Wiki Selling TSLA Options - Be the House

[Dancing Lemur]

Are you guys really arguing over the definition of bullish and bearish?

As @bxr140 said above, it's a spectrum. Why not talk about how to quantify it instead? Sorry if this is too basic to be discussed for a lot of you experienced options traders, but it's some advice I wish someone had given me before I got slaughtered back in the day.

Going back upthread to a key point in this good post:

[...]
Otherwise, selling ~short(ish) expiration calls against leaps is a great idea! I find them very useful for damping out the negative impact of decreasing IV and time decay.
[...]

That addresses monitoring the theta of your positions (the rate of option price movement based on time). Additionally, tracking the delta of your positions (the rate of option price movement based on the price of the underlying stock) gives you a basic understanding of how price and time currently affect your holdings.

The proffered advice is just that: If you trade options, monitor the delta and theta of your positions, both individually and across all holdings for the underlying.

If nothing else, it'll give you something besides the ticker to stare at. You can add it to your "positions" tracker in most any brokerage's software. There are other Greeks that you can monitor too (the derivative's second derivatives, as it were), but I use delta and theta to inform every trade, and watch them obsessively.

I currently have 10 TSLA positions; stock, 8 sets of long calls at different exp/strikes, and short calls covering some of those expiring this week. The positive theta of the short weekly calls more than makes up for the negative theta of the other 8 long positions. That number changes based on the current stock price and time to expiry, so watching it will give you a better feel for how that three-dimensional curve looks, at least intuitively.

Similarly, the delta of my current positions is a solidly positive number, and that will change based on stock price and time, too. Watching, and managing, the interaction of the two is how I think of my TSLA portfolio, rather than worrying overly about any one of those individual components.

So, if you don't have it already, I suggest you add the delta, theta (and IV while you're at it), to your portfolio positions tracker page and watch how they change over time and price movement. Then you'll have some numbers to determine how "bullish" or "bearish" a position is.

 

[bg3wg3]

Been a lurker in TMC investor threads for many years. Thanks, everybody!!

I've mostly been a buyer of TSLA stock and LEAPS, but am now considering switching over to something more like the wheel. I wanted to see what typical weekly and monthly price changes TSLA has experienced over the years, so I put this together and thought it might benefit others:

 

[Discoducky]

The way it works for me is that when I sell to open a CC, I'm super happy to collect the premium which makes me neither bearish or bullish, just a bit richer. Then as time passes I get happier when the call goes up in price as the underlying stocks go up which makes me bullish. I get unhappy when times passes and the CC price increases a lot as I could have sold it for more with less of a time decay, but oh well and again neither bull or bear. But then when the CC is in danger of executing I'm still happy as I've set my sell expectations appropriately and I know the stock fluctuates and I can get those shares back which makes me bullish.

I never feel like a bear, even though I may sometimes be forced to sell.

I get some may feel bearish and I'm ok with that and let it go like I'm letting go of stocks I know I'm going to get back with OTM puts or just buying on dips.

 

[adiggs]

Busy morning for me.

I purchased 1 lot worth of shares at $730 and then wrote a ~.30 delta straddle against those shares at 760c and 710p expiring this Friday for about a $20 premium between the 2 options.

I wrote additional 675 and 680 puts as well, down closer to the .15 delta.


I'm treating this lot worth of shares as a trading position I will use to write some not very OTM calls. I also plan to go weekly with these for at least awhile, as the weekly positions will enable more frequent adjustments. I'm interested in seeing how these close OTM options perform and get some experience with them.

My trading plan is to mostly ignore the position(s) until Thursday and then make a decision about rolling to the Jan 15 contract on Thursday or waiting an extra day to roll. I'll roll the call as long as I can roll to the ATM or maybe slightly ITM contract at a net credit. If the call falls too far ITM, then I'll let it go; take the trading profit and open up a new trading position. Similar idea on the put side.

 

[adiggs]

Busy morning for me.

I purchased 1 lot worth of shares at $730 and then wrote a ~.30 delta straddle against those shares at 760c and 710p expiring this Friday for about a $20 premium between the 2 options.

I wrote additional 675 and 680 puts as well, down closer to the .15 delta.


I'm treating this lot worth of shares as a trading position I will use to write some not very OTM calls. I also plan to go weekly with these for at least awhile, as the weekly positions will enable more frequent adjustments. I'm interested in seeing how these close OTM options perform and get some experience with them.

My trading plan is to mostly ignore the position(s) until Thursday and then make a decision about rolling to the Jan 15 contract on Thursday or waiting an extra day to roll. I'll roll the call as long as I can roll to the ATM or maybe slightly ITM contract at a net credit. If the call falls too far ITM, then I'll let it go; take the trading profit and open up a new trading position. Similar idea on the put side.

And hey! Look - the puts I just sold are down 10-20% almost immediately. This is par for the course though - still plenty of room to still be OTM, and the time decay is working aggressively in my favor with only 5 trading days to expiration.

 

[sub]

The way it works for me is that when I sell to open a CC, I'm super happy to collect the premium which makes me neither bearish or bullish, just a bit richer. Then as time passes I get happier when the call goes up in price as the underlying stocks go up which makes me bullish. I get unhappy when times passes and the CC price increases a lot as I could have sold it for more with less of a time decay, but oh well and again neither bull or bear. But then when the CC is in danger of executing I'm still happy as I've set my sell expectations appropriately and I know the stock fluctuates and I can get those shares back which makes me bullish.

I never feel like a bear, even though I may sometimes be forced to sell.

I get some may feel bearish and I'm ok with that and let it go like I'm letting go of stocks I know I'm going to get back with OTM puts or just buying on dips.

Are you saying you have zero concern getting shares called away and having to buy back in later at a higher price? I'm not talking about shares you bought specifically to sell calls against, I'm talking about shares you plan to hold for many years? My concern is that it works until it doesn't, and the lost gains on the lost shares will never be made back selling premium.

 

[bkp_duke]

Are you saying you have zero concern getting shares called away and having to buy back in later at a higher price? I'm not talking about shares you bought specifically to sell calls against, I'm talking about shares you plan to hold for many years? My concern is that it works until it doesn't, and the lost gains on the lost shares will never be made back selling premium.

Here's the way out of that dilemma: if your call that is expiring say this Friday has been run up, and you risk your shares being called away, then you can almost always "Roll" your call forward to a new expiration, and likely at a higher price. You take advantage of Theta decay to protect your core position.

 

[sub]

Here's the way out of that dilemma: if your call that is expiring say this Friday has been run up, and you risk your shares being called away, then you can almost always "Roll" your call forward to a new expiration, and likely at a higher price. You take advantage of Theta decay to protect your core position.

Yup, I understand what adjustments could possibly be made. What I try to do is plan for the worst case scenario, then decide if I'm ok with that outcome. I'm just not sure I want to risk any shares, I want to accumulate more! Who's been doing the wheel or covered calls only over the last couple of years and can say they have come out ahead or at least not lost any shares while collecting the theta decay?

 

[st_lopes]

Yup, I understand what adjustments could possibly be made. What I try to do is plan for the worst case scenario, then decide if I'm ok with that outcome. I'm just not sure I want to risk any shares, I want to accumulate more! Who's been doing the wheel or covered calls only over the last couple of years and can say they have come out ahead or at least not lost any shares while collecting the theta decay?

I have been selling premium since April 2020, all puts sold are on margin (margin that I would generally not otherwise touch). So, to answer your question, I am better off since I otherwise would NOT have used the margin to buy shares.

I have averaged 7k/week since starting to sell premium. 86% success rate on positions. On 14% where I closed the position at a loss (rather than having shares assigned, though I did take assignment once and flipped the shares for a nice gain the next week), all ended with rolls that were net add'l premium.

In December, I also started selling covered calls after having shifted from 90/10 leaps to shares to all shares. Effectively, I am now selling weekly strangles, where I am ~2:1 puts to covered calls.

The CC hurt on 12/31, where I did give up upside on the core shares (but I still had some Jan 15 500c that more than made up the difference). Plus, the upside that I lost has been made 50% back as of today's gap-up, and will make back entirely by next week if both sides of my next strangle play out.

This week's position:
660p 01/08 - CLOSED at 70% gain (STO $9.9, BTC $2.9)
780cc 01/08 - STO $4.25

Next week's position:
670p 01/15 - STO 10.05
cc TBD; likely 800-850 depending on where we end this week

 

[LN1_Casey]

New year, new tax reporting period. I've finally gone the dark side and dipped into margin as well. Hope I don't Ford it up too badly.

But I sold one CC for 800 Jan8 at $2.35 (pennies before a steamroller), and then sold one margin put at 650 Jan8 for $2.80 because it was too tempting. I need about $40k sometime soon-ish, possibly, so might as well start chipping away that price without resorting to selling my shares. If the CC pops, hey, $800 is not a bad price at all.

 

[juanmedina]

I have been selling premium since April 2020, all puts sold are on margin (margin that I would generally not otherwise touch). So, to answer your question, I am better off since I otherwise would NOT have used the margin to buy shares.

I have averaged 7k/week since starting to sell premium. 86% success rate on positions. On 14% where I closed the position at a loss (rather than having shares assigned, though I did take assignment once and flipped the shares for a nice gain the next week), all ended with rolls that were net add'l premium.

In December, I also started selling covered calls after having shifted from 90/10 leaps to shares to all shares. Effectively, I am now selling weekly strangles, where I am ~2:1 puts to covered calls.

The CC hurt on 12/31, where I did give up upside on the core shares (but I still had some Jan 15 500c that more than made up the difference). Plus, the upside that I lost has been made 50% back as of today's gap-up, and will make back entirely by next week if both sides of my next strangle play out.

This week's position:
660p 01/08 - CLOSED at 70% gain (STO $9.9, BTC $2.9)
780cc 01/08 - STO $4.25

Next week's position:
670p 01/15 - STO 10.05
cc TBD; likely 800-850 depending on where we end this week

So about $500 per put per week on average?

I sold 2 610p 01/15 for $5 and a 680p 01/08 for $6.

I also sold 14x 01/21/22 1050c just to see what happens.

 

[sub]

I have been selling premium since April 2020, all puts sold are on margin (margin that I would generally not otherwise touch). So, to answer your question, I am better off since I otherwise would NOT have used the margin to buy shares.

I have averaged 7k/week since starting to sell premium. 86% success rate on positions. On 14% where I closed the position at a loss (rather than having shares assigned, though I did take assignment once and flipped the shares for a nice gain the next week), all ended with rolls that were net add'l premium.

In December, I also started selling covered calls after having shifted from 90/10 leaps to shares to all shares. Effectively, I am now selling weekly strangles, where I am ~2:1 puts to covered calls.

The CC hurt on 12/31, where I did give up upside on the core shares (but I still had some Jan 15 500c that more than made up the difference). Plus, the upside that I lost has been made 50% back as of today's gap-up, and will make back entirely by next week if both sides of my next strangle play out.

This week's position:
660p 01/08 - CLOSED at 70% gain (STO $9.9, BTC $2.9)
780cc 01/08 - STO $4.25

Next week's position:
670p 01/15 - STO 10.05
cc TBD; likely 800-850 depending on where we end this week

Thanks for the info. Your situation is not exactly what I'm referring to but still good data. I'm referring more to either selling covered calls, or using cash you could/would otherwise own shares with to sell puts. Compare that to holding just shares over the last 2 years, I don't see how it's possible to be anywhere near close. I would love to sell calls against my shares every week and use that cash to buy more shares. One issue for me is my shares are in an IRA and that account is 100% TSLA. No margin allowed.

 

[st_lopes]

So about $500 per put per week on average?

I sold 2 610p 01/15 for $5 and a 680p 01/08 for $6.

I also sold 14x 01/21/22 1050c just to see what happens.

Closer to $1000 per put, but I usually clip at 70%.

I generally aim for $10 premium on puts and $5 on calls, but all depends on what delta is (usually aim for 0.3 on either side) and what’s happening with stock price that week.

My premium per week also went up significantly later in year (as I rotated out of leaps). Something like 2-3k/week in April - July and closer to 10-20k/week in Aug onward.

 

[st_lopes]

Thanks for the info. Your situation is not exactly what I'm referring to but still good data. I'm referring more to either selling covered calls, or using cash you could/would otherwise own shares with to sell puts. Compare that to holding just shares over the last 2 years, I don't see how it's possible to be anywhere near close. I would love to sell calls against my shares every week and use that cash to buy more shares. One issue for me is my shares are in an IRA and that account is 100% TSLA. No margin allowed.

You won’t find many here selling cash covered puts (rather than margin covered).

I don’t believe you need margin to sell a covered call. I can sell them in my local IRA equivalent.

 

[adiggs]

You won’t find many here selling cash covered puts (rather than margin covered).

I don’t believe you need margin to sell a covered call. I can sell them in my local IRA equivalent.

I've only begun selling margin covered (and very lightly at that) puts in the last couple of weeks. Strictly cash secured otherwise since April/May. And easy to rely on cash secured puts when you're working with cash you don't need immediately, but you also don't want in any stock (such as having a year or 2 of living expenses in cash).


I don't yet have a feel for how badly things can go in a big move downwards using margin backed puts and that's got me being very cautious about relying on margin for any of these. So far, about my limit is using margin to round up to the next contract (so selling 4 puts at some strike, instead of 3.3).

But I'm also in more of an income mode now - as long as the income is sufficient, then the portfolio growth is nice and irrelevant. Thus risk of a big loss due to too many short puts is something I only sip at

 

[pz1975]

I've been selling margin-covered puts for awhile now as part of my "funnel" strategy. I try to never use more than 50-60% of my margin to avoid a margin call if the SP drops quickly. It's only happened once so I sold a bunch of my profitable sold puts sooner than I normally would have at the time to build the margin back up. The ones in the red I eventually had to roll out and down. If the SP looks like it is moving down fast, I don't hesitate to buy the puts back at a small loss to avoid risking a big loss. I sell puts usually quite OTM so I have a lot of breathing room before they start to build big losses. As expiry gets closer then I sell more puts closer to the SP but still OTM. I usually do this selling covered calls as well, but haven't been since S&P was announced except for very near and OTM (like $850s today for this week).

 

[st_lopes]

I've been selling margin-covered puts for awhile now as part of my "funnel" strategy. I try to never use more than 50-60% of my margin to avoid a margin call if the SP drops quickly. It's only happened once so I sold a bunch of my profitable sold puts sooner than I normally would have at the time to build the margin back up. The ones in the red I eventually had to roll out and down. If the SP looks like it is moving down fast, I don't hesitate to buy the puts back at a small loss to avoid risking a big loss. I sell puts usually quite OTM so I have a lot of breathing room before they start to build big losses. As expiry gets closer then I sell more puts closer to the SP but still OTM. I usually do this selling covered calls as well, but haven't been since S&P was announced except for very near and OTM (like $850s today for this week).

This is something I should do more often, namely leave more margin available to react on a price move against me. Great food for thought.

 

[Nate the Great]

I do not know if this has been discussed yet up thread. But there no monthly options for April & May.

 

[ReddyLeaf]

Thanks for the info. Your situation is not exactly what I'm referring to but still good data. I'm referring more to either selling covered calls, or using cash you could/would otherwise own shares with to sell puts. Compare that to holding just shares over the last 2 years, I don't see how it's possible to be anywhere near close. I would love to sell calls against my shares every week and use that cash to buy more shares. One issue for me is my shares are in an IRA and that account is 100% TSLA. No margin allowed.

You won’t find many here selling cash covered puts (rather than margin covered).

I’m one, but because I’m limited in the IRA (no margin, can only sell CSP & CC, or buy C/P). I’m trying to build up enough to round out 100 share lots. Around Christmas, I had enough to sell a 575p, which I was then able to roll to a 585p last week. These are definitely lower premium OTM, but it’s the best I can do, and I’m treating this as a paid internship in options. The underlying SP is moving faster than I can roll up the puts, definitely suggesting that holding TSLA would be better.

As with others, I was pretty busy trading today as well. On the other side of the wheel, I’m nervously selling a few CCs, trying to generate cash from the premiums without losing the shares. Last week: STO 1x 03/19 850c at $43.43. Today: STO 2x 03/19 850c at $53.81 (I had some 900c orders that didn’t hit and I didn’t feel like chasing). Then, essentially timed a roll forward: STC 01/22 690/700c at $65/$70 and BTO 2x 01/29 720c at $56.50. I don’t have enough free cash to exercise the latter calls, so I’m just rolling them forward and trying to collect enough premium to convert to 100 shares. Unfortunately, these trades are spread between three different accounts, so cash-constrained and convoluted.

Edit: I’ve only traded options for a few months, but most of my profits have been on held shares, and bought calls (during the S&P run up), not selling CCs or CSPs.

 

[ammulder]

Well, I feel like I made a mistake today. I wanted to sell a 1/15 put, and it seemed like there was just no MMD, so I gave up waiting and sold with the stock price in the 730s. Then the dip came and the rest of the day was in the 720s and this put has been red since like 5 minutes after the trade. Sigh. Wait for the dip!!

I’ve just been going for cash from puts for living expenses, but I’m going to try to grit my teeth and wait until next Friday, and if I get assigned then I get to try the CC part of the wheel.