalc.com

Selling puts outperforms holding stock up to ~$950 per share in June 2024. If the stock drops to $500 at that time, the sold put actually still pulls out some profit, whereas you would have lost 30% holding the stock. Obviously you lose out on upside past $950.

So selling options (covered calls and puts) are bullish behaviors that are actually more conservative than holding stock.

Can one predict weekly fluctuations and profit? Maybe, maybe not. But if you do it within the framework of being bullish on the stock, then those short terms failures can still be backed by moving to longer term bets.

So basically, you will absolutely profit selling puts and covered calls. In fact, you will be more profitable than holding stock in many circumstances outside of the stock tripling in price in a year timeframe.

 

[CHGolferJim]

I don't think you need a thread, the answer is a clear a definite "yes" when done based on a long term view of a stock.

Have a look at my study of covered calls

Wiki - Selling TSLA Options - Be the House

Textbook MaxPain says Friday close $650-660. If I had money or margin, selling p650 & c660 sure looks like a pretty sure bet. Unfortunately, I’m pretty much tapped out. I could sell a couple more CCs. Hmmmm. Too late today, maybe tomorrow.

teslamotorsclub.com

If you don't think the stock will 4x or higher in one year, then you can get higher returns by selling covered calls than just holding the stock outright. Yes, you will not profit as much if the stock balloon rapidly, but you will profit more if the stock grows moderately, stays flat, or declines.

Selling puts is bullish, it is simply an alternative to holding the stock with different financial tradeoffs. The tradeoff again is limited upside, but you make more (than holding shares) if the stock only increases moderately, stays flat, or declines.

You should explore option profit calculator to understand tradeoffs. Take if I sold a Jun 24 $600 put

TSLA Naked Put (bullish) calculator

TSLA Naked Put (bullish) Calculator shows projected profit and loss over time. Writing or selling a put option - or a naked put - has a limited but immediate return but exposes the trader to a large amount of downside risk. It is suited to a neutral to bullish market.

opcalc.com

Selling puts outperforms holding stock up to ~$950 per share in June 2024. If the stock drops to $500 at that time, the sold put actually still pulls out some profit, whereas you would have lost 30% holding the stock. Obviously you lose out on upside past $950.

So selling options (covered calls and puts) are bullish behaviors that are actually more conservative than holding stock.

Can one predict weekly fluctuations and profit? Maybe, maybe not. But if you do it within the framework of being bullish on the stock, then those short terms failures can still be backed by moving to longer term bets.

So basically, you will absolutely profit selling puts and covered calls. In fact, you will be more profitable than holding stock in many circumstances outside of the stock tripling in price in a year timeframe.

Agree. I don’t think my approach is all that special, assume many others here are doing something similar, many much more sophisticated and/or risky: sell 4-15 DTE covered calls only, no puts or spreads, all but 100 shares are in IRA accounts, I have a miserable history buying 6-month or less long calls:

- Core: x00 shares and x LEAPs (currently Jan ‘24); write covered calls on 40%-60% of the shares, not on LEAPs
- Trading: buy-writes at aggressive near-ATM strikes/rolling, currently 0.75x00 shares
- Taxable: low basis, so very cautious $100+ OTM

YTD ROI vs. total current value of all shares/LEAPs = 11%.

 

[intelligator]

Monday to Tuesday, call interest increased at 750, 765? oddly , 780 and 800. Put interest evaporated some at 660, increased at 700.

Using all the tools mentioned above AND patience, thanks all, I'm sticking with the plan to sell 7/22 675 CSP and 775 CC with the expectation that I may want to roll the 775 or not. CSP might not be a thing if the trend continues upwards, yay otherwise! This combo gives me the most flexibility to take assignment or roll out for more credit. The CC are against that same 100 shares I was assigned through a CSP in May... the gift that keeps on giving

 

[Drezil]

my CSP is at -p690 and i don't care if assigned

i use Fibs to help determine res/supp; for ex, today's High was 934am and the quick drop that followed was cue to STO 7/22 830cc for quick +37% daytrade; yesterday was +54% daytrade on 820cc

the secret is:

• be patient to wait for big move up or down
• this is always followed by multiple small pullbacks
• wait for a local pullback to reach res/supp
• confirm using MACD (sometimes 50SMA) that the reverse is about to start
• buy shares if at supp
• add 1% Trailing Stop Loss (this also takes care of the sell once res is reached)

today is busy and profitable...
View attachment 830369

Can you mark those entries/exits on a graph? With MACD?

Because I quite don't get it from your free bullet points

 

[Yoona]

Can you mark those entries/exits on a graph? With MACD?

Because I quite don't get it from your free bullet points

one reason why we have losses is because noise/drama/emotion is mixed in with trades and we react based on what we think should happen instead of observing what is actually happening (ie, just look at the numbers); if they are all replaced with a clear entry/exit plan for each trade, then results become somewhat mechanical and predictable... it is not perfect science but it works for me

they explain it better:

Three Fibonacci Trading Strategies + Infographic & Video | TradingSim

Completely demystify how to trade with Fibonacci using these 3 simple Fibonacci trading strategies you can test today. Plus a cool Fibonacci infographic!

www.tradingsim.com

 

[OrthoSurg]

Anyone have any plays around the earning report?

I still have open 7/22 805 CC (opened 7/14). I was hoping to close before the earnings report, but am fine with rolling these if the SP breaches 800.
I closed out 7/22 450/600 BPS for ~70% gain yesterday (opened 7/14).

Almost Exactly the same CCs as you. Sold 800CCs for 22/7 on the 14/7. They are around 30% profitable and I am torn between closing them this morning to avoid getting steam rolled or waiting and rolling if SP goes above 780 resistance.

Now that we are developing a bullish trend from bullish breakout in qqq. Probabilities of TSLA having a bullish breakout from the consolidation wedge is higher so I don’t have confidence in those CCs if a short squeeze happens from the swing traders who were short. Things could turn sour rapidly for those CCs if the shorts jump on the bullish trend from being forced to close their short positions.

 

[JustMe]

one reason why we have losses is because noise/drama/emotion is mixed in with trades and we react based on what we think should happen instead of observing what is actually happening (ie, just look at the numbers)

Exactly.

 

[BornToFly]

I was wanting to actually buy some Puts in case there is a post-earnings drop. But the price of 600 and 650 Puts are high, and with IV crush tomorrow, I don't know how big a drop would be required to make them profitable?

P.S. - I have never bought Puts before, therefore doing it WOULD guarantee we are green tomorrow....

 

[Yoona]

I was wanting to actually buy some Puts in case there is a post-earnings drop. But the price of 600 and 650 Puts are high, and with IV crush tomorrow, I don't know how big a drop would be required to make them profitable?

P.S. - I have never bought Puts before, therefore doing it WOULD guarantee we are green tomorrow....

TSLA Long Put (bearish) calculator

Put option profit calculator. Visualise the projected P&L of a put option at possible stock prices over time until expiry.

opcalc.com

+p650:

 

[Knightshade]

Yup... my -600 puts are still at an 8% loss right now, despite the stock price being $35/share higher than when I sold them, and over 2/5ths of the time value being gone from when the were sold.

Which I suppose tells us:

On earnings weeks, sell your put spreads later in the week than normal
and
If you wanted to buy protective puts on earnings week, don't wait till the day of earnings

 

[elasalle]

Sold Jan 24 2300 CCs for $25 for some defense in my personal account. (have played this trade multi times). If it drops 4-5$ after conf call, will close and wait for another opportunity post Q3. Enough runway to manage a year from now

in 401K's no CC's sold until after Q3 or after ....

 

[OrthoSurg]

I was wanting to actually buy some Puts in case there is a post-earnings drop. But the price of 600 and 650 Puts are high, and with IV crush tomorrow, I don't know how big a drop would be required to make them profitable?

P.S. - I have never bought Puts before, therefore doing it WOULD guarantee we are green tomorrow....

I already guaranteed we have a red day tomorrow as I closed my 22/7 800 CCs for a meager 20% profit this morning on the drop.

 

[BornToFly]

I already guaranteed we have a red day tomorrow as I closed my 22/7 800 CCs for a meager 20% profit this morning on the drop.

I think that was smart. 10% gain between now and Friday is certainly possible.

 

[OrthoSurg]

I think that was smart. 10% gain between now and Friday is certainly possible.

When I saw the +5% NFLX AH love on the 1M customers loss, I felt the same could happen with TSLA even with BTC impairment.

 

[OrthoSurg]

I think that was smart. 10% gain between now and Friday is certainly possible.

Yes I didn’t feel like gambling around earnings however I feel like selling 29/7 900CCs though. This would make me more comfortable even if we go up 10% AH today.

 

[Drezil]

Yes I didn’t feel like gambling around earnings however I feel like selling 29/7 900CCs though. This would make me more comfortable even if we go up 10% AH today.

I'm feeling a bit more lucky & just sold 3x -875CC for friday @0.39 ..
Lunch money or so ..

if we hit 875, there is always out & up. Wost-case i have to form a Spreand with some LEAPs..

 

[OrthoSurg]

I'm feeling a bit more lucky & just sold 3x -875CC for friday @0.39 ..
Lunch money or so ..

if we hit 875, there is always out & up. Wost-case i have to form a Spreand with some LEAPs..

875 for this Friday is way more reasonable than the 800 I had!

 

[Drezil]

875 for this Friday is way more reasonable than the 800 I had!

I also opened 800CC ..

But they are more actively traded & not fire&forget.

only 3 of them.. but sold $7.50, bought $4, sold $5.50, bought $3.5, sold $6, currently worth $4.9

they are backed by Sep $800c.. so if they got ITM, out & up it is

 

[ZsoZso]

I already guaranteed we have a red day tomorrow as I closed my 22/7 800 CCs for a meager 20% profit this morning on the drop.

Oh, but I countered that by selling 800CC as well as buying 700P, so this guarantees that we will have a surprise rally

 

[Drezil]

Oh, but I countered that by selling 800CC as well as buying 700P, so this guarantees that we will have a surprise rally

your sacrifice is very well appreciated!
Thank you!