Wiki Selling TSLA Options - Be the House

[samppa]

I'm still gonna hold off until monday.. I believe there will be better chances to sell bps. Ideally I want to sell into strength, not into rising sp.
Besides I sleep real good if I have nothing open over weekend (apart that one -900/+800 experimental contract).

I'm not selling calls or bcs, for two reasons:
- premiums so little that imho does not justify risk
- I really don't want to have any of my shares called away for tax reasons.

 

[pz1975]

I'm doing things a little different for next week. Because premiums for sold puts aren't very good, I am opening fewer BPS than usual on a Friday. I am doing $200 spread BPS instead of my usual $100. This buys me a little more profit/trade and also gives more room for recovery should things go south. Seems like a good tradeoff.

 

[Yoona]

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.

ohhhhh i like this very very much

 

[deerfield]

ohhhhh i like this very very much

This is the same as selling cover calls? If shares go down below 905, you locked in your capital waiting for it to go back up?

 

[Yoona]

This is the same as selling cover calls? If shares go down below 905, you locked in your capital waiting for it to go back up?

yeap CC

the "buy stock and then sell ATM options" is strategy for those who don't care about owning/losing the stock and have no emotional attachment to the stock and just want the premium

note to self: do this first thing on monday; this is even less risky than the bps i am planning and more credit

 

[CHGolferJim]

I too have underwater CCs, 10/29 $835. I have been stubbornly rolling these poor sods since $705! Looks like I’ll be rolling them at least a couple more months out.

This is a good problem to have

Very OT: I made a lot of money today swing trading a ridiculous stock (or so I thought). DWAC. What a world we live in. Welp, I’ll be picking up TSLA with those proceeds.

I’m in the same boat with you! My selling CC for income strategy has dissolved before the TSLA tsunami into a desperate attempt to roll at low gain/cost in order to HODL shares and capital gains……during these long awaited but still unbelievable several weeks.

A series of continuous rolls in recent weeks has lead to having a position of 102221C840s, and now I’ve rolled those — 1/2 on Wednesday and 1/2 late today. The technique of BTC during a dip, and STO the replacement (via a GTC limit order at the BTC selling price generally $3-4 higher than “last trade”) during an upswing has made it possible to roll out at no cost:

• Tranche 1: at $32.65 on Wed prior to ER —> 102921C850
• Tranche 2: at $65.50 today —> 111221C860

As we shoot to the moon with SP, the exercise is tedious and could go on forever, and there seem to be few opportunities for CC income, but I’m protecting the capital gains and shareholding, as mentioned.

 

[EV forever]

Yesterday before the ER, I closed out all my 10/22 BPS opened on Monday for about 40-50% profit. This was the second round for 10/22 expiration, since I closed out the ones opened last week on Monday. So overall did well on 10/22s

My original plan had been to open BPSs for 10/29 yesterday, prior to ER, since I expected a huge run-up after ER. Unfortunately, I changed my plan thinking with everyone saying that we were going to see 'sell the news' type of stock movement. I opened about half of the BPS options I wanted at +p695/-p795 @$5with spread of 100 to give some room to adjust in case there was a big drop after the ER. Left aside half of my buying power margin/cash to open more today after the 'sell the news' In the after-hours it appeared like this was a good strategy.

But today turned out to be a pleasant surprise. My overall $TSLA portfolio - stocks, call options, LEAPS are up hugely - so no complaints there! I just wish I had opened up the BPSs yesterday - the premiums were pathetic today, so didn't bother opening anything. But it better to take some time off rather than chase the strikes prices up to get a few extra in premium.

The BPSs that I did open are now at around 50% profit. So my strategy for tomorrow - if we see the run up in SP continue, I will close those out, will be happy with 70% profit. Then just sit on the sidelines till next week. If we see a drop, with reasonable premiums returning, may open the remaining BPSs but with $100 spread to give more flexibility in case things go badly next week. Still not opening any BCSs for next week.

Quick update- decided not to close the open BPSs today, they are above 70% profit but I have nothing else to open. The premiums are too low for the strikes beyond 10% so might as well try and get a few extra $ waiting till next week. There might be a bear raid or some profit taking next week but I doubt the SP will drop below 795 so I feel they are quite safe. May consider taking it easy next week if premiums don’t improve. I like @adiggs idea of taking a week off occasionally - less pressure and helps keeping my greed in check.

This was a great week and frankly a great month. Not my highest earning week but I was playing it very safe. My total portfolio is up 10% for the week and 32% for 1 month - so quite happy with the combo of shares, leaps and sold options. Have not updated the holy spreadsheets yet but pretty sure the realized gains from options was in the 40K range in the individual brokerage and about the same in IRA. Not in the same league as some other folks here but plenty for my goals.

 

[CHGolferJim]

It makes a difference if you are posting under your real name and with an identifiable picture, like you are doing. I can very well inderstand you don’t want to post about large sums of money.

In my case: my name is not Fred and I’m not running around on clogs to plug my finger in every dike that is about to break through…

You mean that’s not a photo of Yoona? Bummer.

 

[deerfield]

yeap CC

the "buy stock and then sell ATM options" is strategy for those who don't care about owning/losing the stock and have no emotional attachment to the stock and just want the premium

note to self: do this first thing on monday; this is even less risky than the bps i am planning and more credit

Looking at 10/22 a put @905 is 15.70 and a call @910 is 17.65. Buying the shares @905 is the same capital requirement as selling a naked put @905. So with a buy/write, start out taking the share for an incremental premium. But selling the put, you are starting the "wheel." But with the put, there's a potential that you don't have to hold onto the shares if the price is above 905 and you have the potential to roll. If you really don't want the shares to start with, wondering why you would assume the risk of not being able to get rid of the share at the price that you bought at.

 

[MikeC]

I planned to let my -c900 get exercised for BPS money or the wheel but it's just so difficult for me to let shares go. I figured I might as well get 920 for them next week instead so I rolled them.

 

[Yoona]

Looking at 10/22 a put @905 is 15.70 and a call @910 is 17.65. Buying the shares @905 is the same capital requirement as selling a naked put @905. So with a buy/write, start out taking the share for an incremental premium. But selling the put, you are starting the "wheel." But with the put, there's a potential that you don't have to hold onto the shares if the price is above 905 and you have the potential to roll. If you really don't want the shares to start with, wondering why you would assume the risk of not being able to get rid of the share at the price that you bought at.

what did i miss?

buy stock @905
STO CC -c910 17.65

at expiration:
- if OTM (ie 899), that's great; 17.65 is mine and i repeat the STO CC -c910 again
- if ITM (ie 915), that's great; 17.65 is mine and take my shares

the plan is $$$ better than the STO BPS +p700/-p750 i am thinking of next week, and with zero risk of max loss

 

[MikeC]

what did i miss?

buy stock @905
STO CC -c910 17.65

at expiration:
- if OTM (ie 899), that's great; 17.65 is mine and i repeat the STO CC -c910 again
- if ITM (ie 915), that's great; 17.65 is mine and take my shares

the plan is $$$ better than the STO BPS +p700/-p750 i am thinking of next week, and with zero risk of max loss

I think the risk vs. BPS is if it goes a lot lower than 899, but not so low that it threatens your BPS. If you're happy to own the shares, it's less of a concern.

 

[deerfield]

what did i miss?

buy stock @905
STO CC -c910 17.65

at expiration:
- if OTM (ie 899), that's great; 17.65 is mine and i repeat the STO CC -c910 again
- if ITM (ie 915), that's great; 17.65 is mine and take my shares

the plan is $$$ better than the STO BPS +p700/-p750 i am thinking of next week, and with zero risk of max loss

Let's say if the share price drops to 850. Your CC premium is not as good anymore and you are holding onto the shares waiting for the price to go back up. Think Mar/May timeframe. You've essentially locked up your capital in TSLA shares. This was what the thread started as . Wheeling TSLA.

 

[BornToFly]

what did i miss?

buy stock @905
STO CC -c910 17.65

at expiration:
- if OTM (ie 899), that's great; 17.65 is mine and i repeat the STO CC -c910 again
- if ITM (ie 915), that's great; 17.65 is mine and take my shares

the plan is $$$ better than the STO BPS +p700/-p750 i am thinking of next week, and with zero risk of max loss

I don't like it:

If I want to do 100 contracts - I buy 10,000 shares and use $9.1M in Margin, and only make $170k on the covered calls. I can also use 40% of that margin in the shares for some BPS ($50) for 700 contracts. That gives additional $140k with conservative $2 premiums for the spreads. But if the SP drops next week (we are at ATH now), I still have $9.1M tied up in those new shares (which are now under water), and now the CC don't earn very much if the stock is back down to 850.

If instead I just use that $9.1M in margin for $50 BPS I can write 1820 contracts for $364k each week with conservative $2 spreads. Every week.

Edit: And, I am not paying interest on the Margin if I'm using it for BPS, but I am if I bought shares.

 

[adiggs]

I've landed in the 'waiting for Monday' camp. I was hoping for a good BPS entry today (my new definition of 'good' is a lot more lax than last week's ) but morning appointment and stuff came and went, and the trading day was over.

I appreciate the many comments about hyper-aggressive cc / lcc's. That's had me thinking and I've got some well established and quite profitable leaps that I can let run for a few years (Jun 2023) or I can do some i-dare-you call sales for big premium. And if I get to a point where I 'have' to take assignment, then that will hardly be a problem - I'll raise more cash for spread sales. I'll be noodling on this over the weekend.

 

[Yoona]

Let's say if the share price drops to 850. Your CC premium is not as good anymore and you are holding onto the shares waiting for the price to go back up. Think Mar/May timeframe. You've essentially locked up your capital in TSLA shares. This was what the thread started as . Wheeling TSLA.

that's the angle i missed - i forgot to consider the scenario where the sp dropped AFTER the OTM expiry

thanks!

 

[Yoona]

I don't like it:

If I want to do 100 contracts - I buy 10,000 shares and use $9.1M in Margin, and only make $170k. I can also use 40% of that margin in the shares for some BPS ($50) for 700 contracts. That gives additional $140k with conservative $2 premiums for the spreads. But if the SP drops next week (we are at ATH now), I still have $9.1M tied up in those new shares (which are now under water), and now the CC don't earn very much if the stock is back down to 850.

If instead I just use that $9.1M in margin for $50 BPS I can write 1820 contracts for $364k each week with conservative $2 spreads. Every week.

Edit: And, I am not paying interest on the Margin if I'm using it for BPS, but I am if I bought shares.

you are absolutely right, thanks...

 

[adiggs]

the plan is $$$ better than the STO BPS +p700/-p750 i am thinking of next week, and with zero risk of max loss

There's never such a thing as zero risk of max loss. If you can't find it, that's a good reason to ask

There CAN be such a thing as a loss to which you are indifferent. I.e. - you sell a covered call, the shares take off, and you end up selling the shares at the call strike rather than the share price. In that case it was an opportunity cost / loss, but you're indifferent because you got a premium and a better sale price than if you'd just sold at the moment you decided to sell (by selling the call).


I think that @deerfield has the right idea regarding the risk. On the buy-write you can sell really close ATM calls for big premiums and as long as the shares are flat to up (flat includes somewhat down) then you're golden.

But if the shares go down significantly and don't come back anytime soon then you can find yourself in a hole that is difficult to dig out of. Say they drop from 905 down to 850 and then start trading between 750 and 850? The covered call did great, but you either bring the strike down for later covered calls (risking a strike to strike loss that exceeds the collected premiums) to get better premiums or you keep selling the 910 call for little or no premium, awaiting the share price to return.

 

[Yoona]

There's never such a thing as zero risk of max loss. If you can't find it, that's a good reason to ask

There CAN be such a thing as a loss to which you are indifferent. I.e. - you sell a covered call, the shares take off, and you end up selling the shares at the call strike rather than the share price. In that case it was an opportunity cost / loss, but you're indifferent because you got a premium and a better sale price than if you'd just sold at the moment you decided to sell (by selling the call).


I think that @deerfield has the right idea regarding the risk. On the buy-write you can sell really close ATM calls for big premiums and as long as the shares are flat to up (flat includes somewhat down) then you're golden.

But if the shares go down significantly and don't come back anytime soon then you can find yourself in a hole that is difficult to dig out of. Say they drop from 905 down to 850 and then start trading between 750 and 850? The covered call did great, but you either bring the strike down for later covered calls (risking a strike to strike loss that exceeds the collected premiums) to get better premiums or you keep selling the 910 call for little or no premium, awaiting the share price to return.

awesome thread!!!

i posted my 'greatest strategy ever' and got corrected 4? 5? 6? 7? times

priceless lesson learned before i made a mistake... holding unwanted shares would have seriously gone against my "all cash" mindset, what a fail

THANKS GUYS

methinks that the 'NEWBIE Trader' sign up there will be staying for a while

 

[BornToFly]

awesome thread!!!

i posted my 'greatest strategy ever' and got corrected 4? 5? 6? 7? times

priceless lesson learned before i made a mistake... holding unwanted shares would have seriously gone against my "all cash" mindset, what a fail

THANKS GUYS

methinks that the 'NEWBIE Trader' sign up there will be staying for a while

I can't believe how much I've learned since discovering this thread in the last month, and I've been on TMC since 2013. I've learned so much from you and everyone else on this thread. We are all newbies when it comes to complex option strategies. I'm forever grateful.