Sometimes selling primum seems way too easy money. Which is good and bad.
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
AquaY
Member
Just some rambling thoughts and wondering what you guys opinions may be.
1) I have 9x 730 8/20 CC expiring today. Roll them now into next week or wait until Monday?
2) I have 2 670 8/20 Puts. Instead of rolling them I sold naked puts for next week and am letting the 670s 'ride'.
I don't need the margin freed up and I see no reason to leave a couple hundred $ on the table.
If the SP drops today below 670 I own 200 more shares and have more CC to write. Either way, I'm good with it
3) what strikes are you guys looking at for BPS for next week?
1) I have 9x 730 8/20 CC expiring today. Roll them now into next week or wait until Monday?
2) I have 2 670 8/20 Puts. Instead of rolling them I sold naked puts for next week and am letting the 670s 'ride'.
I don't need the margin freed up and I see no reason to leave a couple hundred $ on the table.
If the SP drops today below 670 I own 200 more shares and have more CC to write. Either way, I'm good with it
3) what strikes are you guys looking at for BPS for next week?
I'm also shorting some naked calls on MSFT since it's very OB right now. 335 strike 8/27. The way I look at it, this is a no brainer. Either MSFT, which will carry the market, moves up sharply in a week and lifts all stocks, including TSLA, or I collect some nice premium for zero margin down. Also shorting AAPL calls for the same reason.
#1 — if you can close now at a penny or so, go ahead so you can move fast later today if SP surges, or on Monday?
A cautionary note - this works until it doesn't. I've been burned badly by similar thinking in the past (fall 2019). It cost me 1,000 shares (post-split) at what are ridiculous prices (~$60/share). I then compounded the problem by trying to roll my way out of it rather than just taking my knocks. Try rolling your way out of a steamroller like Fall->Winter 2019...not going to happen. The stock is not at a price where I'm completely okay with letting shares get called away, so I'll continue to be conservative around high volatility events. I assume enough risk with the unknown unknowns; don't need to take on more with known unknowns.
To each their own but I would feel remiss if I didn't share what has happened to me.
ChefBoyardee
Member
IMO the SP will rebound next week, you might get a better chance to open CC's soon
I have 680/670 BPS for 8/27 and 9/3, slightly ITM now, but will be below the channel by expiration - 90% ish RoC if the channel holds
alterac000
Member
I am very interested in hearing how these $40 spread size positions evolve for you - I hope that you'll tell us how these go.
I'm also thinking about call credit spreads (call verticals) and with 8/20, 8/27, and 9/3 expirations I'll have plenty of expiration dates to choose from. I'll wait to open any of these for an up day. Probably the 2nd up day in a row where I'll sell CC on the first (significant) up day. I have even more positions to sell now with the new leaps acquired today - the cc sales can't come too soon
Certainly an interesting week. For the sake of trying to enjoy the rest of my day I've completed some transitions. I like everyone's posts on trade tracking...I don't use one but will probably start because at the moment this forum is serving as my defacto trade tracker
Spreads expiring today
- 680/640 bps 10 --> 9/3 680/640 for 9.10 credit --- yes this past Tuesday was scary
- 750/790 ccs 0.33 --> btc for 0.01 but hasn't executed may just expire --- peanuts? but safe
- 690/730 ccs 2.50 --> 8/27 700/740 for 1 during Wednesday's pop --- way too aggressive, scraping unsafely
Covered calls expiring today, sprinkled in throughout the week
- 690cc 5.1 --> btc 0.65
- 710cc 3.2 --> btc 0.05
- 725cc 12 from last week --> btc 0.24 this week
Emotions ran wild for me this week. While others were posting glorious trades on the daily ups and downs, I was getting caught in the "what if it keeps dropping" or "what if it keeps going up" making desperate decisions the wrong way. Need to learn to be more disciplined to take advantage of the swings, in other words not sell short call positions on down days and not sell bull put positions on up days.
My least favorite position now is the 8/27 700/740 ccs resulted from rolling 690/730, itself an unsafe play. AI day while way over my head really felt like proof of Tesla's staggering leadership. Still, MMs seem to be doing what they want.
My second least favorite trade was the 690cc. For the risk I should have been pulling in way more average premium though my out would have been to roll (but...remember my 2 month cc roll recently lol). I escaped this week but this one caused some stress.
Thoughts and input welcome. GLTA and hope you get to enjoy your day and weekend!
Stretch2727
Engineer and Car Nut
Rolling does not always involve a loss. I roll 4-5 contracts a week on thurs or friday to the next week, generally I made $$ on these. The reason I roll is I do not want 2 contracts outstanding on the same strike price should the stock go crazy. The ITM options I usually leave assign. Sometimes I will roll if they are ATM to take advantage of the large premium of ATM options. Deep ITM in the money I let assign.
The strategy is to take as much of the premium as possible every time. It has been working quite well especially with TSLA trading mostly sideways this year.
Here is my original post with the strategy. Works quite well for $2-6K per week. You need a large position in TSLA. The only thing that is different from what I expected is I am mostly rolling, but this is dictated by the stock price.
Wiki - Selling TSLA Options - Be the House
Thing is, let's imagine you had 5160 $TSLA, why would you sell any of it? With that kind of capital (assuming the SP is a least where it is now), you can just eep selling covered calls for your living expenses. Where it becomes less obvious is when you need a large amount of cash out, like my...
teslamotorsclub.com
AquaY
Member
But it's 2 pennies!
Actually, I just closed them for that reason.
Now deciding on whether to write today or Monday. To paraphrase the old playwriter Bill S :
" To write or not to write. That is the question....'
I think you're write. Wait until next week for CC.
Going to run some numbers on BPS
Thanks guys
I was sufficiently deep ITM on those puts that I was typically rolling 1 week before expiration. I was definitely rolling more than 2 days before expiration.
My trigger / decision point was the time value. As that approaches 0 and as DTE approaches the likelihood of early assignment increases. I was deep enough in the doodoo that the early roll made me comfortable I would avoid early assignment. I was also typically rolling 2 weeks at a time, and even rolled 4 weeks once. My thought process on those was that I was completely dependent on a big share price move in my favor and I was far enough ITM that needing a week to get all of that back didn't sound unlikely. That 4 week roll also didn't budge the strike
Most of the rolls were getting me $1-2 credits for a 2 week roll. I mentally round those to 0 but of course that isn't actually 0. There was one memorable roll for $0.02 because the commissions made a $0.01 roll into a net debit.
The BPS cure is, I think, reasonably straightforward to describe. Using a single $760 strike put that has $76k cash backing it, assuming a cash secured put. I changed that into 4 $200 BPS which used $80k cash (margin) to back them. I also tested changing into 8 $100 put credit spreads but the resulting short put wasn't much different.
Those 4 spreads got me to a dramatically better short put strike. Something like changing those $760 strike puts into 460/660 strike put credit spreads. I also pulled in the expiration by a week (nearly no difference keeping the expiration the same). The new position was still ITM but by $20 or so instead of $120ish.
I was expecting I would need to roll the spreads a few times to finish resolving them, but the shares had a friendly move for me and I closed that mess out the week that I rolled.
There are a few things going into why this worked.
1) Changing from 1 csp to 4 BPS (put credit spread) added leverage to the position.
2) That increased my rate of gain from share price moves in my favor, as well as enhanced my rate of loss for share price moves against me.
3) Most importantly - it got my strike back into the land of significant time value so I became exposed to both share price moves in my favor as well as time decay in my favor. The previous position never had very much time value, so there was very little time decay value to be had.
The risk here, and why I went with such a very large spread size ($200) was if the shares had fallen dramatically. Say $640 at roll time, down to $540. In that case I would have ended up at $120 ITM (where I started) except then I would have had a 4x increase in the number of those ITM positions, increasing the size of the loss by 4x. I felt that was a good risk to take, but it was on the table.
Leverage gains also means that leveraged losses are on the table. I believe that the real value was putting significant time value back into play, and is what would have gotten me to resolution with a few weeks.
LN1_Casey
Draco dormiens nunquam titillandus
Closed my call I had for today for $.04, and will probably sell another close to the money one next Monday. I expect the weekend for the AI day to stew and settle and pop the SP on opening.
Could be wrong but hey. Can’t hurt trying.
Could be wrong but hey. Can’t hurt trying.
I have some BPS' open for next week after closing out my BPS from this week at 90% this morning on the opening pop.
Will look to "leg into a wide Iron Condor for extra premium on a pop Monday morning when MM's look to unwind their shorting from today.
Right now have a narrow BPS - -$650 / +$600
Looking to leg into BCS next week around $740/$790 for no additional margin requirement.....but some extra risk and premium.
So happy I've started tracking with Wingman (or something else - it's the one I stumbled into). As I've been using it, I've also been figuring out some details in how I use it that seem important to me, and are different from how I started.
The primary thing is a personal definition of what constitutes a position, so that I know when a transaction is part of an existing position and when it is part of a new position. And that difference boils down to whether a position is being opened or being rolled, regardless of whether a roll type transaction ticket is being used.
A roll is when I move a losing position into a new position for the purpose of buying time for the position to be closed. Whether I do that via separate BTC and STO orders or a roll order (which is made up of a BTC / STO) doesn't matter for purposes of how I track the trades in the trade tracker.
It's a close order when the position ends, whether I am immediately opening a new position or not. Typically I won't be opening a new position immediately, but sometimes I will, and sometimes I'll even use a roll ticket to get out of the old and into the new. Typically, but not a requirement, the close of a position will happen be due to taking a profit on that individual trade (whether the longer series of rolls is profitable is a different question).
The key incremental piece of information that I have needed, and haven't easily had available, is the size of the accumulating credit in an ongoing ITM position. Without this information I've needed to rely on rules of thumb like only closing a rolled position at 90%+ profit to ensure that the overall string of trades was profitable. Better decision making criteria would be having the actual accumulated credit at my fingers so I can make a better decision about when to close. It's very likely that situations will arise where it's better to close at an overall loss on the series of trades as the loss is small and sets me up to start a new OTM trade immediately.
The key is having the accumulated credit at my fingertips.
Wingman tracks that accumulated credit for all of the trades within a single position. The key is to take the few minutes after importing transactions to make sure that all of the individual trades are assembled together into the correct position.
What I started doing, and stopped almost immediately, was putting all of my cc sales into a single never ending cc position. That's how I think of the cc's from a P/L perspective, but that doesn't inform my day to day trading decisions in a useful way.
A larger observation to keep in mind here - not specific to AI day - is that it's easy to hear Tesla talk about stuff that we get excited about as long term investors. I haven't yet watched the AI day stuff, but Elon advertised it up front as a recruiting event. That's a great working definition of something designed for long term impact, and zero short term impact (to the business).
I try to remember that there are effectively 2 of me observing and learning from each of these events. The one I care most about is the long-term me. The long term viewer is looking for the vision and execution against that vision, and the ability to sustain that far into the future. Will the business be better or worse off - is Tesla extending the technology, vision, and execution lead? Stuff like that.
The short term me is trying to figure out what that will do to the share price in the next few days / week / month.
Back to AI day - a recruiting event, even for something as technical as AI, is a long term play. Done well it'll be evidence that Tesla will have the technical resources to continue extending their lead 1-4 years from now. Done poorly it might indicate that Tesla is clueless and they just invested energy demonstrating how clueless they are (I mention this more to observe how something equivalent by Ford or BMW might be viewed).
In all cases the effect on products in the market, and revenue in the quarterly financials, is a long ways away.
And thus my view - maybe some volatility, but a nothingburger.
dc_h
Active Member
Any advise for rolling or taking the loss on 690-680 BPS? I should have dumped or rolled yesterday and today there doesn't seem to be a good roll option with the value already fully baked into the spread (90% loss now).
I think we discussed a few pages back that it's almost impossible to roll once you're cross the midpoint of the strikes. ($685 in your case).
And since we are 0dte... I would probably give up and open some new positions for next week. I faced this same problem on Tuesday but I lucked out with the pop and I closed for smaller loss and opened 4 more positions to finish the week net $2.00 credit.
NOT-ADVICE of course
Is that expiring today?
There are a variety of possibilities depending on what you think will happen from here.
A choice you could make is to increase the spread size to $20 (double it) while retaining the number of positions and see what net credit roll is available. That will double the amount of capital at risk but might improve the strike enough, along with buying some time, for the position to recover. Or course you would then have 2x the capital at risk and the opportunity to double up on your loss
Or 3x, 4x, etc..
What I would start with is to see how good or bad the roll choices are. As you're beyond the mid point on the spread I would expect a roll for net debit - either by moving the short strike the wrong direction or by paying a net debit to keep the position the same, but 1 week later.
Also think about how much deeper into the pit you are willing to climb.
I've experienced a roll that enabled me to 4x my losses from just eating the loss that was available before the roll. Of course if I'd known ahead of time that would be the result then I wouldn't have done it.
It's these rolls where capital at risk and/or number of positions is changed in favor of more leverage and/or bigger positions that create the really big opportunities for fast improvement of a bad position.
What does 90% loss mean here?
Does it mean if you buy it back, you have lost 90% of original premium (thus making a little profit,)?
Or is the loss 1,9x premium received from the sale?
Given the spread and current price, it should mean 90% of potential max loss so (10-premium)*100*number of contracts*.9
Similar threads
