From my look at the maximum pain information, I would say our most likely close is going to be around 705.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
LN1_Casey
Draco dormiens nunquam titillandus
Welp, bought back my call for $0.66 this morning, then sold a 710c for next week for $10. I expect it'll be in the red at least once between now and close next week, but I don't know by how much or if I could time it better next week as I'm asleep during a good portion of market open.
I'm going to start doing more and more aggressive calls until they get called away. Need the cash by October, and earlier wouldn't be bad either.
I'm going to start doing more and more aggressive calls until they get called away. Need the cash by October, and earlier wouldn't be bad either.
dc_h
Active Member
I sold some BPS at 670-660 when we hit 705. I'll sell more 650-640 now and wait to sell any calls until Monday. Maybe no spike up next week, but I think the market should be picking up on the crazy production and delivery numbers and the impact a 10% increase in deliveries will have on profits. Margins for that last 10% will likely be ~30%, adding 300 million to Q3 over Q2. No big FSD release this week or next, but don't be caught off guard if some sample production in Texas is revealed.
TheTalkingMule
Distributed Energy Enthusiast
I too am trying to find a near term sweet spot for selling CC's I'm ok with getting executed. Need some cash in October and don't want to simply sell shares if I can avoid it. Likely buying 9/3 calls today tomorrow if we hover around max pain of $680-690, then I'll sell those to close and STO something like $720 CC's for the following week. Keep it similar to that for a few weeks, ratcheting up the risk of shares getting called as I go.
LN1_Casey
Draco dormiens nunquam titillandus
Yeah, the numbers will be wonderful. However, the market hardly reacts appropriately to wonderful news from TSLA. It's just as likely to be a red day following blow out earnings as any other.
The only think that would suck would be a stock split announcement, which would force the MM's to cover their butts again and let the stock be for a little--causing it to rise as it should.
dc_h
Active Member
I just bought 5 1450 calls for next week. I'm curious if OTM calls can have any impact on moving the max pain to the right. They're a penny, so it cost me $5.00. I also sold BPS 650/640 for next week. Now 10 and 10 and 670-660 and 650-640.
Seems like MMs have squashed and pushed it down to near max pain. STO more puts at $700 9/3 exp for me
FTFY
Just closed those CCs for next week at about 50% profit. Will reopen similar on Monday. Also, picked up a two shares on the drop to $700 (that was my text alert to look at the SP, otherwise I would have missed this drop). More GTC orders still open at $5 successively lower prices.
One thought to consider - roll or close now depending on what you think will happen next week to avoid a day or 2 of teeth gritting. I know it can feel like a loss but if you're reasonably confident that this is as good as its going to get so you're hoping real hard (HRH) to be wrong, then I suggest that is a good reason to be out.
A related thought - gritting teeth, holding out hope, feel - these are phrases I would associate with emotion being in charge, rather than the brain being in charge.
NOT-ADVICE of course. We all make our own decisions and experience our own consequences.
Well… my safety buy to close went off while I was working on other things. So, bummed that I wasn’t paying attention at the right time, but it closed for an agreeable profit given that it’s been way underwater for the majority of the week and I won’t stress about it any more.
I could have rolled out a week to 720 for a buck or two earlier… but I didn’t want to roll because that’s how I got into this situation… selling calls late in the week and then Monday brings a big rise and everything changes. Probably means next Monday will be a big dip and I’ll be grinding my teeth for a different reason.
Can you elaborate on your game plan / thinking on these?
What are you thinking will happen with those purchased calls - what sort of payoff are you looking for? I realize it's $1/contract so we're talking small $. But the thesis can be scaled up if and when it seems like a good idea. It might be hard to buy 100k of those contracts at 1 penny each, but it's the idea that matters anyway
Were there other BPS considered? Any particular insight into the strikes chosen (I see 650 and 670 for the short side)? Any other strikes or expirations considered?
Why the $10 spread size, as opposed to something else?
(Of course - feel free to ignore any and all of my questions
. The answers to these sorts of questions are what I'm looking for in posts, as these answers end up informing my own trades)
My last noticeable mistake (just a few weeks ago) was the big move down that left me with a stack of BPS that were ITM. The mistake was that on the Friday before they were roughly 30% ahead, I thought about taking the early close, so I could wait and see what Monday brought me.Well… my safety buy to close went off while I was working on other things. So, bummed that I wasn’t paying attention at the right time, but it closed for an agreeable profit given that it’s been way underwater for the majority of the week and I won’t stress about it any more.
I could have rolled out a week to 720 for a buck or two earlier… but I didn’t want to roll because that’s how I got into this situation… selling calls late in the week and then Monday brings a big rise and everything changes. Probably means next Monday will be a big dip and I’ll be grinding my teeth for a different reason.
If I'd done so then I'd have sold new BPS when the shares were around 680.
I rolled those 'mistakes' 1 time and I've closed most, with some remaining for 9/3, that will make those overall positions quite nice (I consider all of them to be 'recovered'). Still the lesson for me was two-fold:
1) If / when I have the thought "take the profit off the table", especially combined with some other sense of direction, then just do it. If the move is in the direction I think they're going and that will turn profit into loss, I really don't want to be in a position where my strategy in that position is to hope real hard that my conviction is wrong.
Worth noting - I do intentionally enter positions where I've got both puts and calls short, knowing that one side will be wrong / losing money, while the other is right / profiting. These are more non-directional positions and different.
2) It's not a priority but there IS value in being out over the weekend. Mondays seem to be larger moves in some direction and being in position to see which way before opening puts or calls has been valuable. Of course this isn't a rule, especially for 2+ week positions, but if things otherwise align, then giving up a bit of premium for the additional flexibility looks valuable to me.
EDIT to add: Actually a more recent mistake was selling BPS yesterday. The mistake was violating my new personal guidance of selling puts on down days, and selling calls on up days. This is a relatively new personal guidance and has worked outstandingly.
My rationale, which may still work out very well, was that I was more concerned about a big move up today (or tomorrow) and I didn't want to miss out on that with the puts. So the outcome today is to be more diligent using that guidance - puts on down days and yesterday was up.
InTheShadows
Active Member
Yea I rolled my 650/700 puts for tomorrow to next week for a really nice premium. More than I got when I sold the original set. I would have liked to see that profit added to this weeks bar chart but it’ll look good on next weeks too.
dc_h
Active Member
Can you elaborate on your game plan / thinking on these?
What are you thinking will happen with those purchased calls - what sort of payoff are you looking for? I realize it's $1/contract so we're talking small $. But the thesis can be scaled up if and when it seems like a good idea. It might be hard to buy 100k of those contracts at 1 penny each, but it's the idea that matters anyway
Were there other BPS considered? Any particular insight into the strikes chosen (I see 650 and 670 for the short side)? Any other strikes or expirations considered?
Why the $10 spread size, as opposed to something else?
(Of course - feel free to ignore any and all of my questions
Regarding the 1450 call, I'm just seeing if small very high calls can have an impact on max pain. I doubt it and I think you or someone wrote up on how the market makers have to cover, based on some model of risk, based on odds of hitting the strike. Undoubtedly just $5.00 wasted, but I'm disappointed max pain is somehow staying below 700. If anyone wants to join me though, maybe a few hundred 1450 calls will push max pain up.
On the BPS, I like the $10 spread, I think I get the most profit opportunity, but it is higher risk than a 20 or 50 point spread and doing fewer contracts. I generally stay far enough OTM to avoid having to roll, with the week before last being an exception. So a little higher risk, but I can make more selling 10 650-640 BPS, versus 5 650-630 BPS. I've set aside more money for margin lately, so maybe I'll try to 20 or 50 point spread coming up, if I think the odds of a decline increase. The profit is very small on the 600-550, but I need more cash to move up to the next 100 share increment, when I can sell more covered calls.
Of note, tomorrow the golden cross and the max pain is below James Stephenson's bullish trend line. If we maintain both, we should have a breakout next week.
Just be careful choosing the strike date and price. I bought 090321C800 on 8/17 when SP closed at $666 for $1.24 looking for a AI Day-related bump. Well, a small bump came with the SP closing today at $701 (yesterday $711), but the call has collapsed 80% to $0.19. Need to analyze further, but I do see 0903C670 up >20%. Seems you must pick a price certain to be ITM, and probably the shorter the better. I saw someone post that they buy 1-week calls on Friday and sell at open (presumably limit order GTC) on Monday. That would seem to be workable during these days of concerted price capping on Fridays and unfolding early Mondays. Live and learn.
I don't know how max pain is formally calculated, but it doesn't make sense to me that a 1450 would have any effect. We can assume the price will end up in the middle somewhere, so all the outliers (low puts/high calls) shouldn't have any effect and I would think they'd be ignored. The question is more where in the middle it should settle; whether it's slightly more profitable to pay out the $695 puts or $685 calls or whatever. I bet if you bought a bunch of $700+ puts it would have a much greater effect in terms of moving max pain from $690->$700 versus anything you do way OTM.
In other words, if you look at the giant bowl shape diagram on the max pain page, making the far edges of the bowl steeper doesn't seem like it should have any effect on where the lowest point falls.
There is a theoretical impact and it can be calculated. The amount is miniscule though.
I suppose a good first order approximation is the cost of the position itself ($5 in this case). If the share price has climbed to $1450.01, then the option expires worth $0.01 (or $5 total). Obviously that's a long ways away.
The market maker will need to incorporate the additional delta from that position into their overall position and make adjustments to stay delta neutral. The first adjust is a similarly far OTM put that somebody else buys (maybe as part of a put spread
). If they've got that offsetting position then nothing needs doing.Pretty sure the delta on that is 0.01. In practice the delta the market makers will be working with is probably a small fraction of .01. If we assume that its' 0.001, then the total position for the market makers is worth 500 * 0.001 which I think works out to $0.50. And that $0.50 total position size is what will go into their calculation of position exposure. If you look at the max pain chart, the total pain given a share price of $1450 at the time of expiration will be many billions. An extra $0.50 is many orders of magnitude away from being noticeable.
As far as impact - $5 position or $0.50 against max pain measured in $B just doesn't matter. That is something like 7-10 orders of magnitude shy of mattering next to overall max pain. 3 orders of magnitude is huge - 9 is so big that the human brain stops computing or understanding.
(Sidebar - it's one of the reasons why lotteries do so well; the likelihood of a 1:500,000,000 chance of success seems a lot larger to each of us than it actually is. If you play 10 combinations each week you'll only need 50M weeks to still have a low chance of winning. 50M weeks is around 1M years and now you're into the range where the replacement human being species might evolve. )
Don't take this to be actual market mechanisms - just directionally accurate.
Agree with the higher probability of a breakout soon. This seems to happen every time the difference between the upper and lower 20-day Bollinger bands is less than 10% SP. Today it closed at (731.59-670.81)/701.16 = 8.67%. I don’t have IV readily accessible, but this has been a good leading indicator for me (not that I have been able to properly trade it).
FYI, I have bought calls on Fridays and subsequently sold early Monday. Sometimes it works for a few $K and sometimes it doesn’t, but it’s risky and stressful swimming against time decay. This week “feels” like it might work, but timing on both sides is critical. My best buys have been very late Friday. Furthermore, the highest risk & reward seems to come from slightly OTM calls that turn ATM/ITM on the next trading day. Far OTM calls just seem to decay too fast to increase in value.
After today’s close, I put in a day buy order for 9/03 c720s at $4.20
just for kicks. I doubt it will hit, but you never know what might happen with MaxPain/Powell/Afghanistan Friday. I might buy anyway at a higher price if I’m not busy in the garden and the SP seems held down below MaxPain. My guess is that we see $690 tomorrow, and maybe even $685 temporarily. Also, my thinking is that $20-$30 SP jumps are highly probable on Monday and therefore c720s should be ATM. Along those same lines, I have a GTC 9/03 c727.50s at $12.40 for my covered calls just in case I sleep through a SP surge Monday AM. I’ll put in a $8-$10 sell order on any bought calls, so I don’t sleep through that sale either. Just my musings and trading plan. GLTA.Attachments
InTheShadows
Active Member
Now you share this after market close. I was having those exact same thoughts on some put spreads expiring tomorrow with the short leg at 690. Wouldn’t have made a difference. Market was closed by time I visited this thread. I am planning on closing them at market open tomorrow. Hoping we get that little opening boost tsla seems to get quite a bit.
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