That’s why most of the trades in this thread involve selling options instead of buying them. Buying options can produce some amazing results, but those are often cancelled out by the losing trades (because time is your enemy).
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
That’s why most of the trades in this thread involve selling options instead of buying them. Buying options can produce some amazing results, but those are often cancelled out by the losing trades (because time is your enemy).
This morning I swapped my 10 puts 1300 for 10 puts 1400 (both for 8/7). Net premium gain was 50.5k. I’m fairly confident we will be not be going much lower over the next few weeks as we approach earnings and onwards. And even if I get assigned the shares at 1400 there are still some nice call premiums to be had, even if the SP is 100, 200 or 300 points lower.
I decided that I didn't like the way my July 24 and Aug monthly puts were evolving. Closed them with a nice $ profit at low % (at least for me), and opened this week and next week puts to replace them. Something I'll monitor - does my $/day/contract go up or down with the closer date puts. Initial results indicates they'll go up a lot, but the longer dated puts were in about as bad of a situation as they could have been in, while the shorter puts they're compared to were in near ideal circumstances; need a lot more data to form a real opinion.
I've also gone back into covered call writing - mostly this week for very small premiums ($1-2 scale), and really going out on a limb - 1 position for next week. The larger strategy here being - don't write for the far side of known / planned events, and stick to really low deltas (.10 down to .05, and then go down further to get to the far side of one of the volume positions / OI walls).
I guess overall, the puts are for making money, and the calls are for generating dividends, is how my own strategy has evolved. And I'm not at all reluctant to put the covered call sales on hold anytime, when the whim strikes (I'm pretty much in the market full time with the puts though).
I've also gone back into covered call writing - mostly this week for very small premiums ($1-2 scale), and really going out on a limb - 1 position for next week. The larger strategy here being - don't write for the far side of known / planned events, and stick to really low deltas (.10 down to .05, and then go down further to get to the far side of one of the volume positions / OI walls).
I guess overall, the puts are for making money, and the calls are for generating dividends, is how my own strategy has evolved. And I'm not at all reluctant to put the covered call sales on hold anytime, when the whim strikes (I'm pretty much in the market full time with the puts though).
pz1975
Active Member
My funnel strategy has been working well the last 3 days. Once TSLA stabilized after the run up Monday, I started selling puts and calls for this and next Friday. As usual, I started way OTM (1100 and 1200 puts, 1600 and 1800 calls) and have been selling more closer to the SP every day. Today I sold 1300 and 1325 puts and 1450 and 1500 calls. I think these will all expire worthless but will close them sooner if there is a move tomorrow.
The nice thing about this strategy is that after a big move like Monday, the IV goes way up so every option sold garners a much higher profit per contract than usual. And TSLA typically consolidates after a big move so the most valuable time for the strategy is when the move has ended and consolidation has begun.
I have also started selling much more OTM options for next week. I will avoid July 24 of course due to the ER.
The nice thing about this strategy is that after a big move like Monday, the IV goes way up so every option sold garners a much higher profit per contract than usual. And TSLA typically consolidates after a big move so the most valuable time for the strategy is when the move has ended and consolidation has begun.
I have also started selling much more OTM options for next week. I will avoid July 24 of course due to the ER.
Yes. Those long dated puts are great if you are willing to wait it out, not very exciting
. The premiums don't really go down much relative to the SP increase.
ssq
Member
Fellow Optioneers!
Does it make sense to roll some of these ITM options to ATM/OTM at this point, or even roll out the near term ones out with credit? Your inputs are most welcome.
Does it make sense to roll some of these ITM options to ATM/OTM at this point, or even roll out the near term ones out with credit? Your inputs are most welcome.
Interesting dynamic I'm starting to notice - my covered calls are far enough ITM that buying them back is nearly 'free'. Free as in the loss buying back the calls is offset by the current gains in the shares (the loss is in the time value).
If we were flattish, I'd let them be assigned and work the other side of the wheel with them. With such a strong upwards bias, I'm thinking of paying to get out of the position, with the mindset I'm buying out the time value and retaining the ITM value.
Decisions, decisions.
If we were flattish, I'd let them be assigned and work the other side of the wheel with them. With such a strong upwards bias, I'm thinking of paying to get out of the position, with the mindset I'm buying out the time value and retaining the ITM value.
Decisions, decisions.
I saw this tweet yesterday... Everything is rigged
Now I wondering if my $2150 covered call for the 24th its safe lol. I tried to close it out but the way OTM options would not drop at all in price even after big dips we had the other day.
Wow the premiums for anything on 24th are insane... Now I don't feel so good about my $1600 bucks :/
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Indeed, this happened to me, I think just last week, no? $1200 strike I let exercise at $1208, then the SP shot to $1400 on Monday...
So today were looking to close above $1500 on a day when we should have been pushed under $1400 and definitely NOT above $1500...
Mondays the stock usually rises...
I think some big players woke up, plus the MM's decided it was too hard to keep capping and delta-hedged instead.
If it's me I wouldn't close it. I would just let it execute if it expires ITM, since to me selling at that price is fine. I got some 8/21 2250c and 2850c which I'll take the same approach. If it's ITM by 8/21 I'd roll it to pass November so I don't get hit with short term cap. gain.
Edit: I mean I would roll it to November expiration then let the shares be called so I don't get ST Cap. Gain tax.
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Today's been a stressful day, and it's going to continue next week.
I've punted on the covered calls by rolling them to next week, same strike. My hypothesis for staying at the same strike is that this big move today is market manipulation and we'll see it come back down next week in a big way. If I'm right, then the bad move today will turn into a big drop at the start of next week (and a big win) next week. Mostly I'm not thinking clearly right now and didn't think about the new strike on the roll in any meaningful depth.
Or this roll will just postpone and increase the pain next week.
Oh - and in accord with my hypothesis of a big drop early next week, I closed the puts today as well. Those lost a lot of premium, and if I'm right about a big drop on Monday, then I'll be able to reopen at a good price.
The net change on that covered call position was something like a $50 premium loss on the close, and a new covered call position for $120 that is $70 ITM. I'll be pretty aggressive about closing the new position if I get the opportunity. Collected a big net credit on this roll - that's a plus. For those interested, the new call position is at the .67 delta
What have I learned?
1) I must have made a mistake when attempting to enter roll trades previously, as I was able to enter this trade as a roll (multi-leg trade) where previously I've just done the 2 legs separately.
2) I'll invest more energy in the future gaming out some more extreme possibilities and what I'll do if they happen. Having even an outline of an idea of how to respond is a good idea, and I didn't really have one. Heck - I thought the disastrous position was going to expire worthless today - oops.
3) I thought a $60+ gap at the start of the day was plenty. Turns out that wasn't close to enough cushion. A second position even further OTM also went ITM by a lot - closed that at a loss, though now that I've entered a roll successfully, I would do that over as a roll (puttlng a lot of weight on my prediction of a big drop on Monday - that could be a big mistake
)4) I haven't tallied up the damage yet. I could come out of this WAY ahead (I've never sold a 1 week $120 premium option before). And the pain may just be starting.
5) Not knowing I had the roll option, I sold the call that I wanted to hold until earnings. Nice profit on that, but not in accord with the plan (sell that option on earnings day, prior to close). And then I waited and the extra money still wasn't enough to just close those calls. So some ignorance leads to an early close of a position that's roughly 4x what I started with (no crocodile tears here). Now I know I can roll options, at least in this one account, and I'll be making more use of that transaction type in the future.
On balance - not well prepared for something this extreme, exacerbated by trading mistakes. I don't yet know if the net result is stress plus a big loss, or stress plus a big gain.
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Yeah, when I first bought into TSLA I have thought if it reaches $3000 in a few years I'd be happy to sell. Looks like it might not take that long, even with a global pandemic. Unbelievable.
pz1975
Active Member
My funnel got broken with that big move today! I was able to close out my calls with moderate losses as the SP moved up. In the end my remaining sold OTM calls + all my sold puts ended up essentially breaking even this week against those losses. That's why I like this strategy - even when the SP moves massively against the strategy, as long as I am watching and closing threatened positions along the way, I can still escape breaking even (or maybe a small loss like some other weeks have). Overall so far, I have ended up profiting $4,000-15,000 75-80% of the time and breaking even or losing $1,000-3,000 20-25% of the time.
Heh - mine got shattered, partly because I was greedy over dimes early this morning when I could have closed the covered call for a gain. In retrospect I regret that somewhat, but in the end -- not really. Reason being that it looked to me like I had plenty of cushion and there wasn't anything I knew then to lead me to believe that today was going to be so dramatically different from any other day. There wasn't something I knew then that would have enabled me to make a different decision.
In fact, using what I knew then, I had already changed my decision - I'd decided to close out that position at .25 instead of waiting for the 1 to 10 pennies range, and every bit of anything I've learned or experienced said that was a safe choice.
Regret over woulda / coulda / shoulda isn't interesting to me; it's what did I know then that I didn't act on, or acted differently on, that I can use to change my behavior in a similar situation in the future.
And no tears and no particular grief for me - just more learning that could translate into net pay by end of next week (and might not as well). One possibility for the moment - I might be rolling those calls yet again to 7/24 (sometime next week) with the idea of capturing higher IV in the option prices, and using the post earnings IV crush to close the position (while risking a continual move up after earnings - ugh).
Oh - and amidst this stress and misery, the portfolio is up better than 6 months of pay. #FirstWorldProblems
I am selling calls in my IRA. I end up closing it... I have a feeling that Monday is going to be another good day so I will try to sell another call father out for the same money.
Wow not trying to rub it in or anything but seriously writing calls for TSLA is too risky and I believe we all talked about it in this thread just in the last couple of weeks. I guess it is a lesson learned. I would not be surprised if this was a manipulated price action initiated by people/MMs who had access to the order book. Not only do they squeeze shorts but steal shares from longs who wrote those options. Such crazy action.
You are so much better off selling puts for such nice premiums.
You are so much better off selling puts for such nice premiums.
Not envying the painful split some of you guys ended up in today. Such a big squeeze on no news can kill short term option positions. Those few hundred or few thousand dollars of premium then become very costly.
My 10 sold puts 1400 for 8/7 did okay, but the premium loss was not as much as I had hoped for (from 152.00 to 115.00, which isn’t much decay after a 150 point rise).
My 10 sold puts 1400 for 8/7 did okay, but the premium loss was not as much as I had hoped for (from 152.00 to 115.00, which isn’t much decay after a 150 point rise).
I sell the puts as well - those 2 positions (opened yesterday and today; and both closed today) quickly became 2 of my best trades ever (in $/day/contract - I treat same day open/close as 1 day). They had aways to go, but with such an extreme move today, I decided to close anyway and evaluate next week what puts to sell then. I think the likelihood of a significantly lower share price on Monday is good.
And my guess is you're right about the manipulated price action - one of the articles floating around was about this being a 1 million contract expiration. Some of the articles suggest that this is in service of levering shares out of people's hands so that institutions can get in. If so, that looks like evidence of a share squeeze coming (as opposed to a short squeeze), and represents evidence of the company being seriously undervalued even after today's run.
Now that is an interesting thought.
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