Wiki Selling TSLA Options - Be the House

[deerfield]

Last thing I'll add - if I were still years away from retirement, then I probably wouldn't be doing this. That's a personal choice largely driven by not wanting to throw another significant time commitment on top of a full time job AND following the long term Tesla prospects as closely as I do. I'll follow long term Tesla regardless - selling options makes better use of that knowledge on a short term time scale than working full time.

It's interesting that you mention this. Stumbling upon Paydirt's Options Investing Guide and this one earlier this year actually made me decide to retire from work. I see a clear path to income replacement at multiple times my current income (when you get paid peanuts, this is easy ). If the TSLA pond dried up (I know that you were wondering about this earlier also), I'll shift over to QQQ as a safe strategy to bring in consistent income. I've been studying/doing this for the last 8 months and I'm more confident than ever to give up the peanuts.

 

[InTheShadows]

I sort of expect that I'll stop growing my "assets under management" pretty quickly. If I'm getting 100% / year (a ridiculous thing to assume, but it's directionally accurate), then $1M being managed this way is plenty of annual income. With the annual risk level dropping as the overall portfolio continues growing (more cash means larger ability to ride out a large loss).

I think like many I'm in a place where I've got uses for a really big pile of money - in my case there are some businesses I'd like to buy in the utility sector and change how they operate . An example might be Portland General Electric with a roughly $5B market cap - I would like the opportunity to be the primary decision maker for a utility, with myself as the shareholder I'm accountable to (or maybe a small number of fellow shareholders with a similar objective), to try to push the current utility business model aggressively into the renewable energy economy, and find out what that new utility business model might look like.

But short of that kind of significant business buying ability, this (made up example) $1M / year income is already a ridiculously large amount of income. So I'd bias towards having more and more cash build up rather than continually bigger positions and start doing something others would recognize as diversification. In my case, investing more in real estate via an outfit I found named Fundrise and have the extra build up there. Even as my wife and I are busy trying to give it away.


I do see the possibility of needing to opening 10k contract trades when position sizes just keep on growing. Somewhere in there we get a large account problem around getting orders to fill. Maybe we'll need a new thread for people to talk about the #SeriousFirstWorldProblem of getting big position sizes opened and closed.

You can create that

I have a solar installation company and I have been thinking a lot lately about taxes and what to do with #seriousfirstworldproblems and was thinking of installing solar systems on non profit buildings for free. This would give free solar to a good cause, I could do it at cost, and fingers crossed it’s still around and back to 30%, I could use the solar tax credit to help offset the tax burden.

 

[InTheShadows]

It's interesting that you mention this. Stumbling upon Paydirt's Options Investing Guide and this one earlier this year actually made me decide to retire from work. I see a clear path to income replacement at multiple times my current income (when you get paid peanuts, this is easy ). If the TSLA pond dried up (I know that you were wondering about this earlier also), I'll shift over to QQQ as a safe strategy to bring in consistent income. I've been studying/doing this for the last 8 months and I'm more confident than ever to give up the peanuts.

It's interesting that you mention this. Stumbling upon Paydirt's Options Investing Guide and this one earlier this year actually made me decide to retire from work. I see a clear path to income replacement at multiple times my current income (when you get paid peanuts, this is easy ). If the TSLA pond dried up (I know that you were wondering about this earlier also), I'll shift over to QQQ as a safe strategy to bring in consistent income. I've been studying/doing this for the last 8 months and I'm more confident than ever to give up the peanuts.

That’s a good point. That and spy and spx could help with some of those problems too. I was also thinking that positions would go to like 10 delta out 45 - 60 days too to help with needing less management and less risk.

I believe that in 5 years Tesla is going to have to start paying dividends. They won’t have anything to do with all the free cash flow. The dividends would also help fund the largest shareholder’s Mars colonies.

 

[corduroy]

Not sure I'll read 376 pages but I'm keeping these tips around, thanks!

From a purely income generating perspective (not the tangential benefits) reading all of this thread has been way more beneficial than 4 years of college, 2 years of graduate school and a molecular biology degree.

 

[juanmedina]

I always wonder if we can keep this going in the foreseeable future. It feels like we found a cheat code and it is hard to believe sometimes. The other day I was talking to my wife about my options trading and she was asking me "why other people don't do this" because it has been very profitable so far.

 

[pz1975]

I always wonder if we can keep this going in the foreseeable future. It feels like we found a cheat code and it is hard to believe sometimes. The other day I was talking to my wife about my options trading and she was asking me "why other people don't do this" because it has been very profitable so far.

I think the key is to know when to stop selling options. It’s easy when the SP is mostly stagnant to do this, but it takes discipline to not sell puts or calls or both in more volatile times. As humans, we all get into patterns and start just doing the same thing week after week when it works. Imagine having sold CCs in early or mid-late 2020? I’m always questioning whether I think the SP is ready for a big move up or down. I am selling 10:1 puts:calls the last few weeks (staying well OTM as I like to do to keep a comfort zone) because I think the SP is more likely to have a big jump than dip at this point. In January 2021, I was selling 3:1 calls: puts because of the opposite. If I don’t know I just sell fewer options and stay more OTM. I lose possible profit but my goal is to try and avoid getting hit by a big steamroller.

 

[InTheShadows]

I always wonder if we can keep this going in the foreseeable future. It feels like we found a cheat code and it is hard to believe sometimes. The other day I was talking to my wife about my options trading and she was asking me "why other people don't do this" because it has been very profitable so far.

I think there are a few that figure it out. I installed a Tesla charger for a 70ish year old guy two years ago and I told him I was a Tesla share holder. And we got to talking and he told me he doesn’t pull any shares from his retirement. He generates all of his income with dividends and selling covered calls on his shares. I don’t know what all companies were in his portfolio but I was led to believe that he easily had more than enough with this methodology.

 

[Yoona]

From a purely income generating perspective (not the tangential benefits) reading all of this thread has been way more beneficial than 4 years of college and 2 years of graduate school and a molecular biology degree.

absolutely agree; where else can you know step-by-step how one earned $150k in 80% 90DTE BPS that only need 2 minutes of work (1 min to STO and 1 min to BTC)? Or know in realtime what everyone else is trading PLUS their reasonings behind it.

i quit my dayjob and took early retirement because the lessons/insights/experiences that i learned in this thread gave me enough confidence to make this side gig fulltime

proof? my options income these last 9 months is what i earned the last 12 YEARS (that's not a typo)

special thanks to all the contributors here giving not-advices!!!

 

[M3Rider]

Still holding weekly -720/700bps for $40k and
-665ccs sold on wed worth $10k

Both positions were stressful this week and my finger hovered over the roll button on Monday, but since 720 was not breached by much and I'm still holding -690/680bps roll from the last week, which was rolled on monday at the lowest SP for the whole week and I felt a bit silly doing that, so this week did not roll.

That roll and my older 4x 715 puts should add another $20k of realized gain. With that, I'll have ~$100k+ returned to my margin cushion. In the last 3 weeks will be 10 puts total that returned from the long trips and recycled 300k of margin.

If no major moves tomorrow, might do $30 bps for 10/1 and likely no CCs. Any CCs opened for next week must be closed next week without a roll, so should be far OTM if any.

 

[juanmedina]

I think the key is to know when to stop selling options. It’s easy when the SP is mostly stagnant to do this, but it takes discipline to not sell puts or calls or both in more volatile times. As humans, we all get into patterns and start just doing the same thing week after week when it works. Imagine having sold CCs in early or mid-late 2020? I’m always questioning whether I think the SP is ready for a big move up or down. I am selling 10:1 puts:calls the last few weeks (staying well OTM as I like to do to keep a comfort zone) because I think the SP is more likely to have a big jump than dip at this point. In January 2021, I was selling 3:1 calls: puts because of the opposite. If I don’t know I just sell fewer options and stay more OTM. I lose possible profit but my goal is to try and avoid getting hit by a big steamroller.

I just looked at my first posts in this thread and I sold my first covered call on Jun 16 2020 a $1150 strike. Somehow I made it without losing a single share . Yeah is easy to get comfortable and you start letting the positions get bigger and bigger until you one day surprise surprise you get in a bad position.

 

[buttershrimp]

absolutely agree; where else can you know step-by-step how one earned $150k in 80% 90DTE BPS that only need 2 minutes of work (1 min to STO and 1 min to BTC)? Or know in realtime what everyone else is trading PLUS their reasonings behind it.

i quit my dayjob and took early retirement because the lessons/insights/experiences that i learned in this thread gave me enough confidence to make this side gig fulltime

proof? my options income these last 9 months is what i earned the last 12 YEARS (that's not a typo)

special thanks to all the contributors here giving not-advices!!!

Amazing, but please don’t tell us you spent 12 years of working at McDonalds prior to this ok?

 

[buttershrimp]

at 80% (right now), my long-dated 90DTE BPS will produce approx 150kx4=$600k annual income , if i simply repeat this 4x/yr (assuming prems stay the same, etc)

but since i can cash out now at 80% (ie 60DTE), it means i can do this 6x/yr (approx $900k income) instead of 4x/yr

PLUS: at 50%, the bcs gravy gives 8kx6=$48k annual income to pay for the Xmas party drinks
View attachment 713237

I want to make sure I understand this clearly, when you put on this trade 630/670…. The stock price was mid 600s, so strike of sold option was basically ITM? I must be missing something because it seems your other trades are always OTM. Was this by design?

 

[Yoona]

I want to make sure I understand this clearly, when you put on this trade 630/670…. The stock price was mid 600s, so strike of sold option was basically ITM? I must be missing something because it seems your other trades are always OTM. Was this by design?

yes, because i was bullish; "there's no way sp is still 600ish on Q3"; hope i'm right!

 

[buttershrimp]

yes, because i was bullish; "there's no way sp is still 600ish on Q3"; hope i'm right!

Yes, but to really appreciate this trade you have to go back in time to July…. And imagine putting the trade on …. So if it were today, it might be kinda sorta similar to selling a BPS at 720/760 exp 12/15.

That certainly takes guts if you think of it from a weekly mindset…. But to @adiggs point, the risk versus reward is waaaay different with that expiration. And in that light, it’s actually more conservative than it appears!

which is making me yearn to soar on the sturdy wings of the iron condor.

@Yoona what do you make of the 45 dte big boys strategy? Seems that your trade is potentially better for Tesla stock.

 

[EnzoXYZ]

yes, because i was bullish; "there's no way sp is still 600ish on Q3"; hope i'm right!

I too was doing ATM puts but only 30+ days out thinking no way we will be in low 600 as we get to Q3. Wish I knew about all the margin advantage with a BPS then adding on call spread for a IC back then. Been learnIng so much the last one year.

 

[JustMe]

“… my strategy for about 6 mo has been to watch my Theta burn a few cheap calls I've been HODLing.”

Dude - the $ that’s falling away as your theta burns, like sand in an hourglass is going into the pockets of those of us who sell covered calls.

Not ready for covered calls that I still don't understand - I don't want this to be my new stressful career…”

I’ve been on both sides of this, and what you’re doing is way more stressful than selling covered calls.

Yes there are many great catalysts on the horizon Tesla, but how many times have we been surprised and disappointed by the market’s indifferent reaction to great earnings and deliveries and fsd progress etc. It might be better to buy calls when there’s an unexpected 10% drop on no news and then sell on the recovery.

Covered calls are easy to understand. Have a gander at this YouTube video on them. Be sure you learn how to roll before selling one.

 

[ReddyLeaf]

Ok, with all this talk about BPS printing money, it’s about time for a major market crash (says the trader with mostly 750/755 CCs this week, who then hides in a bunker).

 

[Yoona]

Yes, but to really appreciate this trade you have to go back in time to July…. And imagine putting the trade on …. So if it were today, it might be kinda sorta similar to selling a BPS at 720/760 exp 12/15.

That certainly takes guts if you think of it from a weekly mindset…. But to @adiggs point, the risk versus reward is waaaay different with that expiration. And in that light, it’s actually more conservative than it appears!

which is making me yearn to soar on the sturdy wings of the iron condor.

@Yoona what do you make of the 45 dte big boys strategy? Seems that your trade is potentially better for Tesla stock.

you mean the tastyvideo IC cashing out 45DTE at 25%?

unbeknownst to me until just now, that's what i just did (90DTE cash out BPS 80%, BCS could be whatever% since credit is so tiny)

next time i think i will try 50% of BPS instead (for more turnover)

 

[buttershrimp]

you mean the tastyvideo IC cashing out 45DTE at 25%?

unbeknownst to me until just now, that's what i just did (90DTE cash out BPS 80%, BCS could be whatever% since credit is so tiny)

next time i think i will try 50% of BPS instead (for more turnover)

Yes just curious about your thoughts on the idea that the theta burns fastest at 45 dte when compared against your Tesla specific strategy…. From what I gather, you are doing more BPS with Gravy BCS…. So really we should call this the gravy condor…. I notice a lot of your other trades are more centered around the current stock price compared to the one we were discussing from July. If that’s the case, it seems like that a lot of the BPS weighted strategy there is to simply take profit when various price moves permit you to do so?
I assumed the tastytrade video is more a pure theta drain situation. Sorry if I’m not describing correctly… just trying to understand how to think about layering expirations.

I’ve found recently that a a lot of my profit is made with weekly BPS/BCS in the first half of the week….there is still a lot of money to be made on Wednesday Thursday Friday….and it seems like condors of different expirations are a way to improve efficiency in second half of the week.

just wondering how you think about this from doing so many condors…

I am learning by reading other people’s iron condor strategies on the thread like @Chenkers
who seems to prefer being out of the market each week and deploying spreads anew based on that week’s information.

Up until today I assumed you were consistently staying more centered on the stock price and entering iron condors without legging into them… targeting pure theta burn…. but it seems that you were also deploying spreads based on where you think the stock price will end up at expiration (or perhaps where you think it will be by the time you want to take the majority of profit) rather than what I had previously imagined, which is simply trying to bracket the range and target theta burn

 

[EV forever]

If I'm looking at this right, the 670 Put was $9.57, and buying the 630 cost yo $6.1, for a net of $3.40 each. You could make more money just selling a 600 Put with much lower chance of being in the money. Selling just a 620 put gets you $5. Are you doing this because of Margin requirements?

That is how I got into a world of hurt earlier in the year! This group had not yet started discussing BPS - so didn't know that was a possibility. Last year, naked puts were incredibly profitable while TSLA was going up fast through the stock split and then S&P inclusion - I made a good pile of money selling puts aggressively. That backfired big time earlier this year. So ended up with 30 naked puts rapidly going deep ITM and causing multiple margin calls. I had plenty of equity in the account to cover margin, but all that was from long term HODL shares. When SP dropped, so did my available margin. Had to take ~250K in losses eventually to get out of that situation. Learnt some hard lessons - now won't try that again! It is better to pay for the long put, gives you a cushion in case things go south. Plus, as I am learning now from the great teachers here, this uses less margin giving you more chances to play.