Wiki Selling TSLA Options - Be the House

[adiggs]

I posted a week or three back about trade tracking software. I have finally had a significant number of trades that needed tracking and was therefore able to put Wingman to see how it really works for my purposes. Whether it's the best or the most cost effective and those sorts of questions - I have no idea as I haven't tried anything else. I know that it didn't show up on any of the Best Of lists that I found.

What I've learned.
- Importing transactions for an account is straightforward. In fact I think I prefer their approach as it doesn't involve providing a user name / password. Instead I use my Investment history to identify the transactions starting at a custom date and download to a spreadsheet. Then there is an import function that knows how to read my particular format (and a half dozen or more common US brokerages) and imports those transactions. Easy and straightforward - probably the first important criteria to me.

- Once imported, at least so far, the app divies out the transactions as best it can figure out. This first round it didn't do all that well.

- Reassigning individual legs to higher level strategies / trades though was straightforward. I am hopeful that future imports will make better use of the transaction history and do a better job of assigning transactions, though I won't know for a week or two when I'll have another batch of transactions to import.

- I'm figuring out how to balance a trade with assigned strategy - do I just keep it rolling, adding new transactions as they arise (which happens with my semi-perma strangle). Or do I close out a transaction and start a new one when a particular leg finishes OTM? Still figuring this out.

- I HAVE figured out - in a particular account I'll only have 1 Covered Call strategy, and put all of the backing and option sales into that one strategy. I suspect that it'll just keep growing over time, but I'm not confident about that. At first I had 2 of these in my main account for the different purposes in my head about the positions - that was a mess, so I combined them.

- Cost is $50/month ($500 / year) and I've at least learned enough that I'm confident I'll pay for the second month (first month is a free trial).

- It's straightforward to get realized P/L for an account for a named month (i.e. May, June, ..). For a particular account of mine this has been my primary means of tracking forward progress.

- There is more analysis available, such as by strategy. I haven't used this yet.


After just a couple of weeks I'm pretty confident that I won't be going back to manual tracking.

I am still tracking my month to month macro progress and changes. But that's fast and easy - just a 1 liner for the month with maybe 10 cells to fill in, and they all come straight off my account summaries / totals.

 

[adiggs]

Thanks for the comments, I have much to learn about the Greeks.........

The first of the 3 chunks on the Option Alpha options education covers the greeks pretty well, at least in my estimation. There is a link to that education back on page 1 of this thread. It was about 6-10 hours to go through the videos in the first chunk and I highly recommend it. It'll go through Delta, Theta, and Vega (what I consider to be the big 3) - I also think they talk in a more cursory fashion about Gamma and Rho.

They don't really make this point so I'll mention it - we think of the Greeks as somewhat static. In reality these are all estimations at points in time on a continuous curve. If you remember your calculus, concepts from there will help. And if you haven't studied calculus then just realize that all of this stuff (including IV) are constantly changing based on market pricing, and that they change continuously as stuff is happening.


For instance - while delta might be .20 on a call (a $1 change in the share price is a $0.20 change in the option price), that $1 change in price will also change the delta itself (by Gamma it turns out!). Which is itself still an estimate as the first $0.50 change in the share price carries a $0.10 change in the option price and also a change in the delta (though smaller than the delta change from a $1 change in the share price). Which is itself is an estimate as the first $0.25 change in the share price changes the option price, etc..

Consequence - a $100 share price change can be estimated at inducing a $20 change in the option price. In reality it will be quite a bit different as that's a big enough move on the share price curve that it will induce a much larger change in the delta which will change the actual option price that we see.

And these delta changes might be overwhelmed by vega (changes to the option price due to changes in IV).

 

[ReddyLeaf]

I bought 14x 6/11 c630s for $2.20 during the MMD. Not perfectly timed, but pretty close. Really love today’s action and hopeful about tomorrow. I might sell some cc702.50s or cc755s if the action looks good on Thursday, but it’s probably just too risky.

Well, definitely had a good week, even though I was planning NOT to trade. I was on a road trip and expecting very little available time to watch the market. Those bought +c630s got sold for $3.50 ($1.30 profit). Unfortunately, I was in meetings around the Tuesday open and couldn’t trade. The pre-market looked sooooooooo good that I got greedy and put in a high $20 GTC sell order that never hit. A couple hours later, at a free 15min break, I just dumped them for a small $1800 profit, instead of a max $6000. Lesson: Buying weekly options requires constant vigilance (and getting both open and close correct).

Overnight Wednesday I put in a GTC order -c622.50 @$4.20 that eventually hit during the Thursday morning peak (again, busy at the time and was surprised to get the phone confirmation). Got “lucky” on that one, as the price crashed quickly, though by then it was petty obvious that $610 was the weekly closing target. I wanted to stay at least $10+ and an additional strike above the target. Finally, also rolled some -p617.50 6/11 (closed at about 50% profit) to -p610s 6/18 for a net $6.25 credit.

Summary: $10K profit that allowed me to build up my cash reserve and buy 15 shares, 3x my weekly target.

Next week, unfortunately/fortunately, will finally close out my -p800s that I sold back in January (unless by some miracle Elon announces a stock split before 9am Monday ). Not enough cash in my Roth IRA to buyback/roll. On a positive note, I will more than double the number of shares in that account, allowing for more weekly CC sales. This has been a dead albatross hanging around my neck from my first few greenhorn months of options trading. Now, hopefully, I’m smarter and selling more CCs will increase my average weekly accumulation to 10-20 shares.

 

[buttershrimp]

Well, definitely had a good week, even though I was planning NOT to trade. I was on a road trip and expecting very little available time to watch the market. Those bought +c630s got sold for $3.50 ($1.30 profit). Unfortunately, I was in meetings around the Tuesday open and couldn’t trade. The pre-market looked sooooooooo good that I got greedy and put in a high $20 GTC sell order that never hit. A couple hours later, at a free 15min break, I just dumped them for a small $1800 profit, instead of a max $6000. Lesson: Buying weekly options requires constant vigilance (and getting both open and close correct).

Overnight Wednesday I put in a GTC order -c622.50 @$4.20 that eventually hit during the Thursday morning peak (again, busy at the time and was surprised to get the phone confirmation). Got “lucky” on that one, as the price crashed quickly, though by then it was petty obvious that $610 was the weekly closing target. I wanted to stay at least $10+ and an additional strike above the target. Finally, also rolled some -p617.50 6/11 (closed at about 50% profit) to -p610s 6/18 for a net $6.25 credit.

Summary: $10K profit that allowed me to build up my cash reserve and buy 15 shares, 3x my weekly target.

Next week, unfortunately/fortunately, will finally close out my -p800s that I sold back in January (unless by some miracle Elon announces a stock split before 9am Monday ). Not enough cash in my Roth IRA to buyback/roll. On a positive note, I will more than double the number of shares in that account, allowing for more weekly CC sales. This has been a dead albatross hanging around my neck from my first few greenhorn months of options trading. Now, hopefully, I’m smarter and selling more CCs will increase my average weekly accumulation to 10-20 shares.

You know it’s interesting, as someone who had bought 100 shares at 880. Those p800 sounds like a bargain!

I guess I’m probably technically not smart to say I’d just get assigned but seems like even if you are wrong and way below cost basis, you can just sell covered calls anyway, and if wrong and you get shares called away, you could keep the party going right? Would you be able to catch up sooner that way? Just curious. Maybe the difference is that I prefer weeklies?

 

[adiggs]

Next week, unfortunately/fortunately, will finally close out my -p800s that I sold back in January (unless by some miracle Elon announces a stock split before 9am Monday ). Not enough cash in my Roth IRA to buyback/roll.

I'm getting pretty close to this same decision for myself. Some -p760s are still dangling around my neck, and though there are approaches to clear them up (which I've been using) those also involve exposing myself to leveraged risk. If those move against me then I might take an albatross and turn it into 4x albatross. I.e. - it's time to pay the piper and get back to a less stressful and less effort state.

 

[ReddyLeaf]

You know it’s interesting, as someone who had bought 100 shares at 880. Those p800 sounds like a bargain!

I guess I’m probably technically not smart to say I’d just get assigned but seems like even if you are wrong and way below cost basis, you can just sell covered calls anyway, and if wrong and you get shares called away, you could keep the party going right? Would you be able to catch up sooner that way? Just curious. Maybe the difference is that I prefer weeklies?

Well, I did initially receive $132 premium for those puts, but much like you, I used the premium to buy more shares at much higher prices than today’s. I’ll definitely get put these shares and will start selling weekly CCs. However, in the past six months I’ve learned that I generally make more premium selling weekly puts than calls (farther OTM call strikes because I’m scared of losing my shares).

So, moving forward, I intend to sell one CC very near ATM and sell the rest at about SP+30 (near 0.20 delta). I will probably let the one contract be called away, and use the cash to sell a cash-secured put. I really like the dynamic of having one CSP for every 4-5 CCs. If the SP rises too much, such that I don’t have enough free cash to buyback/roll the CCs, that means the CSP has decreased to near zero and can easily be repurchase. Closing the CSP releases the full cash amount (~$60,000 per contract), thus facilitating buyback of 10x CC at $60 ITM, or 5x CC at $120 ITM. If the SP runs $100+ in a week, I definitely want to be able to roll and take advantage of that appreciation.

 

[buttershrimp]

I'm getting pretty close to this same decision for myself. Some -p760s are still dangling around my neck, and though there are approaches to clear them up (which I've been using) those also involve exposing myself to leveraged risk. If those move against me then I might take an albatross and turn it into 4x albatross. I.e. - it's time to pay the piper and get back to a less stressful and less effort state.

Well, I did initially receive $132 premium for those puts, but much like you, I used the premium to buy more shares at much higher prices than today’s. I’ll definitely get put these shares and will start selling weekly CCs. However, in the past six months I’ve learned that I generally make more premium selling weekly puts than calls (farther OTM call strikes because I’m scared of losing my shares).

So, moving forward, I intend to sell one CC very near ATM and sell the rest at about SP+30 (near 0.20 delta). I will probably let the one contract be called away, and use the cash to sell a cash-secured put. I really like the dynamic of having one CSP for every 4-5 CCs. If the SP rises too much, such that I don’t have enough free cash to buyback/roll the CCs, that means the CSP has decreased to near zero and can easily be repurchase. Closing the CSP releases the full cash amount (~$60,000 per contract), thus facilitating buyback of 10x CC at $60 ITM, or 5x CC at $120 ITM. If the SP runs $100+ in a week, I definitely want to be able to roll and take advantage of that appreciation.

That’s a really good idea regarding position management, profiting on your safety stash. The ratio of # of calls to puts is an interesting consideration. I think ideally I’d own all of my shares (no margin) and sell naked puts with the buying power margin in my account. I’ve had to roll a bad position a couple of weeks ago and it was helpful to see how much margin rolling a bad position can eat up. I really prefer weeklies that are hand picked each week and not rolling a winning position.

I’ve only been doing the wheel now for 8 weeks and I have no idea how people sleep at night doing monthlies.

My two most enduring lessons are the most obvious: using margin to own shares is bad, and day-trading TSLA is death wish type stuff.

 

[alterac000]

That’s a really good idea regarding position management, profiting on your safety stash. The ratio of # of calls to puts is an interesting consideration. I think ideally I’d own all of my shares (no margin) and sell naked puts with the buying power margin in my account. I’ve had to roll a bad position a couple of weeks ago and it was helpful to see how much margin rolling a bad position can eat up. I really prefer weeklies that are hand picked each week and not rolling a winning position.

I’ve only been doing the wheel now for 8 weeks and I have no idea how people sleep at night doing monthlies.

My two most enduring lessons are the most obvious: using margin to own shares is bad, and day-trading TSLA is death wish type stuff.

I agree with your lessons. If using margin I recommend short term only unless you are a MM with the ability to move sp in the direction you want . I've spent this whole year digging myself out of a bad margin position with aggressive trades that sometimes work out, sometimes don't. But thanks to folks here have learned to roll my bad positions. Except naked calls, I still haven't quite figured out how to save those.
I've never tried to day trade shares but unless you are prepared to constantly set stops on both sides seems like it could be tough.

 

[ReddyLeaf]

That’s a really good idea regarding position management, profiting on your safety stash. The ratio of # of calls to puts is an interesting consideration. I think ideally I’d own all of my shares (no margin) and sell naked puts with the buying power margin in my account. I’ve had to roll a bad position a couple of weeks ago and it was helpful to see how much margin rolling a bad position can eat up. I really prefer weeklies that are hand picked each week and not rolling a winning position.

I’ve only been doing the wheel now for 8 weeks and I have no idea how people sleep at night doing monthlies.

My two most enduring lessons are the most obvious: using margin to own shares is bad, and day-trading TSLA is death wish type stuff.

It’s a good technique for me, because I only trade in IRAs, therefore no margin. Sold CSPs and CCs only. I’m not sure that I could stomach trading on margin.

 

[buttershrimp]

I agree with your lessons. If using margin I recommend short term only unless you are a MM with the ability to move sp in the direction you want . I've spent this whole year digging myself out of a bad margin position with aggressive trades that sometimes work out, sometimes don't. But thanks to folks here have learned to roll my bad positions. Except naked calls, I still haven't quite figured out how to save those.
I've never tried to day trade shares but unless you are prepared to constantly set stops on both sides seems like it could be tough.

Short term would be ideal for sure! I have to say, I don’t understand the purpose of naked calls, even though I placed one atm at 610 an hour before close, it was simply an alternative to a bought put and a bet that price would push back down before close …. I suppose the purpose of a naked call is an alternative to a bought put but with premium guaranteed if you forget to act? I suppose if more bearish, not owning the underlying allows you to sell a call without price drop depleting your capital?

 

[alterac000]

Short term would be ideal for sure! I have to say, I don’t understand the purpose of naked calls, even though I placed one atm at 610 an hour before close, it was simply an alternative to a bought put and a bet that price would push back down before close …. I suppose the purpose of a naked call is an alternative to a bought put but with premium guaranteed if you forget to act? I suppose if more bearish, not owning the underlying allows you to sell a call without price drop depleting your capital?

Forgive me I think used the wrong term. I have open calls exp Jan 22 that were unhedged when purchased. I am holding onto them since there is still time left but at the premium I purchased the sp would need to be about 860 just to break even.
I think selling naked calls will either tie up available cash or margin to cover the shares in case assigned, but I've never done that so not totally sure.

 

[adiggs]

That’s a really good idea regarding position management, profiting on your safety stash. The ratio of # of calls to puts is an interesting consideration. I think ideally I’d own all of my shares (no margin) and sell naked puts with the buying power margin in my account. I’ve had to roll a bad position a couple of weeks ago and it was helpful to see how much margin rolling a bad position can eat up. I really prefer weeklies that are hand picked each week and not rolling a winning position.

I’ve only been doing the wheel now for 8 weeks and I have no idea how people sleep at night doing monthlies.

My two most enduring lessons are the most obvious: using margin to own shares is bad, and day-trading TSLA is death wish type stuff.

That approach - owning all the shares and using their margin buying power to back short puts - would scare the dickens out of me . I only sell the puts I have the cash on hand to back (or nearly all - I'll use a little margin for this purpose). I want account value to stay at 100% even if I get all of my puts assigned. Otherwise if you get assigned then you'll end up owning shares on margin!

But my context is dividend generation, not capital growth. I've done my saving and growing into retirement - now I want an income from a stock I want to own that doesn't pay a dividend.

If it helps - my preferred ratio is 1-1.5 CSP for each CC. I've got a new Rollover IRA around $1M. In that account I bought 8 of those $300 strike Jun 2023 leaps and have enough cash left over to back 11 CSP (some new cash has arrived and it's time to recalculate - it might be 9 and 12 right now). When enough incremental premium collects I'll probably buy another of those long dated calls and go to 9 and 11. Then I'll probably let the cash stack up until I can get a 12th CSP, etc.. I'll bias towards buying more of the calls when the shares are cheaper and more cash / more puts as the shares go up (and I'll raise that cash by taking assignment on some shares / calls).

And I'll take assignment as appropriate when I consider the shares to be particularly cheap (put assignment) or expensive (call assignment). This turns into a very slow turning wheel - probably $550 and $750 using recent trading ranges to take 1 or 2 assignments.


I want more puts than calls for two reasons. The primary reason is that it seems like I earn more per contract on puts than calls.

The main reason is risk mitigation. The primary risk I worry about is shares going up and I don't participate all the way in that. The puts will be earning like crazy in that situation and I can (if I need to) use the put income to pay for call strike improvements. I'm not going to let my call strike get $200 ITM.

But again, my context is dividend / income generation from the options, with the shares or long dated calls as my exposure to upside in the shares when it comes.

 

[buttershrimp]

That approach - owning all the shares and using their margin buying power to back short puts - would scare the dickens out of me . I only sell the puts I have the cash on hand to back (or nearly all - I'll use a little margin for this purpose). I want account value to stay at 100% even if I get all of my puts assigned. Otherwise if you get assigned then you'll end up owning shares on margin!

But my context is dividend generation, not capital growth. I've done my saving and growing into retirement - now I want an income from a stock I want to own that doesn't pay a dividend.

If it helps - my preferred ratio is 1-1.5 CSP for each CC. I've got a new Rollover IRA around $1M. In that account I bought 8 of those $300 strike Jun 2023 leaps and have enough cash left over to back 11 CSP (some new cash has arrived and it's time to recalculate - it might be 9 and 12 right now). When enough incremental premium collects I'll probably buy another of those long dated calls and go to 9 and 11. Then I'll probably let the cash stack up until I can get a 12th CSP, etc.. I'll bias towards buying more of the calls when the shares are cheaper and more cash / more puts as the shares go up (and I'll raise that cash by taking assignment on some shares / calls).

And I'll take assignment as appropriate when I consider the shares to be particularly cheap (put assignment) or expensive (call assignment). This turns into a very slow turning wheel - probably $550 and $750 using recent trading ranges to take 1 or 2 assignments.


I want more puts than calls for two reasons. The primary reason is that it seems like I earn more per contract on puts than calls.

The main reason is risk mitigation. The primary risk I worry about is shares going up and I don't participate all the way in that. The puts will be earning like crazy in that situation and I can (if I need to) use the put income to pay for call strike improvements. I'm not going to let my call strike get $200 ITM.

But again, my context is dividend / income generation from the options, with the shares or long dated calls as my exposure to upside in the shares when it comes.

I see, due to my current situation, I’m in balls deep growth mode, learning the wheel is not how I make money (yet). But this sort of bullishness lead to me owning 1700 shares, half on margin as it rode down $100. I’ve experimented with synthetics these past 2 weeks which has been successful but has other problems I haven’t solved, such as buying short dated calls each week. I like owning the real thing.

for me, the idea of owning 1200 shares fully (instead of 1700) and using margin backed puts is simply an alternative to owning 500-700 shares on margin.

I am going to move more money over and increase cash in my account. But I don’t want to decrease my ability to recover my underlying losses in the stock on a ride down. My cost basis is much higher compared to folks on the thread. Plan B was simply to wait until my value rebounded and then sell all margined shares. Plan C (old me) would have bought even more shares with the amount I’m moving over . Progress happens in baby steps to me.

I could cut losses, but I’m not sure I would want to if I don’t have to.

Which idea is less awful? Owning a crap ton of shares on margin or being willing to buy shares on margin if things go down the tubes. I personally like the ability to roll and learn two sides of the wheel at the same time.

also, I’ve learned a most important lesson about making my strategy match my lifestyle, my schedule limits ability to watch ticker. I like idea of identifying roll points and breakeven points each week on weekly options I go into on Tuesday or Wednesday and setting alerts.

my plan is to get much less aggressive as I recover losses of underlying.

 

[adiggs]

I see, due to my current situation, I’m in balls deep growth mode, learning the wheel is not how I make money (yet). But this sort of bullishness lead to me owning 1700 shares, half on margin as it rode down $100. I’ve experimented with synthetics these past 2 weeks which has been successful but has other problems I haven’t solved, such as buying short dated calls each week. I like owning the real thing.

for me, the idea of owning 1200 shares fully (instead of 1700) and using margin backed puts is simply an alternative to owning 500-700 shares on margin.

I am going to move more money over and increase cash in my account. But I don’t want to decrease my ability to recover my underlying losses in the stock on a ride down. My cost basis is much higher compared to folks on the thread. Plan B was simply to wait until my value rebounded and then sell all margined shares. Plan C (old me) would have bought even more shares with the amount I’m moving over . Progress happens in baby steps to me.

I could cut losses, but I’m not sure I would want to if I don’t have to.

Which idea is less awful? Owning a crap ton of shares on margin or being willing to buy shares on margin if things go down the tubes. I personally like the ability to roll and learn two sides of the wheel at the same time.

also, I’ve learned a most important lesson about making my strategy match my lifestyle, my schedule limits ability to watch ticker. I like idea of identifying roll points and breakeven points each week on weekly options I go into on Tuesday or Wednesday and setting alerts.

my plan is to get much less aggressive as I recover losses of underlying.

Not-advice!

I keep going back to the long dated and deep ITM calls (I've begun converting shares to these calls - especially in IRA type accounts). These behave more like cheap shares than options.

Using the current pricing, 1200 shares at $610 is $732k.

The 300 strike Jun '23 calls last traded at $355. That is above the midpoint in the bid/ask spread (which is big - about $10). I'll use $350 for easy math. You can buy 20 of these calls (nearly 21). They have a delta of .91 (.9074) so the 20 contracts provides a delta of about 1800. The options have $40 in time value and $310 in intrinsic value. I think of that $40 time value as the margin interest / price for owning these replacements for shares.

But you'll be able to get some of that time value back when you sell / roll these options. If you were to hold these until 6 months to expiration that would gain you long term capital gains treatment (alternatively roll them just short of the 12 month window to take a short term tax loss). The 6 month contract (I'm using the Dec '21 300 strike call) is trading at $317. I'm using this as an estimate of time value remaining at 6 months to go - it has $7 time value. The net time value you're paying for is around $33 (about as low as I've seen it since I started tracking this contract). Of course the shares might have gone up to $1000 by Dec '22 / Jan '23 driving the time value to ~$0, but you'll hardly care about that - your $310 intrinsic value option now has $700 intrinsic value (2.33x value on a 2/3rds share price increase, not including the increase in delta).

In order to achieve the same or similar delta you could buy 15 contracts for $525k and have ~$200k left over to back puts with. You have something like 1350 delta vs 1200 delta (a small bit of leverage) and some left over cash. As a bonus you can sell 15 covered calls instead of 12!


Longer term for me at least, my intention is that I'll let these options dwindle down to 6-12 months (somewhere past the long term capital gains point for the accounts where that matters) but still a long time to expiration so that I can recoup as much of the time value as possible. And I'll roll at that point. If the shares have been roughly flat then I'll roll to a later expiration 300 strike. If the shares have gone up to say $1000 then I might roll up to $500 or something similar (deep ITM share replacement - probably target the .90 delta) and take some of my gains out. Rinse and repeat every year / year and a half or so.

The way I see it - the mindset around calls like these is that they are share replacements rather than leveraged exposure to share price movements (though they ARE leveraged exposure to share price movements - make no mistake on that point). And I'll use them like shares.


You could get more aggressive, like say the 400 or 450 strike call - even the 500s. You'll be paying more time value for a lower absolute option price and can continue to sell covered calls down to the call strike. It's an exercise for the reader to look up option prices and consider the tradeoffs.

If any covered calls get assigned then you'll either exercise the long dated ITM call to raise the 100 shares needed for the CC assignment (you might be better off selling the long dated call and buying 100 shares vs exercise of the call - math to do at the time).

 

[juanmedina]

Not-advice!

I keep going back to the long dated and deep ITM calls (I've begun converting shares to these calls - especially in IRA type accounts). These behave more like cheap shares than options.

Using the current pricing, 1200 shares at $610 is $732k.

The 300 strike Jun '23 calls last traded at $355. That is above the midpoint in the bid/ask spread (which is big - about $10). I'll use $350 for easy math. You can buy 20 of these calls (nearly 21). They have a delta of .91 (.9074) so the 20 contracts provides a delta of about 1800. The options have $40 in time value and $310 in intrinsic value. I think of that $40 time value as the margin interest / price for owning these replacements for shares.

But you'll be able to get some of that time value back when you sell / roll these options. If you were to hold these until 6 months to expiration that would gain you long term capital gains treatment (alternatively roll them just short of the 12 month window to take a short term tax loss). The 6 month contract (I'm using the Dec '21 300 strike call) is trading at $317. I'm using this as an estimate of time value remaining at 6 months to go - it has $7 time value. The net time value you're paying for is around $33 (about as low as I've seen it since I started tracking this contract). Of course the shares might have gone up to $1000 by Dec '22 / Jan '23 driving the time value to ~$0, but you'll hardly care about that - your $310 intrinsic value option now has $700 intrinsic value (2.33x value on a 2/3rds share price increase, not including the increase in delta).

In order to achieve the same or similar delta you could buy 15 contracts for $525k and have ~$200k left over to back puts with. You have something like 1350 delta vs 1200 delta (a small bit of leverage) and some left over cash. As a bonus you can sell 15 covered calls instead of 12!


Longer term for me at least, my intention is that I'll let these options dwindle down to 6-12 months (somewhere past the long term capital gains point for the accounts where that matters) but still a long time to expiration so that I can recoup as much of the time value as possible. And I'll roll at that point. If the shares have been roughly flat then I'll roll to a later expiration 300 strike. If the shares have gone up to say $1000 then I might roll up to $500 or something similar (deep ITM share replacement - probably target the .90 delta) and take some of my gains out. Rinse and repeat every year / year and a half or so.

The way I see it - the mindset around calls like these is that they are share replacements rather than leveraged exposure to share price movements (though they ARE leveraged exposure to share price movements - make no mistake on that point). And I'll use them like shares.


You could get more aggressive, like say the 400 or 450 strike call - even the 500s. You'll be paying more time value for a lower absolute option price and can continue to sell covered calls down to the call strike. It's an exercise for the reader to look up option prices and consider the tradeoffs.

If any covered calls get assigned then you'll either exercise the long dated ITM call to raise the 100 shares needed for the CC assignment (you might be better off selling the long dated call and buying 100 shares vs exercise of the call - math to do at the time).

What percent of your Tesla holdings are in LEAPs? I am at 20% right now. I am tempted about swapping more shares to options.

 

[UltradoomY]

I was waiting all weekend to see if my 610s were going to get called away, AH price put us above 610. Would've closed mine out if not for the power outage. Must have been dumb luck I was able to keep all my shares. Lesson learned...probably best not to wait to expiration to make major decisions, cause, life happens right??

If something ever happens with your trading platform, electricity or connectivity - you can call your broker and have them execute the trade for you over the phone.
Did this on a golf course once.....

 

[tradenewbie]

STO 650 - $4.5
STO 650 - $5.2

Couldn't resist on selling 1/3 of cc during the immediate jump. Will decide how it's going to play later on for the rest of it.

 

[ReddyLeaf]

STO 650 - $4.5
STO 650 - $5.2

Couldn't resist on selling 1/3 of cc during the immediate jump. Will decide how it's going to play later on for the rest of it.

I jumped too early. You did much better.
STO c640 @ $3.70
STO c620 @ $12.90 (select few that I expect to be called away).
BTC p610 @ $8.60 (50% profit, hoping to sell p605 at MMD).

 

[alterac000]

If something ever happens with your trading platform, electricity or connectivity - you can call your broker and have them execute the trade for you over the phone.
Did this on a golf course once.....

Sage advice. I'm going to put mine on speed dial just in case ever needed.

 

[kcveins]

Just had to say how much I appreciate this thread
I have not done any of the advance strategies thus far, but having this education has been tremendous
I have been able to add an additional 5% of shares in my IRA so far this year