Just STO 9/17 750 cc @ 7.55, I can't imagine MMs won't push SP down a bit on Friday. Will place GTC orders hoping to catch any dip tomorrow.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Already at 35% profit ... to close or not close? that is the question
oh an this is so depressing:
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Found a few more @ 9.29... If I lose I get more Put $ for next week.
corduroy
Active Member
Already at 35% profit ... to close or not close? that is the question
oh an this is so depressing:
View attachment 710200
I'm wondering if this is going to be the new normal for IV. If it's temporary, then it's a great time to buy LEAPs. But maybe we are range bound now that TSLA is an S&P stock.
According to MC, it is trending even lower:
TSLA implied volatility (IV) is 36.7, which is in the 2% percentile rank. This means that 2% of the time the IV was lower in the last year than the current level. The current IV (36.7) is -5.1% below its 20 day moving average (38.7) indicating implied volatility is trending lower
mickificki
Member
So....i apologize for this newb question but, for those of you with 401k's/roth (ie, non-taxable accounts), if you're trading stonks, why wouldn't someone just trade as close to the money as possible to maximize premiums? One wouldn't care if the shares were bought or sold because you aren't getting taxed. so for example if i were to sell calls, shouldn't i just go as close to $760 whether selling calls or puts, to extract maximum premiums?
I do that with puts, but not with calls. I try to guess on Friday’s close and sell CCs above that number. I believe in the company mission and want to stay invested in as many shares as possible. Also, in IRAs there’s no margin, so must have free cash to buyback and roll, if I’ve guessed wrong (like it’s looking for this week). Edit: yes, no tax implications, so turning the wheel isn’t a problem and I’ve done it several times, but not because I wanted to, but because I guessed wrong on the SP close.
I think most of us prefer not to lose shares, even when taxes are not a consideration.
bkp_duke
Well-Known Member
In all fairness, "within that last year" is a pretty poor period to benchmark TSLA on. IV was crazy bonkers over the past year due to many different factors. Over a 5 year period might be a better benchmark.
InTheShadows
Active Member
Just got back from meetings and I noticed my -765 calls for tomorrow are starting to perspire quite a bit.
Yeah well my $740cc’s lips are turning blue
$750cc here for me. I flipped it a few times so my running P/L now needs the $750cc to be worth less than $6.80 for me to stay positive. If we dip down to $3, I'll buy back.Yeah well my $740cc’s lips are turning blue
Aside from taxes or sentimentality, there’s the issue that many here think shares will rise bigly at some point. If that’s when your shares get called away, you may be on the sidelines for a rise that exceeds what put and call premiums offer. $50 in a day hasn’t been that unusual in the last 18 months, for instance, but it’s well more than you’d make in a revolution of the wheel.
If you feel like shares are likely to stay flat, of course, that calculation would look much different.
Does anyone use the delta hedge for a threatened spread? I really like that idea on paper more than a split roll or flip roll or closing position out…. But I’m New to spreads and curious If @Yoona or @dl003 or anyone else does this sort of thing? Basically buying otm puts or calls (or shares) before it reaches danger zone seems a nice way to keep the trade on especially because often the condor would be in danger after a lot of theta burns off…. So those temporary puts or calls might lose you some fees and some premium but sure seems smart to me?!
I used to take that approach, and now no longer have my original low cost shares, some repurchases are even above current SP from early 2021 which I suppose doesn’t matter. Part of the expectation was to be able to repurchase on Monday at assignment price or less which I think happened most of the time, haven’t closely analyzed it, but I did get burned a few times with Monday prices being higher (so lost appreciation). That can happen frequently when TSLA is on an upward trend.
So basically, if you were to sell CC ATM and benefit $5 on the premium, but lose $5 upon rebuying at higher than assignment, there would be no net benefit. Just another trade off to consider.
Another approach is to sell 1/3 ATM and 2/3 higher than you expect the SP to close on expiration day, to maximize premium, and have fewer contracts to have to track for rolling. But doing that one can get caught with the price to close being higher than the original premium.
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I have never really had much luck doing this sort of hedging. Most of the time I buy shares or calls right where the stock is poised for a pullback and the chance of it further running away is slim. Closing one of the wings or rolling it out early to take some profit is much cheaper imo.
Thanks!
I don't. I think I need an example
How To Delta Hedge An Iron Condor
Today I want to take a quick look at how to delta hedge an iron condor. Let's assume we've got the following iron condor in NFLX that has become skewed to the upside. Let's also assume that
optionstradingiq.com
Hope this helps.
Delta Hedging Your Options Strategies
Use delta hedging to balance the delta of an existing position to reduce the delta closer to 0 or the desired delta at entry. We will discuss different strategies for creating a negative delta for a bullish outlook and a positive delta for a bearish outlook.
steadyoptions.com
Sorry if this has been covered, but I seem to remember people like @Lycanthrope not being able to open spreads as one trade. If that is the case, when setting up a bps, are you able to sell and buy the puts separately? Is there an order you would do this in or does it matter?
Indeed, my broker has no combination or complex order facilities, just simple BTO, STO, BTC, BTO, that's it
Unless you have a massive cash/margin to hand, you need to open the long leg first - in my case, if I just tried to sell the short leg it wouldn't accept it - "Insufficient funds", the long leg limits that margin requirement to the width of the strike x the number of contacts
And yes, it's a stress time opening and closing these spreads with multiple orders as the SP can move against you before you get the chance to sell the short, so good idea to set them up when the SP looks flat - if you're feeling lucky then you can buy the long leg on a pop, then try to time the short on a dip, but obvious inherent risks with such an approach
I'm very new to this, scroll up 20 pages and there was a lot of great discussion on BPS
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