Wiki Selling TSLA Options - Be the House

[deerfield]

STO 9/17 CS -770/820 @2.95
BTC @1.10

STO 9/17 CS -780/830 @1.3
BTC @.37

I figured this is good enough for a few hours this morning. If it does run up again, I'll re-enter these. I did the same with puts yesterday. The taking profit at 25% discussion got me thinking. Maybe this is the way to go and rather than wait till Friday to start managing? Just sell and take profit along the way? I'll see how this plays out this week.

 

[bkp_duke]

STO 9/17 CS -770/820 @2.95
BTC @1.10

STO 9/17 CS -780/830 @1.3
BTC @.37

I figured this is good enough for a few hours this morning. If it does run up again, I'll re-enter these. I did the same with puts yesterday. The taking profit at 25% discussion got me thinking. Maybe this is the way to go and rather than wait till Friday to start managing? Just sell and take profit along the way? I'll see how this plays out this week.

Good strategy I believe. I can do this in my brokerage account, but the retirement accounts require the trades to sit for a day or I get penalized for "day trading" activity.

 

[adiggs]

I believe this is exactly what happened last week. There was a huge swing in prices of calls/puts. Even today with SP at 745, the 725 09/17 strike put is 4.50 while the 765 09/17 strike call is 1.50.

Needless to say I think the sentiment is very bearish right now, Markets are trying to tell us something.

Sentiment is bearish - are you referring to TSLA in particular, or the markets overall? My own view on TSLA is pretty bullish in the short term - say now and a couple of weeks after the Q3 earnings - due to how good I think those results will be, and how the wider community of investors will (may ) change their view on the company as we get increasing evidence of the profit potential from actual results, rather than solely the story we've invested in thus far.

If that's the overall markets, what (if any) do you think the elements of that bearish sentiment are? I've had reasons for more than a year to be bearish about the overall market - we can see how wrong that has been

 

[adiggs]

Good strategy I believe. I can do this in my brokerage account, but the retirement accounts require the trades to sit for a day or I get penalized for "day trading" activity.

The day trading penalty box - your broker might make 'margin' available on your retirement accounts to mitigate or eliminate that problem. At Fidelity I have 'margin' in my retirement accounts. All it means is that I can trade on cash changes immediately in the account, without waiting for prior trades to settle.

So I can sell a put, and immediately use the proceeds to do something else - I don't need to wait 2 or 3 days for the sale proceeds to settle. There isn't anything else enabled by this margin - your broker may have something similar.

 

[vikings123]

Sentiment is bearish - are you referring to TSLA in particular, or the markets overall? My own view on TSLA is pretty bullish in the short term - say now and a couple of weeks after the Q3 earnings - due to how good I think those results will be, and how the wider community of investors will (may ) change their view on the company as we get increasing evidence of the profit potential from actual results, rather than solely the story we've invested in thus far.

If that's the overall markets, what (if any) do you think the elements of that bearish sentiment are? I've had reasons for more than a year to be bearish about the overall market - we can see how wrong that has been

The overall markets look exhausted and correction is due,I’m talking very short term 2-3 weeks. I also think Tesla will follow suit and continue to ping pong between 700-740 until the next catalyst; Berlin, P&D to name a couple. I don’t think FSD beta will have any impact on the stock price.

I will be looking to sell puts if TSLA drops below 730.

 

[Yoona]

Tested using 10/1 ICx5 +p675/-p695/-c810/+c830 DTE 24.

I am shutting down this tastyvideo test now that it is at 21% profit. Not waiting for 25%.

I think the test is not representative of "normal" trading days because of the stubborn puts that won't decay the last few days. This should have reached 25% profitability by now.

I still like the concept coz it makes IC mechanical and repeatable (ie select DTE, select 16 delta, select 4 spreads, BTC limit order 25%), all without maxpain drama.

 

[rikkert]

While max pain is $700 and the stock price seems to gravitate around $740 I wonder if the market makers want us to think that 740 is the target for this week...

 

[dc_h]

You're welcome cc writers at 740 to 750. I was sweating my 750, 755, 760, 765 cc's, so I sold more bps at 720-690. Earlier in the day I bought back my 690-650 and 700-650 spreads when we went over 750, more to risk off than anticipating that was our high for the day. I figured if I sold 720 puts, the market would be attracted to my strike price, or at least I could profit from my calls being in the money.

 

[stealthyc]

I opened some ICs 665/-715/-775/830

 

[Yoona]

Tested using 10/1 ICx5 +p675/-p695/-c810/+c830 DTE 24.

I am shutting down this tastyvideo test now that it is at 21% profit. Not waiting for 25%.

View attachment 709265

I think the test is not representative of "normal" trading days because of the stubborn puts that won't decay the last few days. This should have reached 25% profitability by now.

I still like the concept coz it makes IC mechanical and repeatable (ie select DTE, select 16 delta, select 4 spreads, BTC limit order 25%), all without maxpain drama.

changed my mind... it gradually went to 24.90% profit so i closed it manually; total 7 days

assuming $5 credit and 150x and 20 spread and 16 delta per side, a mechanical IC that doesn't need maxpain analysis can generate approx $18,750 every 7 days (exactly a week!); margin 300k

one can even automate this on thinkorswim and it is the next test i will try:

Beginner's Guide To Automated Trading

Use our free code to have semi automated trading in ThinkOrSwim. We cover 8 different trade ideas, and provide free code for each. strategy.

tosindicators.com

 

[stealthyc]

changed my mind... it gradually went to 24.90% profit so i closed it manually; total 7 days

assuming $5 credit and 150x and 20 spread and 16 delta per side, a mechanical IC that doesn't need maxpain analysis can generate approx $18,750 every 7 days (exactly a week!); margin 300k

one can even automate this on thinkorswim and it is the next test i will try:

Beginner's Guide To Automated Trading

Use our free code to have semi automated trading in ThinkOrSwim. We cover 8 different trade ideas, and provide free code for each. strategy.

tosindicators.com

I just watched the video and TSLA doesn't meet the 50% IV rank they used in their tests though (We're at 7% right now), it would be interesting to know what were the results at other IV rank values. For apple they only made trades 22 times over 5 years in backtesting.

 

[buttershrimp]

changed my mind... it gradually went to 24.90% profit so i closed it manually; total 7 days

assuming $5 credit and 150x and 20 spread and 16 delta per side, a mechanical IC that doesn't need maxpain analysis can generate approx $18,750 every 7 days (exactly a week!); margin 300k

one can even automate this on thinkorswim and it is the next test i will try:

Beginner's Guide To Automated Trading

Use our free code to have semi automated trading in ThinkOrSwim. We cover 8 different trade ideas, and provide free code for each. strategy.

tosindicators.com

Set it and forget it! until black swan I think, would be fun to back test it and see if/when it could have resulted in max loss.

 

[buttershrimp]

Set it and forget it! until black swan I think, would be fun to back test it and see if/when it could have resulted in max loss.

I bet that there would be some difficulty backtesting if you rule out IV criteria over past year.... so maybe difficult to annualize? what do you think @Yoona

 

[InTheShadows]

Set it and forget it! until black swan I think, would be fun to back test it and see if/when it could have resulted in max loss.

The thing is you can do one cancels other (OCO) orders, so you could set your tp then have an oco order set to close the position at a stop loss or set to roll when a certain share price is hit.

 

[Yoona]

The thing is you can do one cancels other (OCO) orders, so you could set your tp then have an oco order set to close the position at a stop loss or set to roll when a certain share price is hit.

exactly what i was thinking... just figuring out how to code 'where delta='

 

[Criscmt]

As of this morning's chain, assuming sp swings -10% or +10% from today to Fri, 668-816 is a good range for IC. For the brave, one standard deviation from the current sp is 711-773.
My IC is combination of both + gut feel of maxpain walls: 675-760.

View attachment 709149

What is your plan for managing sudden drawdowns?
Imagine selling put spreads ~850 this February, March.
With these becoming DITM fast, the roll would be for debit, unless one keeps increasing the strikes. Either way, the margin is getting tied up, leading to huge opportunity cost.

All,
Please share your inputs.

 

[stealthyc]

What is your plan for managing sudden drawdowns?
Imagine selling put spreads ~850 this February, March.
With these becoming DITM fast, the roll would be for debit, unless one keeps increasing the strikes. Either way, the margin is getting tied up, leading to huge opportunity cost.

All,
Please share your inputs.

At the time IV was very high so I imagine .16 delta options were a bit more out of the money than 850, but your concern is one I share. Proper backtesting is the only way to really answer your question. I believe this sort of tasty trade strategy expects losers though. You sometimes eat the loss and move on rather than trying to roll forever. You just require that you have a certain percentage more winners than losers proportional to the premium:max loss ratio

 

[Criscmt]

FWIW, here's my post on main thread.
In short, shares assigned for a short leg that was part of a spread, whose expiry is Jan-2022, spread 480C/490C.

Desperation for shares? Shares assigned towards a short leg from a spread, with expiry 3 months away.
Are we about to see Gamma squeeze again?

 

[Drezil]

As we are talking about algo-trading.. i am a programmer & have of course looked into $things.

IBKR (which i use) has a complete API where you can do all sorts of crazy stuff the UI won't allow. I.e. conditionally pause/submit orders. I have just toyed around with it and not build anything real yet, but it is on my agenda (that is getting pushed & pushed due to personal life stuff -.-).

If anyone is interested i could write a small tool for those things for little money.

 

[ammulder]

What is your plan for managing sudden drawdowns?
Imagine selling put spreads ~850 this February, March.
With these becoming DITM fast, the roll would be for debit, unless one keeps increasing the strikes. Either way, the margin is getting tied up, leading to huge opportunity cost.

All,
Please share your inputs.

This was just discussed recently here, e.g. Applying options strategy 'the wheel' to TSLA