Wiki Selling TSLA Options - Be the House

[stealthyc]

Regarding margin, seems a pure BCS won't cost any margin at all?

I don't know what you mean by "pure". BCS has to be backed by cash or margin like any spread. The only thing that can make them "free" is to have the exact same exposure to the opposite side with another position, hence if you have a BCS open, you can open a BPS with the same expiration and spread width for no additional buying power requirement.

 

[corduroy]

Welp, it looks like this week will break an 8 week string of beating my weekly profit goal. I just never found a good entry point for BPS with the SP going up up up, and my bids were always just a little too far off. I played some ccs but those were just gravy amounts. I know when it feels like I am forcing something to happen, it's probably a good idea to just wait and do nothing.

I can't complain though as the overall portfolio grew more than the options profits would have made, so all is good.

 

[tradenewbie]

I don't know what you mean by "pure". BCS has to be backed by cash or margin like any spread. The only thing that can make them "free" is to have the exact same exposure to the opposite side with another position, hence if you have a BCS open, you can open a BPS with the same expiration and spread width for no additional buying power requirement.

For example, I have opened 40 BCS and 10 BPS for next week. On BCS, it's showing a negative margin impact, while BPS is showing a margin impact of 10020.

 

[BornToFly]

I don't know what you mean by "pure". BCS has to be backed by cash or margin like any spread. The only thing that can make them "free" is to have the exact same exposure to the opposite side with another position, hence if you have a BCS open, you can open a BPS with the same expiration and spread width for no additional buying power requirement.

Same expiration is key. I was trying to add a BCS to a previous BPS a few days ago, and I couldn't figure out why my margin requirement went through the roof until I noticed the different expiration dates.

 

[alterac000]

Did something new for me - opened a set of 1000 - 1050 BCS for next week to complete the iron condor with the 700 750 BPS I had opened yesterday. It's a relatively small position in my IRA account - doing this as much to play with and understand the concept as to generate cash as the $$ weren't that significant. I've mostly played on the BPS side, with a small dabbling in straight sold calls, so wanted to try this mechanic to understand it better.

I did the same thing. 10/29 750|700 yesterday and 10/29 1000|1050 today. If we exceed 1000 next week I will sell off the 1050s to unravel the BCS and let my shares get called away at 1000.

 

[ammulder]

I ended rolling the long leg of 725-825 put spreads to convert to 775-825 at the cost of 1.13. Then used the additional margin to sell 815-865s for 4.5. With that I’m over my weekly goal, though well short of last week. Good enough.

 

[Tslynk67]

10/29 call options above $1000 are in $50 dollar increments as well.......

25's again after 1200 - how weird is that?

 

[tradenewbie]

For example, I have opened 40 BCS and 10 BPS for next week. On BCS, it's showing a negative margin impact, while BPS is showing a margin impact of 10020.

In above example, so I only have 10 pairs (ie. 10 BCS/ 10 BPS). For the remaining 30 BCS only, it's showing a negative margin impact, so it sounds it doesn't cost any margin at all? I am a bit confused.

 

[Cherry Wine]

Personally, I opened 10 -780/+680 put spreads expiring 10/29 just to get some skin in the game. If the stock moves against this trade, then I'll be happy to sell lower strike put spreads at a higher premium. If it moves to the upside significantly, and I miss out on additional premium (by not having sold more put spreads), I'll get to open some bearish call positions. I'm also waiting to sell on the upside because if we do bust through ATH then there are currently no known resistance points, and I'll want to be positioned well on the other side of 1,000 in case some momentum comes in.

The risk is that the stock trades sideways all week, and I miss out.

I'm now pretty well positioned for next week. Opened up -1050/+1150 bear call spreads and -1050 covered calls on this morning's pop. To the downside, I filled out my put portfolio yesterday with some -730/+600 spreads. Premium is about 66% of the last few weeks, but I'm still happy with it and feel pretty insulated against any big moves, which is my goal.

 

[BrownOuttaSpec]

Ah, now I see why you use a IC and not just double the amount of BPS positions. Because when you have a BPS and BearCall Spread it equals an IC and it evens out and you dont use any additional margin. The call spreads aren't as much premium but you aren't using any additional margin so it's a great way to leverage the margin that you are already using.

 

[Tslynk67]

after lots of data number-crunching and re-reading of posts, i have decided to halve my TSLA and test dip my toes into the "all cash" structure

for me, this is good news coz:
- potential for more options income
- i can open more positions and go safer deeper OTM
- risk management is easier: 'more DOTM positions will have more probability of success' is better than 'less OTM positions with some probability of success'
- even with lesser credit (due to far OTM), it's still more recurring/compounding income than just pure hodl
- even if sp increases by 50% annually, account total value is still more than just pure hodl
- even if sp increased by $100 into $1000 right now, it's still unrealized gain and not income - i can't spend it and can't compound the gain
- less worrying about black swan which could literally happen overnight and wipe out my account that i need for the next 30 years (think covid 2020, Black Monday, 420 funding secured, 911, etc)
- less worrying about the daily sp swings
- combined with more trading based on IV, there is less worrying if TSLA is directionally downhill
- less worrying about margin rooms and margin calls (since more cash means less reliance on margin)
- if i need to profit on the earnings sp spike, i may just go in and out (ie buy then sell the news)
- more cash means i can sometimes play with the 10:30 MMD for quick stock daytrading (for top-up of options income)
- more income means i have more capability to kickstart and fund my kids' post-university dreams - i rather they own a business than have a dayjob waiting to be paid every 2 weeks (son wants to own an indoor basketball gym and manage a league)

as far as i know, there are at least 2 big guns here who are also in "all cash" and they seem to be doing well

this is my 2 cents!

back to topic... my BCS today is probably safe; will close it soon:
View attachment 724301

This is the first step in the programme, next is to realise you can sell the rest of the shares and get 2x more exposure buying DITM LEAPS, plus a wedge of cash too

 

[samppa]

Ah, now I see why you use a IC and not just double the amount of BPS positions. Because when you have a BPS and BearCall Spread it equals an IC and it evens out and you dont use any additional margin. The call spreads aren't as much premium but you aren't using any additional margin so it's a great way to leverage the margin that you are already using.

just keep in mind that you are essentially doubling your risk..

 

[UltradoomY]

Before lunch (11:30am EST USA) opened up a BPS for 10/29 expiration - for $2.80 each..
Closed at 2pm (2 1/2 hours later) for 20% gain. Not bad, wasn't planning on closing them but just thought, hey that's Whiskey money right there!

 

[Tslynk67]

Before lunch (11:30am EST USA) opened up a BPS for 10/29 expiration - for $2.80 each..
Closed at 2pm (2 1/2 hours later) for 20% gain. Not bad, wasn't planning on closing them but just thought, hey that's Whiskey money right there!

That's the spirit!

 

[Tslynk67]

newbie is excited for that to happen coz i've seen a LOT of posts from some of you brilliant geniuses converting shares to "ditm leaps"

what i know:
- getting lots of $$$ upfront which is used (as backing) to repeatedly generate credit that eventually helps offset the buying cost until the shares become free (because all prems cancel each other out)

what i don't know:
- of course i am CLUELESS what that means in terms of mechanics - strike at atm? near atm? on high iv? on low iv? buy on dip? how it went 2x? sell at 80%? let it expire? when to roll? lcc it? etc

time to read uppppppppppp

The extra $$$ cash facilitates many things, not only DOTM, safe spread, but risky high-value trades too, "because you can"

DITM LEAPS behave almost exactly like shares, but word of advice, pick a strike with good liquidity - Jan 24 c750's look nice right now. I have c600's and they don't trade much = risk of being stranded

 

[EnzoXYZ]

I have opened 75% of my usual positions by this afternoon. I’m keeping 25% to capitalize on “just in case“ down movement Monday due to unexpected macro event.
BPS 10/29 mix of -750p and -790p (2:1)
BCS 10/29 -1050c
All $100 wide

I know in my heart share price isn’t dropping to 850 by next Friday but I have no guts to put money where my mouth is at.

 

[Boomer19]

i’ll admit in surprised it’s actually holding its own while some of the nasdaq stocks are down 3% or more

 

[Cherry Wine]

i’ll admit in surprised it’s actually holding its own while some of the nasdaq stocks are down 3% or more

I think the sentiment some like Gary Black raised -- money flowing out of ad-based tech stocks like SNAP, FB, GOOG, and perhaps even AMZN (not ad-based, but revenue growth perhaps disappointing), into TSLA, could be accurate.

 

[UltradoomY]

I really enjoyed my Buy / Write experiment from 2 weeks ago and it went really well.
Doing the same today but larger than the 1 contract I did to try it -
Buy shares at 905
STO -910 for $14 each
Dont really care if I have to hold on to these for a bit or maybe roll a week for an even juicier credit if we sprint past it.

 

[Knightshade]

newbie is excited for that to happen coz i've seen a LOT of posts from some of you brilliant geniuses converting shares to "ditm leaps"

what i know:
- getting lots of $$$ upfront which is used (as backing) to repeatedly generate credit that eventually helps offset the buying cost until the shares become free (because all prems cancel each other out)

what i don't know:
- of course i am CLUELESS what that means in terms of mechanics - strike at atm? near atm? on high iv? on low iv? buy on dip? how it went 2x? sell at 80%? let it expire? when to roll? lcc it? etc

time to read uppppppppppp

I'm not sure about free- really depends how much call premium you can get and how much position management you wanna risk.


For example the Jan 19 2024 750 mentioned earlier was getting about $170 in time premium when I looked a few minutes ago... (~326 cost at 906 SP)
There's about 112 weeks from now to expiration on that... so you'd need to average about $1.52 premium per week, over the entire 112 weeks, to get the "time" for free.


You'd need to sell $990 for next Friday right now to hit that.



Now all that said- you can certainly sell "safer" calls and the leaps won't be "free" but they'll be pretty inexpensive for getting 1.5-2x the leverage over shares.

And if IV goes back up and call premiums stop sucking it may get easier to make up any difference.