Wiki Selling TSLA Options - Be the House

[FS_FRA]

Do you guys have any safeguards in place in case something happens, and you can't trade/adjust/roll?
I was thinking about this lately.. What if you get hit by a car, wake up in a hospital, same time TSLA crashes and you find out you have a bunch of positions liquidated because you couldn't react in time, well that would not be very nice.. it's a small risk, but non-zero one.

I try to keep my short positions OTM in any case, but I do tend to use 80-90% of my available margin backing. Lately it's all been bull put spreads. Might be a good idea to set a GTC close order at around halfpoint of the spread, just in case.. opinions?

That’s a future-me problem…..

Actually, this week as I am travelling 13h time difference from the market, I set a GTC order to close my position at 75% profit. I did not think about the opposite, i.e. the market running against me. But both my short and long leg were far OTM, below 200MA, that I feel I could react even a day late.

 

[InTheShadows]

Do you guys have any safeguards in place in case something happens, and you can't trade/adjust/roll?
I was thinking about this lately.. What if you get hit by a car, wake up in a hospital, same time TSLA crashes and you find out you have a bunch of positions liquidated because you couldn't react in time, well that would not be very nice.. it's a small risk, but non-zero one.

I try to keep my short positions OTM in any case, but I do tend to use 80-90% of my available margin backing. Lately it's all been bull put spreads. Might be a good idea to set a GTC close order at around halfpoint of the spread, just in case.. opinions?

Mine is hoping my orders close as planned. I have considered this and would like to hear what others have planned. My wife is beneficiary and trusted contact on all of our accounts that are not joint. Her knowing what to do to close them is the issue. I guess maybe call the brokers and ask them to close all option positions and use all available funds to buy tsla shares.

 

[juanmedina]

I am surprised to see the number of posts today saying that they already closed positions for this week and opened for next week which is post IR. Wouldn’t it be better to wait until later to open new positions as you would expect IV to be higher closer to IR. For those who already had 80% profit on the positions this week, I can understand. But many others are already rolling out to 10/22 and it is just Monday! What am I missing here?

My positions for this week are only about 30-40% in profit, normally I would wait till about 75% to close. So no changes today.

I closed almost all of mine for this Friday at 80-90% and I went after 10% returns for the week of 10/22. The stock usually goes up going into ER so that should counteract the IV going up. It is still early on the week so I might even close my 10/22 BPS early at 50% profit before IV really takes off. So far IV has not increased but like @Lycanthrope I don't like the longer term contract. On the call side I haven't done anything yet.

 

[AquaY]

It seems to me some who close early in the week also open them earlier than Friday, i.e. positions might be sitting closer to a week and gained more than positions opened on Friday.

I'm wondering if someone made an observation that positions opened for 2 weeks ahead and closed 1 week later consistently earn more than weekly positions? Probably give you more leeway as to when to close them, can wait out some bad days? On the other hand the premium for 2 weeks should be less than 1 week ×2. But maybe if you close a week early you can get 60% of premium? I've thought about this, but have not yet tried to track the numbers.

There's more than the return to picking expiration dates.
All the greeks come into play and the risks weigh differently.
Most trading systems allow you to run return scenarios if you're interested.
I like to trade out 1 , 2 and 3 weeks.
Part of my risk management is to spread my trades so a unique event does not force me to manage every position simultaneously.
I don't have a rule as to percentage of my portfolio because I adjust it given macro and company factors that can increase risks.
For example, I have not opened any positions for 2 weeks from now because of next weeks earnings.
I do most of my trades for the 1 week, then I start to set up for the following week and I will put on a small amount for week 3 if it seems right.
For me, having the positions makes me monitor all the weeks in a month better by having skin in the game.
I think it also reduces the FOMO issue

 

[AquaY]

Question for those doing large trades. 100, 200, 300, + contracts.
Do you leg into the position with smaller orders or do you put in an order for the large size all at once?
How is the execution you get?

 

[kcveins]

Question for those doing large trades. 100, 200, 300, + contracts.
Do you leg into the position with smaller orders or do you put in an order for the large size all at once?
How is the execution you get?

I have done 80-120 semi-frequently
I put the order in at one time and usually gets filled in increments, although yesterday did fill a cc for 80 in one batch

 

[stealthyc]

It seems to me some who close early in the week also open them earlier than Friday, i.e. positions might be sitting closer to a week and gained more than positions opened on Friday.

I'm wondering if someone made an observation that positions opened for 2 weeks ahead and closed 1 week later consistently earn more than weekly positions? Probably give you more leeway as to when to close them, can wait out some bad days? On the other hand the premium for 2 weeks should be less than 1 week ×2. But maybe if you close a week early you can get 60% of premium? I've thought about this, but have not yet tried to track the numbers.

In some backtesting I did 14DTE closed at 3DTE at the latest outperformed 7DTE fwiw.

 

[CHGolferJim]

In some backtesting I did 14DTE closed at 3DTE at the latest outperformed 7DTE fwiw.

For covered calls, there is a recent weeks pattern of prices dropping 7 days DTE followed by an early AM spike 4 days DTE. Wonder how that influences your conclusion, in other words, wonder if there is an ebb and flow of performance for 7 days vs. 4 days DTE and how that would compare to 14/3.

 

[bkp_duke]

Premarket up over 800. This could turn out to be a really interesting trading day.

 

[Chenkers]

Question for those doing large trades. 100, 200, 300, + contracts.
Do you leg into the position with smaller orders or do you put in an order for the large size all at once?
How is the execution you get?

I'm currently sitting on 730 contracts for this week and could go as high as 1000. The biggest single position I have now is 200 and I typically wouldn't go higher than that. I tend to spread the other contracts around different strikes and types, BPS, BCS, IC, CC. I don't seem to have any trouble with IB filling limit orders (including IC's) of 50-100 or more, usually in under a minute , as long as I'm around about the Mid.

Edit: Note that this week is a lot higher contract count than usual as I have a lot of separately filled BCS and BPS that would normally be combined into an IC.

Edit2: The bigger issue is closing contracts not opening them. Large orders can have a lot of trouble closing out late on a Friday. I'm usually trying to close hundreds of IC's at between 0.01- 0.03 and the orders can be very stubborn to fill. Often I have to open up the IC and try to sell each BPS and BCS side separately. If that doesn't fill then I resort to selling the individual P- and C- and these typically fill quickly. By then the P+ and C+ don't have much value left although they occasionally sell for 0.01 each.

 

[bkp_duke]

I wonder, hypothetically, how often people in this group wind up swapping call options with each other.

We all pick different entry and exit points. I wonder if I bought Lycanthrope's 685s, etc?

 

[ammulder]

I wonder, hypothetically, how often people in this group wind up swapping call options with each other.

We all pick different entry and exit points. I wonder if I bought Lycanthrope's 685s, etc?

I sold some 750 puts yesterday as part of spreads. The open interest in those this morning was one hundred thousand. I am small potatoes… microtatoes… don't hold your breath on buying one of mine!

 

[Yoona]

Question for those doing large trades. 100, 200, 300, + contracts.
Do you leg into the position with smaller orders or do you put in an order for the large size all at once?
How is the execution you get?

never all at once; usually split into 2-3 batches due to bad experience in the past

batches helps me fix 'fat finger' mistakes easier coz 2-3x in the past, i entered Buy IC instead of Sell IC orders and that would have been a disaster... if new position was too large right away, i have less margin room to reverse

another reason for batching is because i like watching a new block "settle" first (ie margin still good? cash was really a credit and not a debit? market didn't make sudden move? did i really use correct strategy?) before adding the next batch

whether Limit or Market order depends on how fast the market is moving (ie if slow range-bound, i know better price will come back)

 

[AquaY]

Edit2: The bigger issue is closing contracts not opening them. Large orders can have a lot of trouble closing out late on a Friday. I'm usually trying to close hundreds of IC's at between 0.01- 0.03 and the orders can be very stubborn to fill. Often I have to open up the IC and try to sell each BPS and BCS side separately. If that doesn't fill then I resort to selling the individual P- and C- and these typically fill quickly. By then the P+ and C+ don't have much value left although they occasionally sell for 0.01 each.

That's actually one of the reasons I trade different strikes. To make management; closing or rolling easier.
Thanks for the info

 

[Tslynk67]

Now we have the highest SP since Feb 12th, so put prices start to creep up

 

[pdwitt]

Playing around with cheddarflow, and wow, I knew TSLA had an active options market, but I had no idea to what extent compared to other companies. If I'm reading the data right, we were the top options market by a factor of 2 last week:
View attachment 720444

What makes me think I'm reading this wrong is that I don't see the SPY, QQQs, etc. on this. So I guess it's just individual stocks that we're ruling. Also, not sure if this is unusually high or not due to earnings. is

It is normal for Tesla to top the list.

 

[BornToFly]

Now we have the highest SP since Feb 12th, so put prices start to creep up

Everyone expecting the usual drop?

 

[mickificki]

Wow I'm SO glad I sold those 810CC's for this week!

 

[mrmage]

Question for those doing large trades. 100, 200, 300, + contracts.
Do you leg into the position with smaller orders or do you put in an order for the large size all at once?
How is the execution you get?

I never intentionally leg in. For a particular strike, either a spread offers a better risk reward or a naked option does, but it cannot be both. I often spread large trades over time. I consider risking anything over a few percent of net assets to be a largish trade, because most of my portfolio is already tied into the stock or other options.

 

[M3Rider]

The bigger issue is closing contracts not opening them. Large orders can have a lot of trouble closing out late on a Friday. I'm usually trying to close hundreds of IC's at between 0.01- 0.03 and the orders can be very stubborn to fill. Often I have to open up the IC and try to sell each BPS and BCS side separately. If that doesn't fill then I resort to selling the individual P- and C- and these typically fill quickly. By then the P+ and C+ don't have much value left although they occasionally sell for 0.01 each.

I figured Money Makers never give you fair prices on worthless put strikes, seems like until the last 5 minutes of trading they keep it at 5-7c per contract(sell price) and 1c(buy price).

Those better prices probably come and go from other retail traders in small batches as they close their positions, so sometimes it takes a long time to close a larger order.
But I feel like 5c(to buy) and 2c(to sell) in the last 30 minutes is doable if you want to close relatively quickly.