Wiki Selling TSLA Options - Be the House

[CHGolferJim]

Adding on to this comment relative to @CHGolferJim 's situation. For rolling calls where I'm thinking assignment, I mentally assume assignment and then I start looking for rolls that get me a better assignment. So in your situation (710cc for today) there will be a very good roll for next week. Maybe 725cc for max strike improvement and a $1 net credit vs. the 720cc for a $4 net credit or something like that (I didn't go to the option chain for numbers - I made these up to illustrate the idea).

In this situation, using my made up numbers, I would do the 720cc and I would analyze it thusly. Would I rather be assigned today at $710, or would I rather be assigned next week at $720 and be paid $4 to wait the extra week? Answer - assign next week. In particular I view myself as having improved assignment by $14 (the $10 strike improvement plus the $4 net credit).

I could do the 725 instead - $15 strike improvement plus $1 credit for $16, but now if the position goes OTM and I have to keep the shares (oh no) then I went through that week earning $1 instead. Thus more of a mid range or balanced roll - some strike improvement and enough credit that I'm happy with the week regardless.


Margin (cash) for a BPS or IC are the same. $100 spread size is $10k. So 15 of these is $150k margin. That $150k covers 15 of the BPS OR it covers 15 of the BPS PLUS 15 of the same spread size call spreads (the combination being an Iron Condor).

I would listen to one of the others actively doing ICs about how to choose strikes and stuff. An IC is how I got myself into trouble. The call leg went from far OTM to nearly all ITM really fast ($20 spread size - not doing that again), and I ended up losing 40-70% on that. I probably could have rolled for time and been ok. The problem in my situation was two-fold; too small of a spread size leaving almost no room to maneuver (roll for time), and the IC is vulnerable to a big move in either direction. It WILL do badly if the move is too large in either direction.

So while the position is free (no incremental margin to add on the call spread), it isn't actually free as you are theoretically doubling risk (call spread is new risk on a move up that wasn't there previously).

It's a non-taxable account, so I'm having a hard time paying >$2k (definite cost) to avoid assignment vs. a decent chance I can rebuy at <$712, and a decent chance the close will be <$710. Watching closely . Otoh, I do see the logic of making a clean break and not worrying about "pennies"(although it's tens of thousands of 'em). There does seem to be a definite support at $710 seeing 3 dips to that level in recent hours.

3:40pm -- Got the twitch, so I rolled the 0827C710 to 0903C710 for $11.36 credit (confirmed)
4:02pm -- thanks @adiggs and @Lycanthrope, closed at ~$711.92!!

 

[mickle]

I've got a 710cc also, holding out for a late day drop! If not I'll roll it in the last 5-10 minutes. Rolled all my other high priced strikes to next week.

 

[mickle]

I've got a 710cc also, holding out for a late day drop! If not I'll roll it in the last 5-10 minutes. Rolled all my other high priced strikes to next week.

OK, changed my mind and BTC my 710, still made about $9/shr profit. Want to wait till Monday before deciding on any new cc's.

Seems to be hard to play the wheel, I've been selling cc's for over 6 months and haven't lost any shares yet, so never got a chance to try selling puts. Maybe I'm not being aggressive enough.

 

[stealthyc]

Ok, so as promised, I STO some -685p and some 480/-685p BPS for next week to make some comparisons. The puts got me 5.32 credit and the BPS 5.06. I setup a straight weekly roll order for both immediately just to check, and the puts get .50 to .60 more than the BPS at the current price.

 

[stealthyc]

OK, changed my mind and BTC my 710, still made about $9/shr profit. Want to wait till Monday before deciding on any new cc's.

Seems to be hard to play the wheel, I've been selling cc's for over 6 months and haven't lost any shares yet, so never got a chance to try selling puts. Maybe I'm not being aggressive enough.

It's your choice, you BTC the ITM CCs. Let them ride and keep all your premium and you get assigned and get to try the other side.

 

[Tslynk67]

It is $1k for every $10 per contract
$500 for every $5 wide per contract
$2k for every $20 wide per contract
Etc.

So a spread of (example) -$660/+$650 & -$720/+$730 would cost you $1k in margin for each contract - minus the premium received.
But it does not double to $20k because only one side can lose.
So 10 contracts - $10k
100 contracts - $100k - minus the premium received.

Wow, I could do 1800 of these... that would be ridiculous premiums...

But so hard to get my head around, I do the same thing, but without buying the long position to support many short positions... selling puts, selling calls, but it's essentially the same thing, except you're offsetting margin/cash reserve...

I need to dwell on this...

 

[Discoducky]

Wow, $711.92 finish. Max pain beat by $11 even after going up to $700 this morning and low volume.

What does next week bring? I've only got expiry for 9/3 going into next week... If V10 FSD and "the button" launches my feeling is that could cause a FOMO spike. Or if August production data is released.

I've got puts open at $695, $700 and $705 as well as calls at $720, $730 and $740. I should probably just do IC's but I like to play the ups and downs throughout the day which has also been hugely profitable as I've made about 20% on puts within minutes sometimes where I'll close out just because it is so cool to make that money so fast.

Also, looks like Nov 25th for Rivian IPO. Might be a good time for stock shenanigans from Zach maybe?

 

[ReddyLeaf]

You guys are killing it. I think I am going to make 3.5% this month and it feels great.

400k for 275X IC's $750/730c/$690/670p September 3rd and 151k credit.

I don't think I would be able to sleep the entire week if I had a position like that lol.

I finally did the math for me and “only” 0.8% this week and 2.5% this month. This has been a very good month for me. No margin or leverage, so all 100% cash- or share-secured trades. I have been sliding closer to ATM, because of that beer-drinking Belgium dude, so getting $6-$10/shr on my initial sales, usually more on puts than calls. Definitely need to keep enough free cash for buyback/roll (which is still my nemesis).

On thing that I learned this week is that by taking profits early, essentially timing sales and buys, it reduced my stress significantly, but still allowed plenty of profit. For example, I rolled -c715/720/725s to 9/03 very early in the week at ~50% gain, then bought back those yesterday clipping another 50%. Plus, I’m out all day today and have the opportunity to sell again next Monday, no stress and still able to trade if today’s prices looked good.

Regarding next month, someone seems to know something, or at least is positioning for a big shift. I didn’t like today’s trading, so stayed on the sidelines (except retained 9/03 -p700s). There were signs of selling large blocks without affecting the SP, and signs of small accumulation raising the SP. Finally, massive puts traded today for next week. These weren’t rolled, but a new position, 50,000 at p600. Not sure what to make of it, but looks like protection or possibly expecting a downward SP fall after August China numbers. Thoughts?

 

[InTheShadows]

My weekly trading gains so far this year. Average is .44%. Mid July I did some restructuring and booked some losses I had been rolling for a few months, thanks to ideas from all of you. Week Ending 8/13 is a bit higher than it should be because I consolidated some OTM LEAPS into ITM LEAPS so I could sell more meaningful calls against them.

This is calculated off of positions closed that week only and calculated from their open date. For stuff I roll, it's netted out as 0 in the rolling weeks and I keep the open date the date I entered the series so when I do close it it gives me the actual weekly ROR for that series.

 

[Tslynk67]

My weekly trading gains so far this year. Average is .44%. Mid July I did some restructuring and booked some losses I had been rolling for a few months, thanks to ideas from all of you. Week Ending 8/13 is a bit higher than it should be because I consolidated some OTM LEAPS into ITM LEAPS so I could sell more meaningful calls against them.

This is calculated off of positions closed that week only and calculated from their open date. For stuff I roll, it's netted out as 0 in the rolling weeks and I keep the open date the date I entered the series so when I do close it it gives me the actual weekly ROR for that series.

View attachment 702209

Great job! People dream of ~0.5% per week, get that an you're a firkin' guru on WS!!

 

[buttershrimp]

BPS is my spirit animal.

 

[ZeApelido]

Wow, we have found the Market Maker, and it is us.

From chummy capricious TSLA investors to stone-cold market makers.

I've seen this story play out before folks.

 

[pz1975]

Wow, I could do 1800 of these... that would be ridiculous premiums...

But so hard to get my head around, I do the same thing, but without buying the long position to support many short positions... selling puts, selling calls, but it's essentially the same thing, except you're offsetting margin/cash reserve...

I need to dwell on this...

This is exactly where I am too. I am comfortable and confident selling naked puts and covered calls each week for nice profit and knowing when and how to close/roll to avoid a big loss. The iron condor opens up a lot more potential for greater profit, but of course also more risk if I sell many more units as margin will allow compared to what I am currently doing. I am going to go heavy into analysis of these types of spreads this weekend.

 

[UnknownSoldier]

From chummy capricious TSLA investors to stone-cold market makers.

I've seen this story play out before folks.

This is how I felt when my SPY puts were mooning in February of 2020.

"Say my name."

 

[buttershrimp]

This is exactly where I am too. I am comfortable and confident selling naked puts and covered calls each week for nice profit and knowing when and how to close/roll to avoid a big loss. The iron condor opens up a lot more potential for greater profit, but of course also more risk if I sell many more units as margin will allow compared to what I am currently doing. I am going to go heavy into analysis of these types of spreads this weekend.

Something that helped me take on credit spreads (besides the massive amount of teaching and help and encouragement from folks on the thread here) has been placing the bull put credit spread on only as many contracts that I could cover if I wanted to convert them into puts…. And then taking the freed up capital and placing other trades on equities with different behavior from TSLA. It kind of forces me to keep eggs in different baskets while I learn and it allows me to use screeners for unusual volatility. This week I placed trades on BABA, ZOOM and MRNA at local highs or lows, simply for the purpose of keeping my TSLA trades safe, and then exiting sooner with profits. It’s taught me more about volatility and option pricing but I’m still very new to it. But it’s earning me income as I learn and spreading out my risk as I learn which is really my goal.

 

[stealthyc]

This is exactly where I am too. I am comfortable and confident selling naked puts and covered calls each week for nice profit and knowing when and how to close/roll to avoid a big loss. The iron condor opens up a lot more potential for greater profit, but of course also more risk if I sell many more units as margin will allow compared to what I am currently doing. I am going to go heavy into analysis of these types of spreads this weekend.

I recommend doing what I did, which is opening more BPS then you are probably comfortable with, having the stock immediately move 10% against you in two days, having your butthole pucker for like a week, but after rolling things forward and riding it out, having a nice chuckle at your well earned gains.

... not advice

 

[InTheShadows]

For the final question - yes. If we're doing enough of this to move the market, then we can be confident that the MM will make use of that information and figure out how to trade against us for their incremental gain.

I tend to think that what we're doing scales into the low millions for individual accounts, but won't scale well into the low 10's of millions. That's not based on actual knowledge - just my own gut feel.

I.e. if instead of the $1M account I just detailed, I were to scale that all up by 10x to a $10M account, I think it'll start getting more interesting getting into and out of positions. And if there were enough $10M accounts trading, then yeah - the MMs will start seeing the trading patterns and be looking for ways to lighten up those accounts to their benefit.


it's an interesting observation and something to be thinking about for me as well. My intent doing this is that I want to have a process, trading strategy, and approach that I can imagine doing 10 years from today - not just this month / quarter / year.

This is a reason that I am looking at this same strategy using the SPY. a lot more volume there and it’s also a way to help diversify a bit. When I get our accounts to lovely $10M+ then I want to have the ability to do some less aggressive strategies.

 

[AquaY]

BPS is my spirit animal.

This was worth the cost of my internet service today.
Literally LOL
Bravo!

 

[alterac000]

sto 50% 8/27 cc710@9
sto 50% 8/27 [email protected]

Have 700/740 call vertical from last week's 690/730 roll which I'll close or roll later this week. Same with 680/640 bps.

Lots of amazing activity on this thread lately. Seeing patients this week so will have to catch up and keep this brief.

Today closed my cc700 for $12.4. A small credit (15.05 - 12.4 = 2.65) better than loss. Could have rolled but no time to explore today. Closed cc710 for $2.4 (net 9 - 2.4 = 6.6)

rolled my 700/740 to 9/3 705/745. Cumulative credit $5.1 from the original 690/730 position. These are not looking great but I will keep rolling until I can buy back for an absolute net profit. Also realized I can title my position group in ToS with the cumulative credit in the label to keep easier track.

Closed 680/640 bps for 0.05.

OT - please get your covid vaccine if you haven't already and spread the word. Not trying to start anything and I'm not political (but also aware of the contention), consider this a public safety announcement and a plea from a tired healthcare worker all at the same time!

 

[adiggs]

It's a non-taxable account, so I'm having a hard time paying >$2k (definite cost) to avoid assignment vs. a decent chance I can rebuy at <$712, and a decent chance the close will be <$710. Watching closely . Otoh, I do see the logic of making a clean break and not worrying about "pennies"(although it's tens of thousands of 'em). There does seem to be a definite support at $710 seeing 3 dips to that level in recent hours.

3:40pm -- Got the twitch, so I rolled the 0827C710 to 0903C710 for $11.36 credit (confirmed)
4:02pm -- thanks @adiggs and @Lycanthrope, closed at ~$711.92!!

Good stuff. If I had that situation you are describing then the straight out roll makes a lot of sense to me. In effect I'd be deciding that I would rather take assignment in one week and be paid $11.36/share to be assigned in one week.

I might have moved the credit down a bit and the strike up, but that would depend on my own belief in where the shares are going.

You also have the flexibility to close early for a profit, even with the contract being ITM. If we're approaching expiration next week with shares at $715 then paying $6 will be a ~50% profit AND let you keep the shares. This is an important benefit to selling close ATM for large premiums.


Risks and rewards - because they're always present! The reward here is you get $11.36 for the next week, with the outcome that you keep the shares (share price <$710) OR that you sell at $710 and collect an extra $11.36 over what you've previously collected.

You can also early close at any share price under $721 to net a profit for the next week AND retain the shares (or you could have paid $2 today though you would've been waiting until close to end of day to get that, and probably on pins and needles all the way there - ugh.

Risk - if you'd taken assignment today and begun selling puts with the cash you raised, and the shares start trading down, but slowly enough that you can continue selling puts in front of that move, then you just missed out on an opportunity to sell at a relatively high price ($710).


Always tradeoffs - a big benefit that I've been getting from this thread, especially this year, is expanding the range of choices and reactions I have to events.