Still cautious about AI Day, so sold 20x082021C725 @ $1.08 in the last hour.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
This dynamic, plus an ugly % loss is why I use such wide spreads ($100 right now). The problem I have with a $20 wide spread is two fold:
1) is mechanical - That $20 spread manages effectively within $10 of the short position. The additional management approach mentioned above is nearly unavailable - you can shrink the spread size to $10 and double the number of positions to buy time, but if the shares don't turn around you're in max loss territory with even less room to maneuver for more time.
With the wide spread size I still have effective roll options up to $50 ITM on the short leg. And if I want to use the increase leverage / decrease spread size approach to management then I probably have 2 and maybe 3 of those choices available to me on the way to a max loss. I.e. shrink the spread size down to $50 while doubling the number of positions should be a pretty big short side improvement. Another shrink / double down to $25 is available.
The unrealized losses start getting really ugly, but a turn around in the share price turns the position green really fast (because it's getting progressively larger and larger amounts of leverage in it).
2) is emotional. With a $20 spread size I get $$ in my eyes and start actually using a lot of the margin that could be used for this. The example I worked above - a $700 ccp (cash covered put) takes $70k as backing. A $20 spread size credit put spread needs $2k, though I could sell 35 of them! Woot! $$ everywhere!!! So I 'restrain' myself and only sell 20 ($40 at risk instead of $70k). Except that in practice losing the $40k is relatively easy - losing the $70k is nearly impossible.
Thus by using a $100 spread size, I 'only' have 7 for 1 leverage available (sell 7 of these $100 credit put spreads instead of a single ccp).
With the shares up today - it's time to evaluate some call sales! I'm feeling gun shy after the 2 down days that pushed on my BPS so hard. I'm pretty sure that I also jumped the gun by 2 days with the rolls on Monday but they also decreased the upset stomach (some) and that makes them effective in my book. And if we get back over $700 this week or next then the weekly income continues at a much higher pace than target as the BPS will all achieve as close to 100% gain as I want to take them (I'll close them well short of 100%).
Anyway - enough about the credit put spreads - I'm leaving them alone for today. Another big up day tomorrow might change that.
On the call side let's do some 715's for this week for 2.50ish. This is 1/2 or a bit less than available 'slots'. I'm mostly doing these using my 'rule' of selling into strength, and that means up for calls. Today is up - therefore sell calls. My plan is a pretty aggressive roll, if needed, for strike improvement if the shares get back to that 715ish range we were previously in. Or think of these as my market taunt to come and get me - if we get in range of these 715s then those credit put spreads are looking great and are a MUCH bigger position.
'Market taunt' is a purely emotional thing for me and comes from my personal observation that at times it seems like whatever I do, the market moves in a fashion best designed to make my stomach churn. It's not an actual thing of course - the market doesn't care about my piddling positions
My IC has now closed for $200 Loss instead of $790 max loss I was sitting at yesterday. Pretty sweet.
BPS if you're in max loss territory, no way to manage it but ride it out. Like adiggs and other side, once you cross the midpoint of the strike, you can't roll for credit. I tried, I looked almost a year out and no way. So I just held it because I was already at max loss. I did close my call side yesterday, if I hadn't, then my call side would've gone up today and would cost me more to buy back. So for the IC, I closed the call side on max loss day, then I treat the put leg as a BPS and just manage the same as everyone else.
I also opened up some bear call spreads for credit (thought it's very ATM), risking it again.
Yesterday I did yolo on 2 9/17 bought debit calls spreads $750 for $7.75 each. I felt we were bottoming with 2 days of big % downs. Those calls were worth $13 when I sold it this morning (This was to help make back my $200 mentioned above). So far so good. Let's see what happens tomorrow and Friday.
BPS if you're in max loss territory, no way to manage it but ride it out. Like adiggs and other side, once you cross the midpoint of the strike, you can't roll for credit. I tried, I looked almost a year out and no way. So I just held it because I was already at max loss. I did close my call side yesterday, if I hadn't, then my call side would've gone up today and would cost me more to buy back. So for the IC, I closed the call side on max loss day, then I treat the put leg as a BPS and just manage the same as everyone else.
I also opened up some bear call spreads for credit (thought it's very ATM), risking it again.
Yesterday I did yolo on 2 9/17 bought debit calls spreads $750 for $7.75 each. I felt we were bottoming with 2 days of big % downs. Those calls were worth $13 when I sold it this morning (This was to help make back my $200 mentioned above). So far so good. Let's see what happens tomorrow and Friday.
dc_h
Active Member
The week is young, but glad I didn't roll out my BPS. I closed 630-620 and 650-640 BPS this morning and have 690-680, 685-675 and 670-660 still open and CC at 705 and 720. I did try to roll some put spreads yesterday, but had aggressive prices. Glad they didn't hit. I only sell each BPS in increments of 5 contracts and only have 13 covered calls. My account doesn't let me sell calls against leaps, which limits me on the CC's right now. Sometime after Q3 or Q4 earnings, I intend to sell my leaps and move back to 100% shares. Appreciate the guidance of the thread, the collective wisdom is really helpful when short term trends to against you.
Short term, I'm funding one college student without touching capital and a downpayment on a new Model 3, which along with a Y will end family use of any ICE cars and like Lycanthrope, have a home update due in the spring that I'm trying to fund.
Short term, I'm funding one college student without touching capital and a downpayment on a new Model 3, which along with a Y will end family use of any ICE cars and like Lycanthrope, have a home update due in the spring that I'm trying to fund.
I know it is broken record time, but.....
Always take a minute before rolling early or closing out a position like a spread. Many of the early rolls or closes Monday and Tuesday could have been avoided is you just "did nothing"
The market is going move around and that is good for us as it will increase IV for higher premium.
Size your positions right and be ready when it's time to roll if needed - like tomorrow.
I know this doesn't work for everyone since we all have an emotional component to our investment thesis, but it literally pays to be clinical and as emotionless as possible.
I am still holding my $685/$595 spreads from last Friday that expire 08/20 and fully expect to be able to close them out tomorrow at 85% or better.
Sorry if I am coming off crass, that is not my intention.
Pick your positions for a reason and then stand by them until you can't but don't give away your theta!
Cheers!
Always take a minute before rolling early or closing out a position like a spread. Many of the early rolls or closes Monday and Tuesday could have been avoided is you just "did nothing"
The market is going move around and that is good for us as it will increase IV for higher premium.
Size your positions right and be ready when it's time to roll if needed - like tomorrow.
I know this doesn't work for everyone since we all have an emotional component to our investment thesis, but it literally pays to be clinical and as emotionless as possible.
I am still holding my $685/$595 spreads from last Friday that expire 08/20 and fully expect to be able to close them out tomorrow at 85% or better.
Sorry if I am coming off crass, that is not my intention.
Pick your positions for a reason and then stand by them until you can't but don't give away your theta!
Cheers!
Easier said than done of course, price could have stayed mid 600's with no good opportunity to roll with just as much likelihood in my opinion. From my experience it's really impossible to say, some weeks rolling on Monday would have been best, some weeks Thursday. I don't think I've ever really regretted a roll, but I've regretted not rolling at times. Either way I'm very happy it rebounded, but we'll see where things go from here.
dc_h
Active Member
I rolled to 8/20 705 CC two weeks ago and lost income on 9 calls I could have sold the last two weeks. Not sure I could have waited that out, but the market closed at 700 that week and I could have avoided a wasted week, with a little more patience. Not always possible though. On the bright side, before undestanding rolling, I might have wasted a lot of money buying the CC's out, when the market turned against me.
Also NOT-ADVICE, but a counterpoint or additional consideration.
@UltradoomY observation has also been nearly my own 100% observation (and my typical response to trades going against me). Like all things market related, it works until it doesn't. Being ready for the second part is also part of trading choices.
My counterpoint was back when I had sold some low 800s puts (Feb ish). I didn't take early roll opportunities as the shares drop, nor did I make use of any of the incremental management strategies (because I hadn't learned them at that point) that I've been learning from y'all these last several months, and ended up with puts going nowhere for 5 months (due to how deep ITM they went). I finally got them closed at what was probably an overall (small) profit about a month ago by using put credit spreads (if not, they would STILL be ITM and have been going nowhere for yet another month).
I let those get too deeply ITM and was patient, waiting for the pop back up. There wasn't a pop back up - the shares kept on going down into the high 500s while I was hanging onto high 700s puts.
I fully agree with the idea that patience / do nothing is frequently the best response when selling options. Because this is a natural reaction for me (do nothing) it is also one reason I rarely BTO low DTE options - I take too much of a patient / wait and see attitude and watch them melt away to valueless.
I believe @Lycanthrope will tell us that is why he sticks to cash secured / covered puts - he has the ability to wait forever (subject to needing that cash for some other purpose) if he really needs to. This is the reason for selling covered calls (whether shares or leaps as backing) instead of margin backed calls, as again, one can hang onto the short call forever if needed / desired waiting for the share price to come back.
And to wrap - this is why I say we all make our own decisions and experience our own consequences. The value here is getting other points of view that we use to inform our own. Reading the main thread yesterday in the depths of a second big down day was very helpful to my 'do nothing' choice. It was also my own decision yesterday to do nothing - not anybody else's (as my 'do something' response on Monday
).
Amazing how active this thread has become over the past few months. I have been away for a while but will look to be more active in the thread. All these new terms like BPS are scaring me lol.
I’m still doing my regular put selling and closing them out on a weekly basis.. I got assigned a few times but quickly used the wheel strategy. This week I bought some Sep calls just because this correction did not make any sense. Good luck to everyone
I’m still doing my regular put selling and closing them out on a weekly basis.. I got assigned a few times but quickly used the wheel strategy. This week I bought some Sep calls just because this correction did not make any sense. Good luck to everyone
One things I crank into my own thinking, as the conundrum you identify is precisely what I (and many of us) faced on both Monday and Tuesday, are this 'lost week' problem.
I rolled on Monday, partly because I was able to roll for a small but adequate credit, that would enable me to maintain weekly income at a decreased but adequate rate (in this particular case -- adequate - 2x target instead of the 4x target I hit the first week in August). That made it a lot easier to move into what I felt was a safer position given we were at a start of a long and sustained move down, than staying pat, while also capturing sufficient upside to not regret the do something choice.
Related to this and something I see missing for many in society ... do you know what 'enough' is? My own observation is that at least here in the USA, many behave as if there is never enough. If you've got a $1M portfolio, then clearly $2M is better. And it keeps going - if $2M is enough, then clearly $4M is better. And if $4M was more than enough, then it would be a lot more fun to have $8M. And wow $8M is fun, but it's hard to spend any of that when it could be used to get to $16M. And somewhere along the way the belief that $2M was somewhere between enough and amazing was lost.
Similar idea on the income side. Is there 'enough' after which risk mitigation / safety / sleep at night (or early morning in my case
) is actually more valuable than the incremental $$ earnings? If $100k/year is enough, then $200k will be like way better. And then $400k will be way more fun, followed quickly be it being hard to spend much of that $400k because it can be used to pyramid into $1M, etc.. My own belief - if I don't know what 'enough' is for me and my focus is on maximizing the $$ results each week, then that's also a good way to work myself into a loss chasing those bigger gains, and/or putting too much energy / stomach acid into the effort. Knowing what 'enough' is, is also a big help in managing the non-$$ aspects of what we're doing.
But that's me!
I rolled puts out to 8/27 and down a bit $685, still making premium amazingly
also selling lcc spreads as while I hope AI day takes the stock up, I doubt it.
also selling lcc spreads as while I hope AI day takes the stock up, I doubt it.
I think this along with your other post in response to me is great.One things I crank into my own thinking, as the conundrum you identify is precisely what I (and many of us) faced on both Monday and Tuesday, are this 'lost week' problem.
I rolled on Monday, partly because I was able to roll for a small but adequate credit, that would enable me to maintain weekly income at a decreased but adequate rate (in this particular case -- adequate - 2x target instead of the 4x target I hit the first week in August). That made it a lot easier to move into what I felt was a safer position given we were at a start of a long and sustained move down, than staying pat, while also capturing sufficient upside to not regret the do something choice.
Related to this and something I see missing for many in society ... do you know what 'enough' is? My own observation is that at least here in the USA, many behave as if there is never enough. If you've got a $1M portfolio, then clearly $2M is better. And it keeps going - if $2M is enough, then clearly $4M is better. And if $4M was more than enough, then it would be a lot more fun to have $8M. And wow $8M is fun, but it's hard to spend any of that when it could be used to get to $16M. And somewhere along the way the belief that $2M was somewhere between enough and amazing was lost.
Similar idea on the income side. Is there 'enough' after which risk mitigation / safety / sleep at night (or early morning in my case
My own belief - if I don't know what 'enough' is for me and my focus is on maximizing the $$ results each week, then that's also a good way to work myself into a loss chasing those bigger gains, and/or putting too much energy / stomach acid into the effort. Knowing what 'enough' is, is also a big help in managing the non-$$ aspects of what we're doing.
But that's me!
The drop from January to mid March was roughly 40% - I know that we will see these along the way for the coming years as well.
I am personally trying to treat each week with appropriately sized positions to be able to have max loss one week and be fine with it.
However there are a ton of techniques that can be applied now, such as a flip/roll, increasing one position size on the short leg, etc. that gives much more freedom in waiting.
When looking at things in a wide view, I don't see another 40% drop this year, and probably not next with as many catalysts happening - new Giga's, FSD rollout, Dojo (will see tomorrow) and additional Giga markets and locations.
But either way, will be sizing positions correctly just in case!
I was saying never to roll early, that can't be helped sometimes, just that waiting it out is very effective "most" times and trusting the reason you opened a position has a lot to do with it.
At some point - the Gut feeling comes into play and you have to trust it.
I fully agree, it's a very slippery emotional slope. I have thought a lot about the "what is enough?" question lately, and I have do have a particular goal in mind that is pretty firm. The one thing that keeps me generally sane is that all of this options trading is simply a side project. I'm 99% a buy and hold guy, and probably more diversified than a lot of the TSLA enthusiasts here, though I do keep adding to my long term TSLA position. Any trading I do has 0 risk of affecting negatively what I consider my core investments/savings. It is also one reason that I am not retired yet as I am unwilling to play these games as a means of true income generation for my livelihood yet, but I consider it good practice for when that day comes. I would have definitely been a lot more chill about this week's price movement had I stuck to sold puts and not BPS but it's been a pretty good lesson (and hopefully will not end up being an expensive one). I do find it really educating and interesting to see here how various folk trade, and their varied tolerances for risk and loss.One things I crank into my own thinking, as the conundrum you identify is precisely what I (and many of us) faced on both Monday and Tuesday, are this 'lost week' problem.
I rolled on Monday, partly because I was able to roll for a small but adequate credit, that would enable me to maintain weekly income at a decreased but adequate rate (in this particular case -- adequate - 2x target instead of the 4x target I hit the first week in August). That made it a lot easier to move into what I felt was a safer position given we were at a start of a long and sustained move down, than staying pat, while also capturing sufficient upside to not regret the do something choice.
Related to this and something I see missing for many in society ... do you know what 'enough' is? My own observation is that at least here in the USA, many behave as if there is never enough. If you've got a $1M portfolio, then clearly $2M is better. And it keeps going - if $2M is enough, then clearly $4M is better. And if $4M was more than enough, then it would be a lot more fun to have $8M. And wow $8M is fun, but it's hard to spend any of that when it could be used to get to $16M. And somewhere along the way the belief that $2M was somewhere between enough and amazing was lost.
Similar idea on the income side. Is there 'enough' after which risk mitigation / safety / sleep at night (or early morning in my case
My own belief - if I don't know what 'enough' is for me and my focus is on maximizing the $$ results each week, then that's also a good way to work myself into a loss chasing those bigger gains, and/or putting too much energy / stomach acid into the effort. Knowing what 'enough' is, is also a big help in managing the non-$$ aspects of what we're doing.
But that's me!
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InTheShadows
Active Member
This is after we can see the whole picture. It's always different when you are looking at the right side of the graph and don't know what the next candlestick is going to tell you. The management I did on Monday, most was for nice credits, which I am glad, even today that I did. Some I rolled out to next week, others to Sept 17th. Those if they expire worthless will still easily meet my weekly RoR goals.
The ones I waited until yesterday to deal with were the ones that gave me problems. Two of which I rolled to next week for a debit. Now I wish I would have let them go, however you never know what the next bar on the chart is going to say so I am glad I did roll them, even for a debit. It gives me a lot more time to deal with them, and they are both above that dreaded midpoint of the spread now and I could now roll them out even more if I felt I needed to, and this time for a credit.
It is all about risk management and not over leveraging.
I played with butterflies 6 months ago and didn't like them. I have never used an IC before. I am intrigued by them though after seeing some people use them on this thread. I think they would help to lessen the pain of a drastic move like the last two days.
I have also added another column to my spreadsheet now that calculates my spread midpoint and turns red when the stock price drops below it. I'm going to add some % multiplier to it (yet to be determined) to turn it red before the price gets there to let me know it needs management right away.
All good learning experiences. Thankfully this pull back has somewhat recovered to give us a chance to make some corrections to give ourselves some more breathing room.
IMO reducing the stress, even if it means giving up some of the gains is always better. After all, the returns we usually get are ridiculous, and I have a hard time getting people to believe me when I tell them how much you can make selling options.
LN1_Casey
Draco dormiens nunquam titillandus
Sold a 710c this morning during the run up for a nice $5.
Nice wall of calls at $700, and the market never reacts appropriately to great news from Tesla. I feel pretty safe in my bet, if not. I'll sell puts again. Yay!
Nice wall of calls at $700, and the market never reacts appropriately to great news from Tesla. I feel pretty safe in my bet, if not. I'll sell puts again. Yay!
InTheShadows
Active Member
This is where defining a goal comes in handy. In my spreadsheet I have a page that breaks down the income I hope to acheive for each month and each year over the next 15 years. Part way along that chart is my retirement goal and what I am defining as my retirement goal. For me it is $X of annual income from theta and a base of $X dollars for my accounts. Both of those numbers are 3x above what we need to live on right now because once I hit that point 10 years worth of what we need to live on now will go to SPY shares and I will sell theta on those.One things I crank into my own thinking, as the conundrum you identify is precisely what I (and many of us) faced on both Monday and Tuesday, are this 'lost week' problem.
I rolled on Monday, partly because I was able to roll for a small but adequate credit, that would enable me to maintain weekly income at a decreased but adequate rate (in this particular case -- adequate - 2x target instead of the 4x target I hit the first week in August). That made it a lot easier to move into what I felt was a safer position given we were at a start of a long and sustained move down, than staying pat, while also capturing sufficient upside to not regret the do something choice.
Related to this and something I see missing for many in society ... do you know what 'enough' is? My own observation is that at least here in the USA, many behave as if there is never enough. If you've got a $1M portfolio, then clearly $2M is better. And it keeps going - if $2M is enough, then clearly $4M is better. And if $4M was more than enough, then it would be a lot more fun to have $8M. And wow $8M is fun, but it's hard to spend any of that when it could be used to get to $16M. And somewhere along the way the belief that $2M was somewhere between enough and amazing was lost.
Similar idea on the income side. Is there 'enough' after which risk mitigation / safety / sleep at night (or early morning in my case
My own belief - if I don't know what 'enough' is for me and my focus is on maximizing the $$ results each week, then that's also a good way to work myself into a loss chasing those bigger gains, and/or putting too much energy / stomach acid into the effort. Knowing what 'enough' is, is also a big help in managing the non-$$ aspects of what we're doing.
But that's me!
From my original plan, I copied that sheet and made a new one and pasted everything in as values and it is my fixed plan so I can keep an eye on my original plan. Because the one I created that with has changed over the years as I change my trading style and adjust my weekly RoR goals, and move targets up or back to keep my near term goals with in reason.
When I created my trading log 2 years ago to keep a detailed account of everything I felt this was a good way to keep things in perspective because as you have said, our goal post are always moving, and it's good to realize how our wants/needs evolve over time.
For those that haven't I laid out my rationale for why I'm doing this and how it all works in my mind, back on page 1 when I started this thread. It might not all be true for everybody, but at the foundation this is it for me.
I'm actually a lot less buy and hold today, but I was back then (maybe only 80% now). I also have new needs now.
But the thought process that brought me success so far (buy and hold) is still deep in my bones, is the core of how I think about investing in general, and something that I don't particularly want to change.
My take on ICs has been transformed from a few initial efforts. I now think of an IC as it's components - a credit put spread + a credit call spread. This makes it pretty easy to 'leg' into an IC. I am mostly opening credit put spreads. Once these are on, I also have the choice to add a credit call spread of the same size position and expiration 'for free' (by which I mean, 'no incremental margin requirement'). It's not actually free of course as I've added risk and return as well.
So I leg into these when I like the call spread side that is available, and don't add the call spread when I don't like that side.
Then again I'm also selling covered calls along side of the credit put spreads, so the call spreads are sushi money for me. The income comes from the BPS andCC. I stay WAY far OTM when I do open these call credit spreads, well back from the covered calls. The covered calls provide plenty of the directional exposure for me that the call spreads would provide in an actual IC.
One reason I like this thread so much - there is only 1 person in my life outside of this thread I can talk to about this stuff. The financial planners I've talked to were helpful, but they also heard 'options' and stopped hearing anything after that (other than I like to go to Vegas and throw it all down on black on the roulette wheel).
Most everybody else doesn't like this sort of thing at all, and/or isn't willing to put in the learning effort, and/or ... Ah well.
Sounds like a great week to me. Any week that is positive is a good week already, and any week that is positive and includes some experience and education is about as awesome as it gets. Paid to learn - wouldn't that be nice to acquire those shiny college educations
LN1_Casey
Draco dormiens nunquam titillandus
Jeez, someone talk me out of rolling my Jan22 610p to a Jun22 690p. They're selling for $128, and my 610 is only $54, thus a profit of $74.
Speaking of which - a bit up day, I should evaluate what these look like!
I see IV going up - high 40s right now instead of high 30s, using the 8/27 expirations. I have 8/27 put spreads already on, so call spreads won't need incremental margin.
The 770/870 call spreads for 8/27 are good for 1.25 at the .07 delta and are the right range for what I consider for these. That's not enough reward for the risk to me, right now. I'd do that trade for 8/20 expiration, but the 8/20 version is about .25. Maybe on Friday though, after the initial AI day reaction is priced in.
Sidebar - I expect AI day to be a nothingburger with a bit of volatility thrown in. I remember early on Elon saying that it was primarily a recruiting tool and that is mostly what I expect out of it. I know enough of AI (formerly a Data Scientist) to know that it's a long row to hoe from idea to implementation, and that like software, implementation needs a lot of iteration to be something transformative.
I don't expect Tesla's AI efforts to be any different. As a long term investor I expect to be thrilled by what I hear. As a short term option seller, I expect much ado about nothing.
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