Wiki Selling TSLA Options - Be the House

[dc_h]

I moved everything to next week already. I've logged in a couple of times to see if there are some low risk trades for this week, but nothing that really has a good risk reward ratio to me. I'm happy to read up on likely outcomes for next weeks earnings, timing for Berlin and Austin to see a little baby Model Y pop out somewhere and look out for something serious from NHTSA or bad macro.
PS: Anyone not following Alex Voigt, should:

https://twitter.com/x/status/1448675770679939073

 

[Drezil]

OOOOO . . . . I've got some homework to do now!

When you are at it: look up "Freefly" as well
Like: https://www.tastytrade.com/shows/market-mindset/episodes/free-butterflies-asap-10-01-2019

 

[EnzoXYZ]

I read a lot about people trading in BPS that are far OTM. Does anyone ever sell them ATM? A few days ago @805 I saw that selling a BPS of 805-785 would net $6.45 and at the same time opening a B(ear)CS of 805-825 would net $10.30. Together that is $16.75 for a risk of 20 points.

If the SP moves 20 points in either direction, which is highly likely over the span of 1.5 week, you can pull the longest leg (rolling up or down by 20 points) and get maybe another $4 to $6 in extra net premium.

That would result in a position that is guaranteed to be profitable at expiration, no matter what SP does from that point on. Or am I making a miscalculation?

If I had to sell BPS ATM I would go 30 days out. I’m just worry about the buyer exercising some options so close to expiration If one does weekly BPS ATM. I’ve done really well from April to September selling ATM 30 days out cash/margin secured puts that I might try ATM BPS. This was mostly when Tesla was below 700 but now above 800 not sure I would be too comfortable. Any big move down would be the best time to do so.

 

[EnzoXYZ]

Closed majority of my BPS for this week.

I would like to live another day with safe BPS next week. It feels almost certain and no way we drop much after earnings. Will still sell majority of planned BPS under 700. Normally I sell 730s for next week. Less premiums but whole lot more sleep.

Slow and steady wins the house race.

 

[corduroy]

Add more BPS 10/22 580/680s at $3.75 Calculator shows probability of profit 99.9%

 

[PastorDave]

I read a lot about people trading in BPS that are far OTM. Does anyone ever sell them ATM? A few days ago @805 I saw that selling a BPS of 805-785 would net $6.45 and at the same time opening a B(ear)CS of 805-825 would net $10.30. Together that is $16.75 for a risk of 20 points.

If the SP moves 20 points in either direction, which is highly likely over the span of 1.5 week, you can pull the longest leg (rolling up or down by 20 points) and get maybe another $4 to $6 in extra net premium.

That would result in a position that is guaranteed to be profitable at expiration, no matter what SP does from that point on. Or am I making a miscalculation?

I sell both ATM and ITM BPS fairly frequently. I'm looking to balance out my 10% premium on capital risk trades with a few smaller ones that are 50/50. I'm ok taking a small loss, but stress about the trades that are sold way OTM going bad. I've done very well trading slightly ITM BPS (obviously I'm bullish on the stock). Usually I'll go one to three weeks out and look for $8-$10 on a 20 wide spread. Had some 780/800s on for 10/22 and 10/29 for a while, but closed those for profit already. Another nice thing about these spreads (in addition to having a low capital risk) is that they're relatively easy to close for limited losses if it looks like your trade is going against you. This week I sold some bear call spreads ATM, 800/810. Those performed more or less as expected, but I felt were a decent hedge against the huge number of put spreads I had on. I closed them for a loss, but not a big loss. I could have closed them for about 30% loss yesterday, but wanted to see the options OI data first. No way we're retesting 800 tomorrow imo, so I closed them. Usually I'll close these types of spreads early, although they typically have room to miss the short strike and still make good money.

 

[Discoducky]

Exciting stuff today, looking at the Volume

 

[Ogre]

Just realized I have enough cash in my IRA to sell puts (and that I can indeed sell puts in my IRA), but I can’t use margin in that account. Hopefully I’ll build enough equity in my margin capable account soon.

Not sure if it’s worth selling puts if you have to maintain 100% cash coverage or not, but I went ahead and sold my first chunk of 780 strike puts for end of month. That’s a 2% return in 2 weeks. Maybe I was too conservative.

 

[mongo]

Just realized I have enough cash in my IRA to sell puts (and that I can indeed sell puts in my IRA), but I can’t use margin in that account. Hopefully I’ll build enough equity in my margin capable account soon.

Not sure if it’s worth selling puts if you have to maintain 100% cash coverage or not, but I went ahead and sold my first chunk of 780 strike puts for end of month. That’s a 2% return in 2 weeks. Maybe I was too conservative.

Basically what we did. Closed some DDDITM calls from pre-split days when stock was $780 and sold puts for next week @780 (wanted more time buffer in case it dipped this week). If TSLA drops, it's shares at a lower price than direct purchase. If TSLA shoots up, well at least we still have shares and live to sell puts again.
Nice to have some stable cash after years of 100% invested.

 

[Ogre]

Basically what we did. Closed some DDDITM calls from pre-split days when stock was $780 and sold puts for next week @780 (wanted more time buffer in case it dipped this week). If TSLA drops, it's shares at a lower price than direct purchase. If TSLA shoots up, well at least we still have shares and live to sell puts again.
Nice to have some stable cash after years of 100% invested.

I’ve been sitting on some cash for a while and not letting it work for me so this is overdue.

Also selling calls against my overweight AAPL position. Those shares have taken me a long ways, but it wouldn’t hurt my feelings to free up that position and move it into TSLA.

 

[FS_FRA]

Opened my BPS for 10/22 705/605 @ $5.09 - double the number of contracts I’ve been buying so far as I’m looking again to close these early next week. Hopefully well before earnings. GTC 80% profit close order placed.

Might consider rolling the whole lot for additional credit, or only the short leg. Need to spend some time on the mechanics and implications on that.

 

[ammulder]

Just realized I have enough cash in my IRA to sell puts (and that I can indeed sell puts in my IRA), but I can’t use margin in that account. Hopefully I’ll build enough equity in my margin capable account soon.

Not sure if it’s worth selling puts if you have to maintain 100% cash coverage or not, but I went ahead and sold my first chunk of 780 strike puts for end of month. That’s a 2% return in 2 weeks. Maybe I was too conservative.

Isn't this one of the points of spreads? If you have $78k of cash with which to back a $780 put, you could instead sell 15x $50 spreads.

 

[MikeC]

Holding all 10/22 -p700/+p600 into next week. If we keep going up, I am thinking about selling far OTM BCS to make an iron condor, rather than chasing the SP up with higher strike put spreads.

My guess is the ER will be great but the SP reaction will be muted, especially if we keep climbing into the ER.

 

[adiggs]

There has absolutely been a buy-the-rumor leading into the ER. It’s starting to feel a little surreal.

On the other hand, with Berlin and Austin this close to opening, and Shanghai and Fremont targeting 50% growth, and FSD Beta expanding again, insurance expanding, not to mention likely a financial beat… how much of a sell-the-news can there realistically be? I mean, I can see a brief dip, but if so I’ll be buying, and I have a hard time thinking others won’t as well. We might certainly level off around $800 for a while, but I don’t see revisiting $600…. So I guess I do think some price stabilization and an IV crush is likely, though it may take a week or more to settle.

I hesitate to even think about the alternative, that the past month’s steady rise continues after the ER…

Something I've begun thinking about - as the shares continue rising and are getting away from the $700 strike, I find myself thinking that I want to keep my BPS further and further OTM. Back when the share price was more like $720-$740, I was pretty comfortable with BPS with a 700 short strike. That's how strongly I felt about support at $700.

I still feel that strongly about support at $700, but chasing after the share price with my puts is how I got myself into trouble back in Feb-March.


To generalize - the closer to an ATH, the further OTM my put spreads will be. In theory that would also mean closer ATM calls or call spreads, but since I'm not selling any of those, I think there's a good chance that I will continue not selling any.

The lower and lower the share price / further from ATH that we go, then the closer to the money I'm willing to be with my put spreads. I actually don't like this $800 share price so much - I'd much prefer being around $750! I think that these lower / mid 800 share prices will continue translating into 730-750 short puts. I will probably still be <800 even if/when the shares get back to the ATH (900).

 

[ammulder]

Something I've begun thinking about - as the shares continue rising and are getting away from the $700 strike, I find myself thinking that I want to keep my BPS further and further OTM. Back when the share price was more like $720-$740, I was pretty comfortable with BPS with a 700 short strike. That's how strongly I felt about support at $700.

I still feel that strongly about support at $700, but chasing after the share price with my puts is how I got myself into trouble back in Feb-March.


To generalize - the closer to an ATH, the further OTM my put spreads will be. In theory that would also mean closer ATM calls or call spreads, but since I'm not selling any of those, I think there's a good chance that I will continue not selling any.

The lower and lower the share price / further from ATH that we go, then the closer to the money I'm willing to be with my put spreads. I actually don't like this $800 share price so much - I'd much prefer being around $750! I think that these lower / mid 800 share prices will continue translating into 730-750 short puts. I will probably still be <800 even if/when the shares get back to the ATH (900).

Yes, many of us feel a bit burned by the prior rise to $900 and subsequent fall back to earth. But, and the risk of cliche, this time does seem different… there’s a lot more growing strength in the business to support growing strength in the stock price. I can’t argue that it justifies $900+, but certainly a fall back to $600/$700 seems pretty unreasonable, barring some large macro event.

Not that the market is always reasonable…

 

[Drezil]

Don't forget: according to max pain there is a 250m$ incentive to get TSLA to 790 by day end.
Even if they won't get it, every $ is expensive.. expect a fight.

 

[corduroy]

IV continues to drop.

Date	IV	Percentile
10/01/2021	51.7	28%
10/04/2021	50.9	26%
10/05/2021	49.2	23%
10/06/2021	51.2	28%
10/07/2021	50.9	26%
10/08/2021	48.3	20%
10/11/2021	47.2	18%
10/12/2021	44.7	15%
10/13/2021	44.1	14%
10/14/2021	41.5	12%
10/15/2021	39.5	9%

 

[The Accountant]

Here is the stock movement prior to and after earnings last quarter. I know it's one data point but too lazy to look into other quarters.
I have TSLA shares in my "Wheeling IRA" account. I have been waiting to write calls on them and am thinking of writing them today as a continued rise next week is no sure thing.

 

[Yoona]

Here is the stock movement prior to and after earnings last quarter. I know it's one data point but too lazy to look into other quarters.
I have TSLA shares in my "Wheeling IRA" account. I have been waiting to write calls on them and am thinking of writing them today as a continued rise next week is no sure thing.


View attachment 721773

any particular 10/22 -c strike you have in mind?

some of us are nervous about our -c850 (that would be me)

TIA!

 

[ammulder]

I'm likely to add new contracts as 700/750s -- a nearly $5 credit right now (nearly 10%!).

That ship may have sailed!