Wiki Selling TSLA Options - Be the House

[juanmedina]

I personally think selling CCs right now is insane. This SP movement is unnatural and could just keep going up. You may win on those but IMO it is absolutely not worth the risk.

are you doing anything to protect your gains?

 

[TheTalkingMule]

I personally think selling CCs right now is insane. This SP movement is unnatural and could just keep going up. You may win on those but IMO it is absolutely not worth the risk.

I whole-heartedly agree, I just need to raise some cash and am willing to risk the execution now that my effective selling point is over 1225-1250. Of course, I also need a decent premium. Nothing good out there today, so I'll just wait til Wednesday when the SP is actually at $1200

 

[adiggs]

I now have deep ITM Leaps, much deeper and much sooner than expected. I'm starting to think about exercising the options instead of selling them in order to avoid paying taxes on the gain. Is there a disadvantage of exercising them before the expiry date?

The early exercise would give the time value to the call owner. But there might be a tax benefit to exercise over sell - I'm not a tax pro and you get to read about that if it might matter. If in an IRA then it won't matter.

Another thing I thought about this morning - if you're deep enough ITM and time value is small enough, then the bid/ask slippage may be about the same as the time value. In that case the exercise might become the cheapest way to acquire the 100 shares. In the end it's the cost to acquire the 100 shares. Most of the time its "sell the LEAP / buy the 100 shares" because of the time value.

Any not-advice on some 1150 sold calls expiring Friday in an IRA?
(note spreads are not a thing in this account)


A) Roll 1 week out at 1150 for $17.50 credit
B) Roll 1 week out at 1180 for $2.05 net credit (1190+ is debit)
C) Roll out further at 1150 expecting it's gonna dip a bunch before then- $35 net credit rolling at 1150 3 weeks out for example
D) Don't do anything till Friday then roll if much above 1150 that morning
E) Just let em go.

I've got some 1200s with a similar question before me. It depends on what the intent was. For me it was to sell the leaps backing them, so I plan to roll for 1 week to a better strike and then probably take assignment. I'd like to sell a few at a time on the way up so I dollar cost average my way out of the position, getting me sales at a relatively high share price.

I did discover that with shares around 1160 I could roll those 1200s out 1 week and up to 1250 and a $2ish credit. I'm holding up until closer to 1200 though as I think I'll get an even better roll when close OTM.

 

[pz1975]

are you doing anything to protect your gains?

No. It’s hard to justify selling when the SP just keeps going up. I fully anticipate a big drop at some point, but will that be from 1,300 back to 1,150 maybe? This is crazy.

I have some CCs that I’ve been rolling out that are very red but they are offset by some of the ITM LEAPS I bought in the 600s. They are effectively acting like bull call spreads now with the short portion at much sooner expiry dates. It’s capping my profits on the LEAPS now but they were already very green so at least provides backstop against the CCs wiping out my core shares.

After selling the OTM calls I bought Friday after open for an ice profit, I actually bought $1,250 weekly calls when I saw the climb looked relentless again (around 1,155 or so). They are nicely green now and am going to just hold them until it looks like we’ve reached a top. That may not happen until later in the week at this point!

 

[Cherry Wine]

Just when you think you've seen it all with this stock. This is approaching (or has surpassed?) the craziness of the S&P inclusion.

 

[EV forever]

I now have deep ITM Leaps, much deeper and much sooner than expected. I'm starting to think about exercising the options instead of selling them in order to avoid paying taxes on the gain. Is there a disadvantage of exercising them before the expiry date?

I have done this before - exercising almost 18 months early. The advantage it gives is that you can use that for margin. I wasn’t selling LCCs anyways, so having the extra margin helps. Mine were very deep ITM, strike of 252 when SP was at >800. The time value doesn’t matter much when it is that deep ITM as the LEAP is behaving like stock already. Exercising it allowed the long term clock to get started on those shares and I can continue using it as collateral for margin.

 

[ammulder]

It’s really getting to the point I’m considering buying some puts to profit from the inevitable fall. I like the Q3 results and analyst upgrades and Hertz order as much as the next guy, but this is just nuts.

If we hit $1200 today, is that the time to buy some $1100 puts?

Am I crazy?

 

[alterac000]

Feeling things are overheated, but going along for the ride however long it lasts. Back in recently with some conservative positions.
11/5 Bps 750/550 $2.12 rolled up to 940/740 today for $1.2 net credit
11/5 Bps 800/600 $2.4 will hang on for now until/unless something else declares this week
Cc 1500 $.60
Bcs 1500/1700 $.60 placed partially filled

May end up regretting the cc and bcs, already been burned on the way up last few weeks, but hopefully being almost 30% away from sp will be "safe". Actually in the time it took to write this post the bcs ordered filled and are already underwater lol

Opened 11/26 1200/1300 bull credit spread last week for $12 to try to capture some upside. This is nicely up and I'll be watching for a sell point.

I agree with adiggs that goals play into the overall strategy. With shares as high as they are now I don't feel as compelled to strive for wealth accumulation. Much more interested in 'safe' income (however safe TSLA options can really be) and minimizing losses. Could be famous last words whenever the next big TSLA drop happens though!

 

[Cherry Wine]

It’s really getting to the point I’m considering buying some puts to profit from the inevitable fall. I like the Q3 results and analyst upgrades and Hertz order as much as the next guy, but this is just nuts.

If we hit $1200 today, is that the time to buy some $1100 puts?

Am I crazy?

Don't you know that $TSLA will never go red again, ever?

 

[TheTalkingMule]

Well I sold a 11/5 CC @ $1225..........and then it shot up(down) 30% in 180 seconds. Lol!

I need to sell some shares so this is no problem, but watch out folks! They're coming for your shares!

 

[EV forever]

Had not checked on the stock for the last hour - wow! This feels insane now. My long leg of the debit call spread is nicely in profit but the short leg is deeply red. If I close both right now I am looking at a loss of 20K compared to 160K last week! Now the question is, should I hold till tomorrow or just close out today and call it a day!

When in doubt follow the rule of half. Thinking of closing out half of them today and holding the rest for tomorrow

 

[Bunky]

Flipped 2 ITM CC's to 3 ITM puts. At least the SP is now going towards these puts (for now) rather than drifting away from the CC's.

 

[ammulder]

Don't you know that $TSLA will never go red again, ever?

I mean, maybe the thing to do is buy $1100-1200 put spreads, and have a hair trigger on buying back the $1200s if the stock turns down? So turn it into just a long put if there’s a pullback, but still profit if there’s eternal green instead. Just a question on how much I’d lose on the short put while identifying the turnaround.

 

[dc_h]

Well, I'm going to feel a little dumb if I get nailed selling calls again. I sold cc's at 1400. If we hit, I'll be in a good place and happy to step away. I may regret if we hit 2000 this year, but I'd probably be freaking out at that level. I would still have long calls, but my shares would be sold or locked up with long term cc's. If we are surfing on both uncle Leo and WSB and fundamentals, we could keep going. The mania buyers see no tops and will pile in until some macro wipes them out. I did get hurt selling 30 1000-1050 bcs, but I have enough shares that it did not hurt too bad. I also had 3 cc's at 950 that got called. I should have closed the 1000-1050 spread early in the week and could have cut my losses in half. Instead I got aggressive and traded the other side, selling aggressive BPS and making back about 1/3 of my loss. There's no telling how long this will run, @Right_Said_Fred was not out of line saying it should have corrected by now, and the gammasqueeze guy on with Dave Lee also thought the same and obviously so did many smart traders on the thread. Hope everyone got out and was able to lick their wounds and move on. It should serve as a reminder that our strategies are generally not for widows and orphans. If you are betting mom and dads pension, I hope they are ok losing chunks at times and understand the risks. There is a saying at the Chicago Board of Trade, "the easiest way to make a small fortune at the board, is to start with a large fortune." Regardless of the thread title, we are not the house, there are big market makers with different information. No one knows Tesla\TSLA better than this forum, but most of us don't have insider macro and market maker information. 3rd standard deviation events can wipe out even the best laid plans, so be ready to retreat and make bets that you can recover from, or balance out with an exit strategy.

 

[Knightshade]

I've got some 1200s with a similar question before me. It depends on what the intent was. For me it was to sell the leaps backing them, so I plan to roll for 1 week to a better strike and then probably take assignment. I'd like to sell a few at a time on the way up so I dollar cost average my way out of the position, getting me sales at a relatively high share price.

I did discover that with shares around 1160 I could roll those 1200s out 1 week and up to 1250 and a $2ish credit. I'm holding up until closer to 1200 though as I think I'll get an even better roll when close OTM.

Well, originally they intended to get some premium on ~$200 OTM sold calls

Then I rolled em a week for a small credit from 1100 to 1150.

Now we're here.


If 1200ish is the top I'm fine having these called away at 1150 this Friday I guess (since rebuying would cost more than $50/share anyway, and the pullback will likely mean I can rebuy more shares than I lost fairly soon).


But if we're gonna keep going for a bit rolling a week out to 1180 and a small credit is more in my pocket both now and for next week if they exercise then versus this week and I'm probably not gonna make that $30/sh plus in premium plus higher strike $ selling puts with cash for a week if I let em go at 1150 this week, so rolling for a small credit is "better" right?


Alternatively selling $1180 3 weeks out gets me almost $20/sh now plus wither a cheap buyback or expire if there's a significant pullback, or the $20 credit plus $30/sh if still above... but if it's WAY above by then I "lose" compared to letting em go now and buying in later.

(being an IRA I can't do fancy stuff like flip to an ITM put and such)



Hrm- other fun factor- I wanna potentially move the contents of this IRA in a couple weeks to a better broker and probably don't want complicated things like covered calls in here to do that... so I'm thinking roll a week out and up for a small credit is probably best- then whatever happens happens and I've got either shares or cash to move to the new broker.

 

[CHGolferJim]

Well, I freaked out about my DITM $855 and $860 11/12 CC and put together a reallocation plan for my total TSLA investment to move forwards. The 3AM thinking helped in the light of day over the past 5 days or so.

The main things I now realize and have hopefully learned are not to ignore 2-3 key points of wisdom expressed here — don’t tie up all your shares, don’t be too aggressive with strike prices, and don’t sell in the last 6 weeks or so. Well, with the uptrend avalanche of SP, I got creamed by the CCs on most of my shares going deeper and deeper ITM (and BTC cost rising 1:1) as I rolled out at small to no credit with the #weeks required rising each time. So, today I bit the bullet and closed the covered calls on about half my shares at a cost of 37% of October’s combined shares and LEAPs gains, and financed it by selling x00 shares at $1150 in a subsequent limit order. At least that went in my direction! I still have March22 $900 CCs to deal with, but playing and expecting for some kind of dip during the next 4 months to bring the cost down (surely!).

I just had to do it, or couldn’t come up with a better idea, to regain flexibility and control (since I don’t understand spreads and puts). Plan to retain a similar exposure to TSLA, but take a few profits through allocation to 50% LEAPs, get much more cautious on CC on core shares, get aggressive on weekly CCs on a trading position which I will NEVER ROLL just collect the premiums, and do a few other things.

I think the main thing that got me in trouble was chasing retaining shares and unrealized capital gains as SP rose, and rolling into higher and higher BTC costs, even though I thought each roll was justifiable for the capital gains. An expensive purchase of peace of mind.

 

[samppa]

Sold bps today soon after market open:
-1100/+900
-1050/+850
-1000/+800

These are now around 50% profitable.. if I can buy these back near market close for less than 50% I will. It's decent for one day

 

[corduroy]

For my remaining -1050/1150 BCSs in IRA, when I felt we had topped out today I sold the long calls, netting a $4,500 credit each and breaking the spread. Then I rolled the -1050s out 2 weeks with a strike improvement to 1070. My main assumption is that the long calls had reached max value for the week and is this buys me a couple weeks for a pullback of the short call. Also added some cash to the trade. Now that the short call is on its own, I can more easily roll for time or strike improvement. Of course I gave up my defined risk.

 

[juanmedina]

I have some 1105cc's 11/19 obviously under water but for some reason and I am not worry about them. I am kind of tired about stressing about money when I have enough.

 

[MindOverMatcha]

Well, I freaked out about my DITM $855 and $860 11/12 CC and put together a reallocation plan for my total TSLA investment to move forwards. The 3AM thinking helped in the light of day over the past 5 days or so.

The main things I now realize and have hopefully learned are not to ignore 2-3 key points of wisdom expressed here — don’t tie up all your shares, don’t be too aggressive with strike prices, and don’t sell in the last 6 weeks or so. Well, with the uptrend avalanche of SP, I got creamed by the CCs on most of my shares going deeper and deeper ITM (and BTC cost rising 1:1) as I rolled out at small to no credit with the #weeks required rising each time. So, today I bit the bullet and closed the covered calls on about half my shares at a cost of 37% of October’s combined shares and LEAPs gains, and financed it by selling x00 shares at $1150 in a subsequent limit order. At least that went in my direction! I still have March22 $900 to deal with, but playing for some kind of dip during the next 4 months to bring the cost down.

I just had to do it, or couldn’t come up with a better idea, to regain flexibility and control (since I don’t understand spreads and puts). Plan to retain a similar exposure to TSLA, but take a few profits through allocation to 50% LEAPs, get much more cautious on CC on core shares, get aggressive on weekly CCs on a trading position which I will NEVER ROLL just collect the premiums, and do a few other things.

I think the main thing that got me in trouble was chasing retaining shares and unrealized capital gains as SP rose, and rolling into higher and higher BTC costs. An expensive purchase of peace of mind.

My condolences. It's painful to part ways and accept the losses. But better to cut the losses now before it gains further. A lot of trading is psychological and pivoting to different methods depends on emotional and cognitive flexibility. TSLA is a beast and as bullish as I am, I'm still just sitting on my hands. I want to sell puts and put spreads, but I know mentally I may not be able to handle the unease. This is my way of "taking a vacation".

Buying back into TSLA or selling puts can generate enough gains to make for these losses in the next few weeks. Crazy to think we may break 1200 today or tomorrow.