Wiki Selling TSLA Options - Be the House

[Max Plaid]

Just algobots reacting to FOMC minutes. Leaning towards restrictive rate policy to combat inflation.

It’s interesting to watch the price action when such news drops. Huge swings in seconds. Initial sell off followed by strong upward move. Fading now.

But I’ll take a flat to slight green close today after the morning we had.

I know, I posted that BEFORE the FOMC minutes and the volatility... went in the right direction before AAPL got too high and then the bears piled-in

I think that's a hell of a lot of short-selling we've witnessed today, extremely low volume, and when the sellers came in, it popped hard - tomorrow might be fun

 

[SebastienBonny]

Yes, general I don't have much cash. Go into margin for a while and sell the thing(s) in my portfolio I love the least. Not BBBY at the moment!

Was still thinking about this and I was wondering: would doing the same with covered calls provide sort of the same result?
Selling a cc ATM and keep on rolling every week as long as you’re exerciseable?
A 900 cc gives you 30 for friday, rolling it one week, same strike gives 45.
Seems solid weekly income, but you risk early assignment and I would only do this when selling with a strike above the price I paid for the shares. When the stock tanks, the cc expires and you can sell far OTM call. Premium will be less then ofc...
Thoughts?

 

[Buckminster]

Was still thinking about this and I was wondering: would doing the same with covered calls provide sort of the same result?
Selling a cc ATM and keep on rolling every week as long as you’re exerciseable?
A 900 cc gives you 30 for friday, rolling it one week, same strike gives 45.
Seems solid weekly income, but you risk early assignment and I would only do this when selling with a strike above the price I paid for the shares. When the stock tanks, the cc expires and you can sell far OTM call. Premium will be less then ofc...
Thoughts?

Yes @Max Plaid has ITM CC experience. It didn't work for me as I get worried when itm.

 

[Max Plaid]

Was still thinking about this and I was wondering: would doing the same with covered calls provide sort of the same result?
Selling a cc ATM and keep on rolling every week as long as you’re exerciseable?
A 900 cc gives you 30 for friday, rolling it one week, same strike gives 45.
Seems solid weekly income, but you risk early assignment and I would only do this when selling with a strike above the price I paid for the shares. When the stock tanks, the cc expires and you can sell far OTM call. Premium will be less then ofc...
Thoughts?

Yes @Max Plaid has ITM CC experience. It didn't work for me as I get worried when itm.

If you hold shares already then this is one approach, and you can also do a buy-write if you're in cash - or sell aggressive puts until they yield some shares...

Main thing I would say is be comfortable with the idea of having your shares called away, not necessarily with an early-assign, but just let the thing expire rather than rolling. Depends what you're after and how it works for you tax-wise, etc., but I've been getting much better results once I stopped fretting about that - if there's one thing I've learned over the years, it's that the share price goes up and goes down, quite unpredictably, and so often, either rolling a strike at a high cost, or even closing-out a losing position for cash, was the worst thing that could be done, allowing the exercise and then just playing the other direction nearly always yielded better results

Where writing ITM calls can be interesting is as a down-side insurance. I did this a few months ago when we were trading above $1000, I deliberately wrote -c925's for very fat premiums, the SP obligingly dropped below and I rinse-repeated all the way back down to $700

Essentially, and ITM CC write gives a similar effect as a bought put, although you obviously gain more with the put the more ITM it goes, with the calls, you essentially have the premium you sold them for. The bonus with the sold calls, of course, is that you can roll them if you want, whereas with a sold put, if it stays OTM, your money is down the drain

Note I have 20x -c900's written for this week, against put-assigned $900 shares, and I was looking to sell 10x more for next week today, but missed mu limit order by 85c, fvking short-sellers!

Not sure if any of this makes sense, and never advice, just observations I've made. Pinging @adiggs as he's the master of the buy/write...

 

[samppa]

Was still thinking about this and I was wondering: would doing the same with covered calls provide sort of the same result?
Selling a cc ATM and keep on rolling every week as long as you’re exerciseable?
A 900 cc gives you 30 for friday, rolling it one week, same strike gives 45.
Seems solid weekly income, but you risk early assignment and I would only do this when selling with a strike above the price I paid for the shares. When the stock tanks, the cc expires and you can sell far OTM call. Premium will be less then ofc...
Thoughts?

I've been in a sort of perma-straddle these past few weeks.. other side expires, the other I roll, usually roll for max strike improvement, and open again the expired side.
Been working great so far, although right now my calls are quite deep itm..

 

[Yoona]

does anyone subscribe to TrendSpider? (i don't really care about the monthly fee)

this is the TW Pivot indicator that shows when the stars are all aligned and it's time to buy/sell (high probability guess):

 

[adiggs]

If you hold shares already then this is one approach, and you can also do a buy-write if you're in cash - or sell aggressive puts until they yield some shares...

Main thing I would say is be comfortable with the idea of having your shares called away, not necessarily with an early-assign, but just let the thing expire rather than rolling. Depends what you're after and how it works for you tax-wise, etc., but I've been getting much better results once I stopped fretting about that - if there's one thing I've learned over the years, it's that the share price goes up and goes down, quite unpredictably, and so often, either rolling a strike at a high cost, or even closing-out a losing position for cash, was the worst thing that could be done, allowing the exercise and then just playing the other direction nearly always yielded better results

Where writing ITM calls can be interesting is as a down-side insurance. I did this a few months ago when we were trading above $1000, I deliberately wrote -c925's for very fat premiums, the SP obligingly dropped below and I rinse-repeated all the way back down to $700

Essentially, and ITM CC write gives a similar effect as a bought put, although you obviously gain more with the put the more ITM it goes, with the calls, you essentially have the premium you sold them for. The bonus with the sold calls, of course, is that you can roll them if you want, whereas with a sold put, if it stays OTM, your money is down the drain

Note I have 20x -c900's written for this week, against put-assigned $900 shares, and I was looking to sell 10x more for next week today, but missed mu limit order by 85c, fvking short-sellers!

Not sure if any of this makes sense, and never advice, just observations I've made. Pinging @adiggs as he's the master of the buy/write...

Nothing here I'd change - its all stuff I've begun doing as well via buy-writes. I just haven't been doing them all that long. I believe @CHGolferJim is the longest serving practitioner.

The tax side is something I've been thinkign more about - my own conclusion is that I won't be doing buy-writes in my taxable account. Maybe something more wheel-like; sell reasonably aggressive puts looking to take assignment on the way down and then sell reasonably aggressive cc on the way back up. Not really looking for assignment but also not putting much energy into avoiding it either.

It's the assignment side that the buy-write has really helped me with - being ok with assignment.


H'mm... might be time for some new csp tomorrow


I will say that what has helped me get ok with having shares called away is having a chunk of the account that I think of as cash, and using that cash for csp / buy-write / wheel. Within that 1/3rd to 1/2 of the account, I treat any shares as a different form of cash. The other 1/2 to 2/3rds of the account, in shares and leaps, makes it easy to own shares in that 1/3rd to 1/2 that come and go and that I hold little or no emotional attachment to. While simultaneously being very attached to the 1/2 to 2/3rds that are in shares / leaps.

Its a game I play with myself to achieve the end result that I desire. It works for me.

 

[saniflash]

Was still thinking about this and I was wondering: would doing the same with covered calls provide sort of the same result?
Selling a cc ATM and keep on rolling every week as long as you’re exerciseable?
A 900 cc gives you 30 for friday, rolling it one week, same strike gives 45.
Seems solid weekly income, but you risk early assignment and I would only do this when selling with a strike above the price I paid for the shares. When the stock tanks, the cc expires and you can sell far OTM call. Premium will be less then ofc...
Thoughts?

You are assuming that IV, which is a major variable for option pricing, will remain constant. This is not the case

 

[SebastienBonny]

You are assuming that IV, which is a major variable for option pricing, will remain constant. This is not the case

When IV changes, you can change your strike price when rolling + IV sometimes works in your favor and sometimes against.
Once rolling isn’t giving you enough premium anymore, you can let them call away and start selling puts, for example.
I guess the only way to find out is to just try it.

 

[traxila]

A tale of a CC trade gone bad:

Much is made on this site of the dangers of CCs and having your precious shares ripped from your hands in untimely fashion as the stock rockets away to Jovian heights. This a a real concern, especially with TSLA which snatched shares left and right from regretful CC sellers in 2020 as the stock did indeed imitate the latest SpaceX launch. However one must consider that even with continued volatility and SP upward pressure, it is doubtful that the stock can again engage in such a stratospheric rise due to the large numbers now involved. That is not to say that TSLA will not continue to spurt up and achieve the status of largest market cap in the world. I know many of us believe this is inevitable based on the continued innovation pushes from Tesla and the lackluster responses from the legacy OEMs.

I believe that the main reason people on TMC are so fearful of an assigned CC sale is that most of the population here is subject to US tax laws and also sitting on HUGE capital gains. I don't have any six dollar shares anymore (sigh. another story), but I am sitting on a lot of shares that are 95% capital gains. A forced sale would wallop me in NYC with a minimum of 35% (LTCG 20%, Medicare 3.8%, NYS 9%, NYC 4%) which would make it most difficult to market time my shares back (I would almost certainly fail and lose more) and just mess with my mojo and compounding.

So I have been selling CCs 20+% outta da money for usually well under a dollar (fifty to sixty cents depending) on a regular basis and thanking my lucky stars that I have enough shares for this to translate into what the majority of the population would consider some serious cheddar. But based on the heroics of this thread, I decided to start being more aggressive with shares owned in my IRA, which bear no such tax risks. Selling near ATM calls. And in this case selling exclusively ATM calls for one hundred of my shares. But I also agreed to stick with the idea that these shares must not sell! Sorry for the long preamble.

For the first few weeks this turned out great, with me harvesting large numbers in comparison to my other way out of the money CCs. After all, selling for 26 and closing out for 14 a day later to look for another opportunity makes my weekly 20% OTM sales look sickly with their returns. There is a time commitment I cannot reliably guarantee, however due to my other obligations in life.

I will not track the specific catalysts that were moving the SP here, as TSLA always seems to have some monster catalyst coming and usually decides to move dramatically for 'no reason' at random as well.

On July 20 I STO a 7/22 740 C for a credit of 25 with the SP at 742. Was betting that evenings catalyst would not amount to much, a bet that had been working out pretty well. July 21 did not agree as the SP rocketed to 817 where I knew my CC was already in trouble so I rolled to a 7/29 750 C for a 2.8 credit hoping things would cool off. On July 25 with the SP holding at 810 I rolled to 8/5 750 C for a 8.1 credit.

The stock gave me a dip on July 26 to 777. Still being underwater, I decided it was time to pump up the strike price for future returns. I rolled out two weeks this time to an 8/19 770 C for a 5.15 credit. The SP began to skyrocket again and by July 29 with the price at 886 I began to despair that my CC's long term fate was bleak, so I concentrated again on increasing the strike with a roll to an 800 10/21 C for a 23.27 credit.

On August 2 with the SP at 910 and the stock split coming fast I guessed (incorrectly) that a continued run was in the cards, so I milked the time bank again, rolling out to 1/20/23 850 C for a credit of 14.

On August 9 the SP had dropped to 850, but I still didn't think much of my CCs chances come January 20. I bit the bullet and went ballistic, cashing in all my chips to seal my CCs disastrous fate with a roll to a June, 21 2024 1250C for a credit of 43.

I know the experienced denizens of this thread would have had better results with this, perhaps even the foresight to close the position for a small loss as the SP skyrocketed out of the 700s, but one of the rules I try to adhere to is to never roll for a debit. I must always be paid for my time.

But now my shares are milked and locked in, and I have to twist for next two years over my lost opportunities, gnashing my teeth and beating my chest. Or do I?

Let us examine my 'disastrous' foray into the world of CCs.

I began with a SP and a call strike of 740 and ended at 1250 for an increase of 510 points.

I received credits of 121.32 with my desperate and impatient rolls. If my shares are called away two years from now at 1250 my overall gain will be 631.32 for an 85% gain from where I started. 1250 is an all time high SP from where we stand right now. TSLA may well be at 2500 come June 2024, and I will be crying over my lost profits, but looking back over my history of trading, would that all my disastrous decisions had yielded an 85% gain over two years!

I guess the overall point of my post is that yeah, selling CCs can definitely hurt your returns if you have a monster stock, but I don't understand when people paint it as some sort of reckless casino roulette wheel that could lead to catastrophe. If you manage it and do your best to keep your shares, you will get returns even with an SP that is punishing you, and even if you don't get more involved and let them go to play the wheel.

Oh, and one more thing. I do believe that 2025 strikes are dropping in September.

 

[CHGolferJim]

A tale of a CC trade gone bad:

Much is made on this site of the dangers of CCs and having your precious shares ripped from your hands in untimely fashion as the stock rockets away to Jovian heights. This a a real concern, especially with TSLA which snatched shares left and right from regretful CC sellers in 2020 as the stock did indeed imitate the latest SpaceX launch. However one must consider that even with continued volatility and SP upward pressure, it is doubtful that the stock can again engage in such a stratospheric rise due to the large numbers now involved. That is not to say that TSLA will not continue to spurt up and achieve the status of largest market cap in the world. I know many of us believe this is inevitable based on the continued innovation pushes from Tesla and the lackluster responses from the legacy OEMs.

I believe that the main reason people on TMC are so fearful of an assigned CC sale is that most of the population here is subject to US tax laws and also sitting on HUGE capital gains. I don't have any six dollar shares anymore (sigh. another story), but I am sitting on a lot of shares that are 95% capital gains. A forced sale would wallop me in NYC with a minimum of 35% (LTCG 20%, Medicare 3.8%, NYS 9%, NYC 4%) which would make it most difficult to market time my shares back (I would almost certainly fail and lose more) and just mess with my mojo and compounding.

So I have been selling CCs 20+% outta da money for usually well under a dollar (fifty to sixty cents depending) on a regular basis and thanking my lucky stars that I have enough shares for this to translate into what the majority of the population would consider some serious cheddar. But based on the heroics of this thread, I decided to start being more aggressive with shares owned in my IRA, which bear no such tax risks. Selling near ATM calls. And in this case selling exclusively ATM calls for one hundred of my shares. But I also agreed to stick with the idea that these shares must not sell! Sorry for the long preamble.

For the first few weeks this turned out great, with me harvesting large numbers in comparison to my other way out of the money CCs. After all, selling for 26 and closing out for 14 a day later to look for another opportunity makes my weekly 20% OTM sales look sickly with their returns. There is a time commitment I cannot reliably guarantee, however due to my other obligations in life.

I will not track the specific catalysts that were moving the SP here, as TSLA always seems to have some monster catalyst coming and usually decides to move dramatically for 'no reason' at random as well.

On July 20 I STO a 7/22 740 C for a credit of 25 with the SP at 742. Was betting that evenings catalyst would not amount to much, a bet that had been working out pretty well. July 21 did not agree as the SP rocketed to 817 where I knew my CC was already in trouble so I rolled to a 7/29 750 C for a 2.8 credit hoping things would cool off. On July 25 with the SP holding at 810 I rolled to 8/5 750 C for a 8.1 credit.

The stock gave me a dip on July 26 to 777. Still being underwater, I decided it was time to pump up the strike price for future returns. I rolled out two weeks this time to an 8/19 770 C for a 5.15 credit. The SP began to skyrocket again and by July 29 with the price at 886 I began to despair that my CC's long term fate was bleak, so I concentrated again on increasing the strike with a roll to an 800 10/21 C for a 23.27 credit.

On August 2 with the SP at 910 and the stock split coming fast I guessed (incorrectly) that a continued run was in the cards, so I milked the time bank again, rolling out to 1/20/23 850 C for a credit of 14.

On August 9 the SP had dropped to 850, but I still didn't think much of my CCs chances come January 20. I bit the bullet and went ballistic, cashing in all my chips to seal my CCs disastrous fate with a roll to a June, 21 2024 1250C for a credit of 43.

I know the experienced denizens of this thread would have had better results with this, perhaps even the foresight to close the position for a small loss as the SP skyrocketed out of the 700s, but one of the rules I try to adhere to is to never roll for a debit. I must always be paid for my time.

But now my shares are milked and locked in, and I have to twist for next two years over my lost opportunities, gnashing my teeth and beating my chest. Or do I?

Let us examine my 'disastrous' foray into the world of CCs.

I began with a SP and a call strike of 740 and ended at 1250 for an increase of 510 points.

I received credits of 121.32 with my desperate and impatient rolls. If my shares are called away two years from now at 1250 my overall gain will be 631.32 for an 85% gain from where I started. 1250 is an all time high SP from where we stand right now. TSLA may well be at 2500 come June 2024, and I will be crying over my lost profits, but looking back over my history of trading, would that all my disastrous decisions had yielded an 85% gain over two years!

I guess the overall point of my post is that yeah, selling CCs can definitely hurt your returns if you have a monster stock, but I don't understand when people paint it as some sort of reckless casino roulette wheel that could lead to catastrophe. If you manage it and do your best to keep your shares, you will get returns even with an SP that is punishing you, and even if you don't get more involved and let them go to play the wheel.

Oh, and one more thing. I do believe that 2025 strikes are dropping in September.

Many thanks for sharing your experience and including such detail. I have some similar experience, and am diligently trying to work down my CC exposure as much as possible before the 2H which has arguably already begun. I rolled some DITM to April which is as far out as I’d like to go. My primary rule is rolls even for debits are justifiable when a greater level of capital gains is being protected/booked — which is even more attractive in non-taxed accounts where I do 90% of my TSLA trading. An obvious-to-many element which should be HIGHLIGHTED and UNDERLINED is that rolls need to be initiated ATM or barely ITM, as once they get to $100+ ITM they really have to go far out in time to roughly break even, holding capital hostage, but still being useful on the capturing capital gains justification.

 

[corduroy]

I closed my last remaining BPS from last week for pennies yesterday. I'm not selling anything on the call side ahead of the split, so I am waiting for a down day to sell some CSPs or BPS.

Off topic: I sold a bunch of BBBY BCS yesterday right before the bell, and just closed them all out at 90% profit. Kind of embarrassing to admit that I jumped into that silliness, but the set up was too irresistible. Turned out to be one of my most profitable trades in a while.

 

[juanmedina]

I am actually sad that we haven't had a good uptrend up to the split to sell some calls. I sold 950cc for $4 this morning and closed them for $2.56.

 

[Max Plaid]

Considering this is the fight for the bear-market, it seems pretty weak from Shorty...

It's a bit boring though, and very irksome, I want the SP to pop up to $930 so my -c900 sell order for next week triggers

 

[dc_h]

I just rolled a 12/16 1100 CC to a 8/26 875 CC for a $1.05 debit. I rolled out cause I didn't want to give up my shares, when the market shot from 800 to 940 and looked like it might keep going. I have 3 other 1100 calls still out there, but wanted to test putting this back in play for the wheel. Once called, assuming we don't drop back below 875, I'll sell 875 puts and take the income.
I don't recall anyone else rolling in on CC's. I may regret if we run to 1100 in the next 5 days, but think we may be in a channel until some good/bad news comes out.

 

[phantasms]

Considering this is the fight for the bear-market, it seems pretty weak from Shorty...

It's a bit boring though, and very irksome, I want the SP to pop up to $930 so my -c900 sell order for next week triggers

Funny. I just came in here to ask "how would you most profitably offload 100 shares?" and the above is something I was considering. I got these shares from a 900p exercising. Why are you waiting for $930 to write?

I could sell shares now, make ~$920
Sell a 900 for next week and make ~924 [if above 900 close]
Then I looked at the monthly and saw I could sell 900 9/16 and make ~965 [if above 900 close] Of course the further out the increased risk it's at 1200 and I feel bad or it's at 700 and I feel bad as I should have "sold the local top" and I walk away with only $65.

Thoughts? Any not advice? I just want to protect myself with some cash if this is in fact a bear market rally that's starting to cool off.

 

[Max Plaid]

Funny. I just came in here to ask "how would you most profitably offload 100 shares?" and the above is something I was considering. I got these shares from a 900p exercising. Why are you waiting for $930 to write?

I could sell shares now, make ~$920
Sell a 900 for next week and make ~924 [if above 900 close]
Then I looked at the monthly and saw I could sell 900 9/16 and make ~965 [if above 900 close] Of course the further out the increased risk it's at 1200 and I feel bad or it's at 700 and I feel bad as I should have "sold the local top" and I walk away with only $65.

Thoughts? Any not advice? I just want to protect myself with some cash if this is in fact a bear market rally that's starting to cool off.

Because I set a target of $50 for the premium and it needs to pop up there for the limit order to trigger - this for next week, no this, I already sold 20x -c900 for this

Bit of a yawn-fest today

Edit: wake me up when the Nasdaq crosses 13000...

 

[ReddyLeaf]

…….Bit of a yawn-fest today

Edit: wake me up when the Nasdaq crosses 13000...

Exactly what the MMs want. sell c/p917.50s

 

[MikeC]

Real quiet around here today. I’m guessing we’re flat to down tomorrow, up early next week, then sell the news Friday.

-Closed out my 8/19 -p900 too early today
-Sold 8/26 1000 CC @5.84 today
-Still holding 8/19 -p880/780, 9/16 -p860, various 8/19 CC (950-1060), plan to close today or tomorrow

 

[Jim Holder]

Hi, I have 1,100 long TSLA shares (avg $1,088). Looking to sell CC’s to carry me until the prices recover. Can the pros here share some insight if selling 10x CC 11/18 @1100 is appropriate and when is premium best during the day/week to sell them?

Thanks in advance