Wiki Selling TSLA Options - Be the House

[adiggs]

Anybody using a trade tracking / journal program? I've been manually entering positions in a spreadsheet and finding that an increasingly untenable approach.

I duckduckgo'd to see if there was anything like this already out there:

tracking option trades at DuckDuckGo

DuckDuckGo. Privacy, Simplified.

duckduckgo.com

I found several options. Just reading the description I think I like the looks of this one the most:

Wingman - Trade Tracker for Options, Stock, and Futures

Trade tracking and analysis platform built for options/stock/futures traders. Import trades directly from your brokerage firm - no manual entry. Have your trades grouped and analyzed, so you can make faster, more informed trading decisions.

www.wingmantracker.com

That is because they spend the most time talking about the stuff that matters most to me - easy trade imports (export the CSV from broker; import the CSV into tool), and easy interface for assigning positions to trades (where they don't automatically get assigned). Keep tracking of an evolving position to see how it is performing over time. E.g. a PMCC with a long dated call paired up with a large series of short term short call sales.

Analyze trade types to see what is working best for me, etc..


I haven't tried anything like this, but I consider a trading journal essential. And one that has all trades - not just a subset I think important at the time. And the entry for this is becoming a problem for me

The downside - this is going to be $50/month or $500/year.

 

[juanmedina]

The ongoing pondering of the option chains continues.

With that short 760 put I have, here's an approach that uses all of the cash / margin backing the put for a call credit spread (equally doable with a put credit spread depending on one's belief in direction).

BTC 1x-760p June 4
STO 76x-600c May 28
STO 76x+610c May 28

The $10 spread is $1000 per contract in margin / cash backing. A 760 put uses $76k in backing, so BTC on that frees up the backing. Use that backing for that many call credits with a $10 range. This particular credit spread is generating around $2.70 for each contract. I chose the -600c as something I believe today to be likely to finish OTM.


The put side with a similar end result would be a -565/+555 put credit spread. I think I have a lot more belief in a <600 finish to the week, than a >565 finish.


As bxr keeps pointing out, there sure are a lot of approaches and mechanisms here.


EDIT to add: A benefit of this particular trade structure is that this can be performed against however many of the ITM contracts as one has. If one were deep ITM with 10x-760p then you'd be opening 760 of the call spreads. At least with my broker that will take 1 ticket for each 2 of the puts I roll this way (limit of 200 contracts in a leg).

Fidelity has a mechanism to remove the commissions on option trades. But also involves turning over like $2M to one of their money managers to manage on your behalf. Start trading multiple tickets with 150 contracts on them - the commissions start adding up, over and above the bid/ask spread friction.

Here it is:

Exclusive program benefits for Wealth Management Clients | Fidelity Rewards+ | Fidelity

Fidelity Rewards+ offers exclusive benefits to wealth management clients. Learn more about our industry leading value here.

rewards.fidelity.com

And hey - 3% cash back on credit card purchases - what's not to love!?!


EDIT again to add: Throw in that "free" (margin perspective) put spread that is WAY far OTM. Say a +490/-500 for a ~0.35 credit. Over 76 contracts per 760p you're rolling out of for a bonus $35*76 = ~$2500ish!

I am thinking about doing that selling WAY OTM spreads before earnings when the IV is highest and then get the IV crush. We are afraid about trading the week of earnings but they usually end up being disappointing. I am thinking about going 20% OTM and even doing ICs.

I sold some CC's 652.5s 5/28 for $2.57. What CC's do you have for next week?

 

[corduroy]

TSLA implied volatility (IV) is 53.2, which is in the 3% percentile rank. This means that 3% of the time the IV was lower in the last year than the current level. The current IV (53.2) is -4.9% below its 20 day moving average (55.9) indicating implied volatility is trending lower.

I haven't seen IV at these levels since I've been tracking. Seems like a great entry point for buying LEAPs to just hold or use in vertical debit spreads, especially after the 5 down weeks in a row we just had.

 

[adiggs]

I am thinking about doing that selling WAY OTM spreads before earnings when the IV is highest and then get the IV crush. We are afraid about trading the week of earnings but they usually end up being disappointing. I am thinking about going 20% OTM and even doing ICs.

I sold some CC's 652.5s 5/28 for $2.57. What CC's do you have for next week?

I have 600s for 5/28 expiration for most of my positions.

But I also have 550s that are there as a roll position for some -760p - the put was so deep ITM that 550s were as far as I could reasonably roll to. I expect that the 550s will get rolled at least 1 week and maybe 2 weeks, sometime this week, as I don't really expect shares < 550, but I do expect shares < 600 at end of week.


Any new CCs or call credit spreads that I put on this week are (today) going to be using the 600 strike. If we open up $50 on Monday morning, then of course I'll make a new plan!

 

[juanmedina]

I have 600s for 5/28 expiration for most of my positions.

But I also have 550s that are there as a roll position for some -760p - the put was so deep ITM that 550s were as far as I could reasonably roll to. I expect that the 550s will get rolled at least 1 week and maybe 2 this week as I don't really expect shares < 550, but I do expect shares < 600 at end of week.


Any new CCs or call credit spreads that I put on this week are (today) going to be using the 600 strike. If we open up $50 on Monday morning, then of course I'll make a new plan!

with the way bitcoin is trading I don't think you have to worry about that .

 

[adiggs]

I've been thinking about roll logic for short calls and puts, and I think I'm figuring some stuff out that I haven't previously had conscious. The important ah-hah is that the roll logic changes for OTM and ITM positions. To be clear, by roll I'm not referring to the convenience rolls from a winning position to a new desired OTM position. I'm referring to rolls for managing positions - deep ITM rolls; ATM rolls to lower risk, that sort of thing.

An observation - in all circumstances, short calls get better as the share price goes down, and short puts get better as the share price goes up.

However the roll logic is different between the two, and I think it boils down to the amount of time value in the position plus the amount of time value in the new position.


For OTM positions we'll tend to get a better roll by rolling calls at a relatively high share price. Though the current call is relatively richly priced, the new call will have an extra week of time value and be even better prices.

Therefore the best time to roll an OTM put is at a relatively low share price, as that'll provide a better price to the new position (which will be a bigger improvement than the relatively bad time to close the existing position).

In both cases, while OTM, just waiting for more time value to decay is often the best choice.


When deep ITM the best roll timing switches. For a deep ITM put (the thing I've been spending the most time thinking about lately) the best time to roll is at a relatively high share price. This is when that put is the least ITM, and the less ITM will provide better rolls (better roll = max strike improvement for net credit). Reverse the logic for deep ITM calls.


I haven't previously been anything like this systematic about these rolls. The insight for me is that while ITM and OTM puts (or calls) always benefit in the same way from changes in the share price, the logic for when to roll is flipped between the two.

(NOT ADVICE. My own observation that you'll need to consider and see if it also makes sense and is useful to you)

 

[adiggs]

TSLA implied volatility (IV) is 53.2, which is in the 3% percentile rank. This means that 3% of the time the IV was lower in the last year than the current level. The current IV (53.2) is -4.9% below its 20 day moving average (55.9) indicating implied volatility is trending lower.

I haven't seen IV at these levels since I've been tracking. Seems like a great entry point for buying LEAPs to just hold or use in vertical debit spreads, especially after the 5 down weeks in a row we just had.

And here I've been buying LEAPs as share replacement lately. What good timing

 

[buttershrimp]

I've been thinking about roll logic for short calls and puts, and I think I'm figuring some stuff out that I haven't previously had conscious. The important ah-hah is that the roll logic changes for OTM and ITM positions. To be clear, by roll I'm not referring to the convenience rolls from a winning position to a new desired OTM position. I'm referring to rolls for managing positions - deep ITM rolls; ATM rolls to lower risk, that sort of thing.

An observation - in all circumstances, short calls get better as the share price goes down, and short puts get better as the share price goes up.

However the roll logic is different between the two, and I think it boils down to the amount of time value in the position plus the amount of time value in the new position.


For OTM positions we'll tend to get a better roll by rolling calls at a relatively high share price. Though the current call is relatively richly priced, the new call will have an extra week of time value and be even better prices.

Therefore the best time to roll an OTM put is at a relatively low share price, as that'll provide a better price to the new position (which will be a bigger improvement than the relatively bad time to close the existing position).

In both cases, while OTM, just waiting for more time value to decay is often the best choice.


When deep ITM the best roll timing switches. For a deep ITM put (the thing I've been spending the most time thinking about lately) the best time to roll is at a relatively high share price. This is when that put is the least ITM, and the less ITM will provide better rolls (better roll = max strike improvement for net credit). Reverse the logic for deep ITM calls.


I haven't previously been anything like this systematic about these rolls. The insight for me is that while ITM and OTM puts (or calls) always benefit in the same way from changes in the share price, the logic for when to roll is flipped between the two.

(NOT ADVICE. My own observation that you'll need to consider and see if it also makes sense and is useful to you)

@adiggs to understand what you are saying here…. Let’s say I sell a weekly put tomorrow strike price 570 (assuming it market open is at 578);

Let’s say it grabs a premium of $12….

Now fast forward to Friday and let’s say stock price is one of the following:

1) 565

2) 545

3) 500

I’m trying to understand the cost of rolling these positions at each of these scenarios?

 

[adiggs]

@adiggs to understand what you are saying here…. Let’s say I sell a weekly put tomorrow strike price 570 (assuming it market open is at 578);

Let’s say it grabs a premium of $12….

Now fast forward to Friday and let’s say stock price is one of the following:

1) 565

2) 545

3) 500

I’m trying to understand the cost of rolling these positions at each of these scenarios?

Hard for me to answer this question as these are prices at a point in time rather than an evolving price position over the week.

What I'm thinking of - I have 2 positions deeply ITM that will illustrate. The 760p I have - everything else being equal I'll be better off rolling while shares are at $590 than at $560. In practice I'm so far ITM that it won't really matter. But the 640p I also have - that might roll for a strike improvement all on its own at $590/share, while it probably won't have a strike improvement at $560.

This is opposite of when you'll find good sales prices on a new OTM put - you want the shares as low as possible when selling a new OTM put. So the 560 price for selling an OTM put, 590 price for rolling a deep ITM put.


I also have a 400c. Everything else being equal I'll be better off rolling that at $560 rather than $590 (though in practice it's so deep ITM that it won't matter). That is backwards from an OTM call where you'll get a better price or a higher strike when the shares are higher. Thus selling a new OTM call when shares are at 590, while I'd want to roll that 400c (or even a 550ish call; I have some of those too ) when the shares are at $560.


This also goes to something I'm going to be more disciplined about. There are two rolls that I do. The first is something I call a convenience roll. I have a winning OTM position that is nearing expiration and it's time to establish a new position. I use a roll for convenience to get from the old to the new position. Both are OTM. I could also BTC and immediately STO; or BTC and wait a day or 3 and then STO. I have complete flexibility and my new position will be whatever choose. This is also a position that is generating income and earnings.

The real roll that I'm generally talking about - my more disciplined approach is that on these rolls, I'll be rolling for maximum strike improvement and minimal credit. There won't be any attempt to balance the credit with strike improvement. I am in effect making the decision to postpone the earnings from the position I established in exchange for minimizing any risk (I'm real risk averse, in a universe where the financial management people think I'm a hair-on-fire risk taking lunatic).

 

[wnorris]

Anybody using a trade tracking / journal program? I've been manually entering positions in a spreadsheet and finding that an increasingly untenable approach.

I duckduckgo'd to see if there was anything like this already out there:

tracking option trades at DuckDuckGo

DuckDuckGo. Privacy, Simplified.

duckduckgo.com

I found several options. Just reading the description I think I like the looks of this one the most:

Wingman - Trade Tracker for Options, Stock, and Futures

Trade tracking and analysis platform built for options/stock/futures traders. Import trades directly from your brokerage firm - no manual entry. Have your trades grouped and analyzed, so you can make faster, more informed trading decisions.

www.wingmantracker.com

That is because they spend the most time talking about the stuff that matters most to me - easy trade imports (export the CSV from broker; import the CSV into tool), and easy interface for assigning positions to trades (where they don't automatically get assigned). Keep tracking of an evolving position to see how it is performing over time. E.g. a PMCC with a long dated call paired up with a large series of short term short call sales.

Analyze trade types to see what is working best for me, etc..


I haven't tried anything like this, but I consider a trading journal essential. And one that has all trades - not just a subset I think important at the time. And the entry for this is becoming a problem for me

The downside - this is going to be $50/month or $500/year.

I have been using TraderSync since November and have enjoyed it. Since I am still working and have two kids I have not been able to spend as much time with it as I would like and certainly not maximizing the usefulness of the tool. There is definitely a learning curve to optimize how the program will best work for your style of trading. If you are trading multiple strategies and take the time to tag by strategy you could definitely gain from using the tool.

It is definitely not cheap, but if you sign-up and wait they will sometimes throw offers at you at a lower cost.

Edit: I just checked and I paid 39.98 per month for the Elite package for a year. Much less than what they are advertising on their site at the moment.

 

[Chenkers]

STO 25 x IC 550/575 640/665 @ $8.45 for $21,000 total credit. Currently up $4k so hopefully it continues to pay out.

I also converted 1 x DITM 755P- into 10x 595/550BPS. These are losing value much faster than the DITM Put so going OK so far. Unfortunately I wasn't in time to do the same with the 2 x 780P- but then there's always the next dip.

 

[juanmedina]

I sold 14x $617.5 for $4.5 average and 4x $630s at $3. Crappy timing on the 617.5s.

 

[tradenewbie]

STO
3X612.5 @ 8.34
3X630 @ 3.95

Let see how it goes

 

[dl003]

I havent said this out loud, but this thread is an irreplaceable source of encouragement. Whenever I start worrying about my short calls, I come in here and look at your trades and then I feel fine.

 

[adiggs]

With that short 760 put I have, here's an approach that uses all of the cash / margin backing the put for a call credit spread (equally doable with a put credit spread depending on one's belief in direction).

BTC 1x-760p June 4
STO 76x-600c May 28
STO 76x+610c May 28

The $10 spread is $1000 per contract in margin / cash backing. A 760 put uses $76k in backing, so BTC on that frees up the backing. Use that backing for that many call credits with a $10 range. This particular credit spread is generating around $2.70 for each contract. I chose the -600c as something I believe today to be likely to finish OTM.

I've been continuing to ponder this idea, and I realize that while I like the end result, I AM THINKING ABOUT THIS WRONG. And the wrong way of thinking about this matters.

The better way to think about this is that I am biting the bullet and recognizing my loss in that 760p. Just take that loss, own it, and get to work earning back the loss.

And the beginning of earning it back, in this particular case, is a credit call spread. But it could have been anything designed to start earning it back. And I should choose that position on its own merits. One notion being that if I decide to do $50k IC positions, then I should do that here as well. Don't choose a weird sized position, and muck up the winning vs losing trade ratio by having an odd sized position, or choose the strikes at something other than exactly what I want.

The one thing that I feel I have gotten right about how to think about this trade, is that BTC on the 760p WILL free up that $76k backing it and make it available for some other purpose.


Or at least these are my opinions. NOT ADVICE. I know that I'm thinking about this wrong for me at least.

 

[adiggs]

what is "lcc"?

On these leap covered calls, at least in the Fidelity Active Trader desktop app, I'm finding these show up as Debit Spreads - not as covered calls. Which makes sense - buying the leap and selling the call definitely carries a debit.

I don't know if others are seeing these as covered calls when the trades are grouped - thought this would be interesting for others.

 

[alterac000]

I've been continuing to ponder this idea, and I realize that while I like the end result, I AM THINKING ABOUT THIS WRONG. And the wrong way of thinking about this matters.

The better way to think about this is that I am biting the bullet and recognizing my loss in that 760p. Just take that loss, own it, and get to work earning back the loss.

And the beginning of earning it back, in this particular case, is a credit call spread. But it could have been anything designed to start earning it back. And I should choose that position on its own merits. One notion being that if I decide to do $50k IC positions, then I should do that here as well. Don't choose a weird sized position, and muck up the winning vs losing trade ratio by having an odd sized position, or choose the strikes at something other than exactly what I want.

The one thing that I feel I have gotten right about how to think about this trade, is that BTC on the 760p WILL free up that $76k backing it and make it available for some other purpose.


Or at least these are my opinions. NOT ADVICE. I know that I'm thinking about this wrong for me at least.

I think this is also something I learned reading all the great ideas here, and the creative ways to exit positions.
Agree that in effect step one is to admit a bad play. I've had several that I did not gracefully exit hence sitting on a huge capital loss for this calendar year, and still trying to figure out how to exit Jan 22 700c ~60% down (I know there is still time but recent price action isn't giving me much optimism, and position size was way bigger than I should have taken so psychologically it weighs on me daily). But learning here I have also managed to mitigate and exit some of my other losses in much better ways.

I also agree that in your case closing out the -760p will free up room to work with other plays. What I haven't yet figured out though is how to compare risk of some of these alternative plays vs the original position. In your case, what is the risk of the original -760p vs IC vs credit call spread vs other? Or do we say that if there is at least some relative reduction in risk then you give it a go?

 

[buttershrimp]

sto 12x cc622.50@5

 

[adiggs]

I think this is also something I learned reading all the great ideas here, and the creative ways to exit positions.
Agree that in effect step one is to admit a bad play. I've had several that I did not gracefully exit hence sitting on a huge capital loss for this calendar year, and still trying to figure out how to exit Jan 22 700c ~60% down (I know there is still time but recent price action isn't giving me much optimism, and position size was way bigger than I should have taken so psychologically it weighs on me daily). But learning here I have also managed to mitigate and exit some of my other losses in much better ways.

I also agree that in your case closing out the -760p will free up room to work with other plays. What I haven't yet figured out though is how to compare risk of some of these alternative plays vs the original position. In your case, what is the risk of the original -760p vs IC vs credit call spread vs other? Or do we say that if there is at least some relative reduction in risk then you give it a go?

Good questions all

I'm trying out condors as a mechanism for incremental cash. For now using a consistent sizing that is bigger than experiment money, while being less than I'd like to be using assuming that these work out and I find a good method for choosing the strikes. For now I've got my 2nd and 3rd open for this week and we'll see how these go.


I think that part of the answer lies in how you think about each trade - make sure that trades you link together in your mind really do go together.

In the original case that I wrote about (BTC 760p, open call credit spread), I was BTC a ~$200 option premium ($20k) and then opening a call spread with $76k margin backing it and about $56k as the max loss. I might like the new position better, and it was 1 week shorter, but a move against and I would gain resolution with a losing position by taking a larger loss.

Hence the importance of thinking about this position better - that it really is two separate trades, each with their own risks and rewards, costs and benefits. And upon review I'm not interested in that 76 contract position, mostly because that's not my "standard" position size and I want consistent position sizes so that I can better track wins and losses, and whether my overall results from condors is ahead or behind. Am I winning enough? And an odd sized position will make that more difficult to track.

 

[bxr140]

I've been thinking a lot about ICs. I can't remember if I posted about this previously, but the short summary is that if we assume each IC is a full win or a full loss (a gross simplification I know) then the win rate needs to be REALLY high to actually generate positive results.

That's DEFINITELY not the right way to look at a credit spread and/or an Iron Condor.

A credit spread should be thought of in the same way as a single sold contract. The idea is to finish OTM and if you finish ITM you roll out of it or eat the loss. While the magnitude of risk and magnitude of reward are different, the fundamental approach to the kinds of credit positions is not.

Rolling a spread might prove difficult if also the long leg ends ITM.

We talked about this one upthread--this is DEFINITELY a misleading statement. Rolling any credit position that's ITM gets more and more 'difficult' the farther ITM the sold contract. Rolling a credit spread that's so far ITM that the long is also ITM is no more difficult than an equivalent naked/covered ITM...and in fact, the spread actually becomes progressively easier than the naked/covered if the long is ITM because the max loss is pretty much fixed.