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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
pz1975
Active Member
I agree that this $100K/week should not become an aspirational goal here. Things have been relatively easy the last number of weeks with BPS. I have personally had my best weeks ever the last 3 (4 assuming this week continues like it has). However, I am trying to be even more cautious now knowing that at some point, the SP will drop hard and fast and I dont want to get cocky and complacent thinking this is easy now.
I want to do this for 10 years and even a couple really bad weeks could wipe out all my gains if I get too aggressive. Our newest member with 40 years of experience had wise advice to stay safe and conservative. I hope everyone here heeds his/her words.
I want to do this for 10 years and even a couple really bad weeks could wipe out all my gains if I get too aggressive. Our newest member with 40 years of experience had wise advice to stay safe and conservative. I hope everyone here heeds his/her words.
bkp_duke
Well-Known Member
Put in GTC orders for all my BPS at 90% profit. Currently most are sitting about 80%. Could be an interesting market open.
I'm mainly selling put spreads. This week and last, I leaned heavily on 650-750 and 700-750 spreads -- 750 seeming like a pretty safe number. But if I'm going to be honest, I'd be better off at least 10% away from the stock price, so maybe that should be more like $620-720. Perhaps a bit higher for a $100 spread, so maybe a mix of $670-720 and $640-740? Though subject to change if the stock price keeps going up.
My problem is that I see these $7 or $9 spreads with the $750 short leg, and a huge number of open puts at $750, and the mid-BB over $770 and it's hard to convince myself that the stock will go lower than $750. But earlier in the year there were weeks where my "TSLA down 5%" alert went off day after day. I don't feel like TSLA was a worse company then. But one lady in China stomping on her car made a massive (undeserved) change in sentiment completely out of left field, and today there are plenty of opportunities for macro problems (inflation, failure to increase debt limit or pass infrastructure bills, gas prices going nuts, take your pick), and I'd rather feel like I could take a day or two of big hits without scrambling.
Then I think I pay close enough attention that I could scramble successfully.
Basically, I'm at war with myself.
I had two major losing battles earlier this year, but I'm still (for me) very far up in total, which doesn't help me talk myself into being more conservative. Except the put spreads could go bad faster than the plain puts I was selling earlier in the year, and I don't yet have experience with a major downturn while holding put spreads. I think I could handle it...
...but am I right?
Yup, what you said... my first BPS getting hairy with Evergrande Monday, was a very expensive, but excellent lesson. Shame I'm not smart enough to learn from others, but hopefully I won't go down that route again!I'm mainly selling put spreads. This week and last, I leaned heavily on 650-750 and 700-750 spreads -- 750 seeming like a pretty safe number. But if I'm going to be honest, I'd be better off at least 10% away from the stock price, so maybe that should be more like $620-720. Perhaps a bit higher for a $100 spread, so maybe a mix of $670-720 and $640-740? Though subject to change if the stock price keeps going up.
My problem is that I see these $7 or $9 spreads with the $750 short leg, and a huge number of open puts at $750, and the mid-BB over $770 and it's hard to convince myself that the stock will go lower than $750. But earlier in the year there were weeks where my "TSLA down 5%" alert went off day after day. I don't feel like TSLA was a worse company then. But one lady in China stomping on her car made a massive (undeserved) change in sentiment completely out of left field, and today there are plenty of opportunities for macro problems (inflation, failure to increase debt limit or pass infrastructure bills, gas prices going nuts, take your pick), and I'd rather feel like I could take a day or two of big hits without scrambling.
Then I think I pay close enough attention that I could scramble successfully.
Basically, I'm at war with myself.
I had two major losing battles earlier this year, but I'm still (for me) very far up in total, which doesn't help me talk myself into being more conservative. Except the put spreads could go bad faster than the plain puts I was selling earlier in the year, and I don't yet have experience with a major downturn while holding put spreads. I think I could handle it...
...but am I right?
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I apologize if you already explained, but what would you do differently if we get another "Evergrande Monday" and the short leg of your BPS are ITM or getting close to ITM?
Has anyone done an analysis going into an earnings event? IV usually stays elevated and may rise up to the event, but what about theta? Is there any benefit to selling options, calls or puts, a week out? Or, will premium stays relatively consistent to the share price until post earnings?
my personal goal is to finish the year green
after the 87% drawdown i closed the gap up to "only" 10 down YTD. Still far away from the heights of february, though.
Everything you've stated is justifiable and there's nothing wrong with taking a more conservative approach.
For me I try to take an objective/analytics approach to it and try to analyse the risk away from the emotion typically involved with a tight situation. I've had the benefit of holding large and very DITM BPS positions earlier in the year and having to survive weeks on end with minimal to no margin buffer. That taught me that the real manageable risks are a lot lower than the headline max risk. And I've learned additional management techniques since then as well as keeping a larger margin buffer on hand. So for me the real loss risk for a given week is only a small fraction of the cash premiums I have built up over time. Therefore I can continue to maximise premiums within my overall strategy and risk thresholds week to week. When a negative scenario arises I can still be confident that I won't be wiped out and can manage it OK. Ultimately it's up to each persons individual risk threshold and comfort level.
The same thing happened to me, I closed basically at open for a good sized loss, then reopened a different position later in the day that made up my losses and more by that friday.
Well, for my part, I bought back the short leg and left the long leg open. That seemed great, as the long leg picked up some money, and I planned to open a new short leg whenever the stock price settled.
Then after a while, the stock price turned up again. I thought that was great and didn't want to miss out on the rise, so I sold a new short leg at a different price, but the spread as a whole was still profitable. Then the stock price plummeted. Something saved me -- I think I was away from the ticker during the worst of it -- so I was able to ride it out until the recovery the next day or later in the week.
So I felt like the strategy of buying back the short leg was great... while my ability to forecast when the downturn had recovered was terrible. I figure next time I need to set a mandatory waiting period for myself before selling a new short leg... or at least, pay better attention to the macros and don't resell the short leg if the macros are still in the toilet because a minor TSLA recovery may not last.
If I had exactly the same scenario as that I would not close the whole trade, but just the short, then either sell the long if the price drops further or re-establish a new short leg, either with a lower strike or at the original if the SP recovers
But the principle from here is to be so DOTM that this doesn't happen very often
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I've rolled all of my BPS from 735/760 to 745/770 for a $0.3 credit each.
Max pain has increased to $765 but it looks like the real balance point should currently be somewhere between $780 and $795 - assuming they can get it down that low with all the buying pressure.
Max pain has increased to $765 but it looks like the real balance point should currently be somewhere between $780 and $795 - assuming they can get it down that low with all the buying pressure.
So far the BPS that opened on Monday are only up 12% with IV currently at 42. Looking back it took from September 27th to the 30th for the IV to go from 42.2 to 51 because of the P&D report I assume.
That’s the key, in my opinion- working within a strategy that leaves you able to roll with the punches in the event of an unexpected move. It’s only a matter of time.
Speaking of unexpected moves, this new story on the NHTSA investigation is a red flag. I think this thread hadn’t really latched on to BPSs quite so much when this story first hit in August, when the stock dropped almost 10% in less than a week. This overhang is still out there. It’s worth considering whether you’d be okay if this thing didn’t go Tesla’s way.
Knightshade
Well-Known Member
FWIW STO -750/+650 BPS for 10/22 this morning at $9.50 net credit
Short leg is at current put wall, and $22 OTM past the 1SD cited earlier, so seems pretty safe.
Are folks selling for next Friday mostly looking to close by late Wed. before ER announce, or Thursday looking for IV crush vs any possible sell the news?
Short leg is at current put wall, and $22 OTM past the 1SD cited earlier, so seems pretty safe.
Are folks selling for next Friday mostly looking to close by late Wed. before ER announce, or Thursday looking for IV crush vs any possible sell the news?
Tesla's predictable response to NHTSA I'm sure is that there was no defect, it worked like all other ADAS, and the addition of the emergency vehicle sensing is a feature add, not a response to defect. They have until Nov 1 to respond, so there is no concern before that.
The second part seems to be about NDA for beta testers. Not whether or not Tesla should be beta testing.
The NHTSA certainly has the regulatory power to throw wrenches into things, but they have shown themselves to be a pretty reasonable and thoughtful agency so I'm not overly concerned. They take time to deliberate and make decisions so there is still a good amount of time before anything they decide to act on would be known, so I think it's obviously good to keep an eye on it, but no immediate issue.
Aargh! I also fell victim to selling 650-750 put spreads for next week. Couldn't help myself. Also 680-730s. Not quite as conservative as I meant to be, but hey.
For next week, I am totally willing to close on Wednesday before the earnings call if it goes like this week. I closed spreads for $0.5 today (and a couple for $0.7 just to clear the board for next week). I don't think it would be worth it to wait another day or two to get that down to $0.2 or $0.1 and potentially lose $1 off next week's spreads, though I did also open one overly optimistic order in case there's still a drop left this week. I think next Wednesday I'd rather close for $0.5 vs. wait to see if things are up or down on Thursday. But if higher IV or lower stock price keeps the spread prices high through Wednesday, maybe I'll cross my fingers and keep them open?
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