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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
It's getting too rich for my blood. I took off about half of my long term rolling calls today:Huge volume indicating a short term blow out top?
Question with TSLA is how long is short term
STC 22x 12/7 900c
These are my main delta position, but I've still got about that many left on. I expect us to go up to 1300 at least at this point, but fear and greed are getting a little high for my tastes:
Fear & Greed Index - Investor Sentiment - CNNMoney
Fear & Greed is CNNMoney's investor sentiment tool that comprises of 7 markets indicators.
money.cnn.com
Be greedy when others are fearful, and fearful when others are greedy. So I'm going to build cash and lock in some gains. I'll maintain exposure to the upside via ITM put spreads, weekly call options and maybe ATM puts if I'm feeling lucky. So if the stock reverts, I'll only be out those relatively small premiums, but if we keep heading for Mars, those plays will turn small risk into large returns.
My strategy of smaller, riskier positions is paying off huge recently; I've doubled my account size in 8 days (which my wife cannot believe). One of the reasons that I'm raising cash is that I'm very close to my targets for the year for account size, and I don't want to screw that up. When things settle back down, I should be working with multiples of my former options capital, so I also hope to make money back then if we keep going up as well. It's going to hurt watching the SP keep going up (already does in the AH), but I just feel like it's time to risk off a bit, especially with the FOMC meeting tomorrow and Wednesday.
In other news, I'm taking delivery on a Plaid S on Wednesday! I finally decided the wait for the LR version wasn't worth it and got a delivery date like a day after ordering it. Very excited, but I'm not happy to be away from the market when the FOMC minutes come out!
Edit: Forgot to share some example positions for the ITM put spreads:
STO 30x 11/5 BPS 1275/1250 @ $21.91
So that $3.09 risk for probably $10 or $15 gains (I would close this out at 1290 or so). Trades like these have been paying off for me nicely on the run up. Wish I'd held more of them longer.
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My only concern is that TSLA followed the rises and falls of the NASDAQ much more closely today than last week. For instance, TSLA fell back from $1190 to the $1160s initially on a macro down trend and that whole rise into close was a visually identical on the two charts. In other words… it may be that a macro down day has some power over us now.
I gather the Fed meeting starts tomorrow, and though everyone is expecting them to start tapering, there still could be some kind of negative commentary (on inflation or whatever).
When it was stuck at $1170 for a while, I was actually kind of hoping it would level off there for a while. Until we get some kind of sanity in the price action, I feel like there’s little way to predict whether it will be up or down next. Even if the late rise today carries on into tomorrow morning, if there’s a downturn at some point, how far can it go? There’s no frame of reference right now.
I get home from errands and we're at 1209 (awesome!). The 1200s that expire this week can now be rolled out 1 week to 1250 for which I'll pay a $1 debit (instead of the $2ish credit from the earlier roll opportunity). I post this only to provide some instances of rolls and help inform our intuition about when to roll.
My plan is to leave it be. Maybe we get a pullback tomorrow and maybe it keeps going - either way works good for me, as I'll either sell those long dated calls at $1200 or I'll be able to roll them effectively (better strike, credit). Selling some of these as the shares go up is part of my plan - I don't know when there will be a pull back, nor do I know how far it'll go. Sort of like dollar cost averaging one's way into a position as shares are going down - this will be the reverse.
This is also reinforcing my trading plan to stick with lcc's and away from call spreads. Being able to take assignment as a straightforward mechanism to get out of a position is very much a source of calm.
EDIT to add: one of the characteristics I'm watching on when to 'take assignment' (close the cc and the same # of long calls) is delta on the two positions. As long as the long call has a higher delta than the short call, then the long call is adding value faster than the cc is losing value (at least based on share movements). Changes in IV are variable - each point of change will have a bigger impact on the long call but change less often, while the short call IV will change much more but Vega will be smaller.
At this point my June '22 600 strike calls have a .95 delta, while the 11/5 1200 strike calls have a delta of .60; that sounds like a good reason to let 'em run as well. Assignment will be closing each, so gaining .35 per $1 of share price change sounds like a good reason to let it run.
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InTheShadows
Active Member
I did this exact thing last year for about 3 weeks straight. I bought at the close and sold at market open next day. I continued it until it didn’t work one day then stopped. Made out really well.
Only reason I’m not doing it now is that I have a new trading plan that is 99% guaranteed to work (until it doesn’t) and I am so far ahead of my goals it is ridiculous. No reason to turn into a pig and get slaughtered.
The short legs of my put spreads are so FOTM (950) that they will hardly move until Thursday. I’m pretty sure I could move closer without adding much risk, however I do not want to have to manage positions. And when we do get our pullback the value of my leaps crashing will be enough emotional turmoil with out adding bad bps to the mix.
Well, I did sell half and now I wish I hadn't.
Don't be greedy, don't be greedy......
This was the same guest that was interviewed by Dave Lee re: the gamma squeeze. TLDR - he thinks it'll consolidate to around 1,100 by Friday. Last Monday had the Hertz purchase order news, which was a clear catalyst (and probably drove institutions to pull the trigger more based on fundamentals) and built up overall excitement. No catalyst today but just straight rocketing.
bballshinobi
Member
OK, you asked for it..... get ready to plunge. I'll buy one to test the theory.... one buttershrimp call is usually equivalent to a 50 point price drop.
Please let us know how this position develops. Hearing how this evolves is something that I think many of us will find valuable.
This is how I do the math. The question I ask - would I prefer taking assignment on the current position, or on the new position. In your example a $30 improvement in the strike and a bit of premium; $35ish is a great weekly result (at least is is for me - your mileage may vary
).The risk here is that the shares reverse and end lower than 1180, leaving you with the premiums and the shares - and no sale. For many this is a great outcome. However if you're actually trying to sell some shares, then this isn't great. Mostly it's just something to be aware of.
In the moment my own thinking is that I'd like to roll my 1200s for 1 week and play it by ear, but I really do want to make some sales on the way up. So a situation where I've rolled for strike improvement and credits, and then watch the share price drop too far, is not desirable for me.
For what its worth, at least with Fidelity, I start with a Spread ticket and then add legs (up to 4 total) until I have enough to create my desired end result. Specify each of the old and new positions and away we go.
I've done this before using the Custom ticket, but when I just went looking, I couldn't find that. And the flip roll and other such machinations are terms that, as far as I know, we've made up ourselves. I know I've done stuff like this - flip rolls, split rolls, split-flip rolls. But in retrospect those might have all been done in a brokerage account - it's been long enough that I don't remember, and hard enough to find that its not worth the effort me to go run down
I try to avoid doing that (roll BPS up on a day with a big jump in price). The problem, which I've done to myself, and which can be extraordinarily painful is to roll up to gain the extra credit, just in time for the reversal that sees your winning position suddenly go ITM. And then keep going and all you've done is turn a bad situation on one side into a bad situation on the other.
Then again you'll want those put spread premiums to help offset the call spread losses.
I've realize that what I really want to do is to sell my put spreads at relative low point. These are most easily spotted when the shares have a nice down day. But sometimes - that relative low point is on an up day. I rolled some 950 short puts up to 1100 this morning (still this Friday expiration). This is a smallish position for me and is about 15% ahead since I made that roll. But this is the sort of roll that got me into 5 months of trouble back in Feb. I've learned a lot since then and I've got more tools, and will be much more aggressive, about managing the position should it start looking troublesome.
But that's the risk of chasing the share price moves with one's rolls - turning a nice winning position into an ugly losing position isn't all that hard
I'm up 60% on the month - a completely ridiculous number - and as I look things over I keep finding places where I could have made different choices and be even further ahead. Cuz, you know, I could have planned on this run back at the start of October and been better positioned to take advantage of it.
Yeah - don't be greedy, don't be greedy. It's not working as well on me as it should
On the plus side I think that my wife and I are finally starting to get out of our lifetime attitude and approach to spending money (don't). We've got a fairly limited range of ways we can spend money on ourselves, but there are people and causes in our life that we -can- spend money on; and that's rewarding.
bballshinobi
Member
I was thinking the same thing after watching the video. So the $1,200 11/09 call was $45.25 at close today when the stock was $1,208. I think if we have a flat or even god forbid red day then those calls would lose a lot of value fast, which would allow MMs to start unloading some of the delta hedge shares. What goes up will come down fast too. Might be fun to grab a put or two if we just see a flat day tomorrow.
BrownOuttaSpec
Active Member
I'm trying really hard to only "hit singles and doubles" but it sure it getting tempting to swing for the fences.. MUST RESIST. This run up is messing with my game plan.
bballshinobi
Member
Use the premiums you make on short term options to buy LEAPs is the name of the game
Knightshade
Well-Known Member
Agreed- I'm not particularly looking to dump shares... though I'm "ok" with it if the week ends only a little ITM since there's no tax impact either way.
Yup. This is why I'm moving this IRA to fidelity in a couple of weeks most likely.
I'm with ML- no spreads in IRA, period.
I can sell share (but not LEAP) covered calls, I can sell cash-only secured puts. I can buy shares or puts (with cash only). I can roll an existing option.
That's it. No spreads of any kind, no custom tickets either.
So I was just a little stressed today.
So far so good with the flip. The sold puts were +28% today vs if I left them as cc's they would have been -36%. I have moved the outstanding risk nearer the money and even if the SP reverses steeply, I feel better about rolling puts down towards the SP that I believe will be going up more than down in the long term, vs perpetually rolling calls towards a target that is slowly (and sometimes quickly) moving off into the distance. I need to keep an eye on margin impacts but I plan on flipping more ITM CC's to ITM puts in a measured way. I think I will be able to get out of them quicker that way. They are also giving me good value from a peace of mind perspective in that they put me in closer alignment with my bullish af outlook. Will keep you all posted
Where those covered calls? If so, you decided to take the loss instead of continuing to roll?
I tried simulating a flip in my options calculator, but flipping some of my Jan 2024 CC into ITM Puts immediately gave me a margin call. I'm still hoping we drop back into the 900s in the next 6 weeks so that I can buy back my CCs. ALL my big losses in the last two years have come from selling CC that I later regretted as the SP kept moving up, and my "I'm ok selling shares at X price" kept increasing. I believe we will be over $3,000/share by 2024, so my $2,000 strike CC were just stupid.
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