Wiki Selling TSLA Options - Be the House

[jeewee3000]

Your SPR(sleep-to-premiums ratio) must be nearing optimal.

I'm excited for this all to click in my head so I can pull these relatively safe, utterly roll-able, and straightforward positions out of my butt each week with ease.

These are my "safe" positions to use up a lot of the unused cash for this week.

My less safe positions open are:
11/5 -1000p/+900p (I'm not too worried about this, though, I don't think we'll go below $1000 this week.
11/19 1200cc's (already rolled a few times, they started out as 1050cc's when Hertz-Monday happened). I'm only rolling these if SP stays over $1200 an entire day or if we zoom towards $1250 on crazy volume on a single day.

Reason I prefer to keep my shares is largely tax risks, sprinkled with some FOMO and sentimental value.

 

[ChefBoyardee]

Dang, 95% IV for next week... Just sold a few 1000/900 put spreads and a 1500 CC on one of my leaps.

Also, there might be resistance at this level - too early to say but this (massive) channel lines up pretty well

 

[adiggs]

IV is sure looking good. Low 80s for the ATM this week, and high 70s for ATM next week!

I had a previous post about margin mechanics, as much for my benefit as for others as I'm starting to learn how it works in the details.


Today I had my first margin call come due (was MET immediately from the cash I had on hand - I have more cash than margin, so no actual risk here to me). I now see that margin call show up in the account as Pending Activity. I'll find out for sure tomorrow but I suspect that is going to behave the same way that the cash secured positions in the IRAs work. The Pending Activity will stay there as a cash reservation to cover my position commitments that are beyond what my margin covers.

I expect that as additional margin calls come due that Pending Activity will be increased to meet those margin calls, but I'll know more about that tomorrow and in two days. Tomorrow if I'm right, then that Pending Activity will still be there. In 2 days I'll have a second margin call coming due. Of course I am also evaluating when to close the positions that have generated the margin calls and I'm thinking about rolling out of one of them today to take advantage of, and lock in, the high IV for next week. That'll upset the margin mechanics testing.

 

[TheTalkingMule]

When this has happened to me (also with Fidelity) it looked like (but I didn't validate) that it was Fidelity pairing up my positions in a way that minimized my margin usage. A consequence here is that you won't have the easy 1 click Close Strategy button to clear those out, but check the actual margin consumpion. I could easily be wrong about what's going on there.

That's definitely it, and I can understand the mechanics of how it happened. Fidelity forced the sale of another CC contract at that same date/strike earlier in the year to I guess balance out margin in my IRA. I was trading semi-improperly and have now resolved it by using "IRA margin". Well I think when they went to sell one of those contracts they sold the one that was paired to the long call.

Now I have two dangling contracts that purchased together would normally just pair with no margin of any kind, since there's a debit of max loss at the point of sale.

I want the 100 shares of margin back, so my hope is that selling and then rebuying the same position will pair the two new contracts properly. See any danger in do that with a 4 leg market price order? Might lose or gain a few pennies, but that's ok. Will my total max profit on the spread still theoretically remain?

 

[adiggs]

Dang, 95% IV for next week... Just sold a few 1000/900 put spreads and a 1500 CC on one of my leaps.

Also, there might be resistance at this level - too early to say but this (massive) channel lines up pretty well
View attachment 728516

Do you have a reading from that channel on the support strikes? It does look like 1000ish on the way down - can you tell what the slope is? I'm wondering what those big channel lines suggest the support level will be for next Friday in particular. I suppose there are 4 of them on the chart (the 4 lines below the current share price).

Thanks!

 

[dl003]

Dang, 95% IV for next week... Just sold a few 1000/900 put spreads and a 1500 CC on one of my leaps.

Also, there might be resistance at this level - too early to say but this (massive) channel lines up pretty well
View attachment 728516

Makes one think...if these lines hold, was I wrong thinking that the early run-up this year was all irrational exuberance? Did buyers get too euphoric or did market get too bearish 3 months later?

Anyway, we're running out of lines to draw. I'm praying to God this is it and not even religious.

 

[adiggs]

I want the 100 shares of margin back, so my hope is that selling and then rebuying the same position will pair the two new contracts properly. See any danger in do that with a 4 leg market price order? Might lose or gain a few pennies, but that's ok. Will my total max profit on the spread still theoretically remain?

One thought that occurs to me is that a buy/sell of the same position might trigger a (minor) wash sale, or a pattern day trader designation - something of that ilk. I don't know really and I suppose you can give it a whirl and tell us all about it.

But the real answer is I'm clueless on this topic . I've solved the problem for myself by using so little margin that I'm indifferent to the details about how positions are grouped for margin purposes. Fidelity has mine grouped differently from how I opened the positions right now as well. That's ok - it'll take a minor bit of additional work to close them, but nothing onerous.

 

[mongo]

That's definitely it, and I can understand the mechanics of how it happened. Fidelity forced the sale of another CC contract at that same date/strike earlier in the year to I guess balance out margin in my IRA. I was trading semi-improperly and have now resolved it by using "IRA margin". Well I think when they went to sell one of those contracts they sold the one that was paired to the long call.

Now I have two dangling contracts that purchased together would normally just pair with no margin of any kind, since there's a debit of max loss at the point of sale.

I want the 100 shares of margin back, so my hope is that selling and then rebuying the same position will pair the two new contracts properly. See any danger in do that with a 4 leg market price order? Might lose or gain a few pennies, but that's ok. Will my total max profit on the spread still theoretically remain?

There may be a restriction on trading the same security on the same day. Plus, their UI may reject a self contradictory ticket (null result). Finally, you might be hurting yourself on the bid-ask spread (though they should match and cancel).

 

[mongo]

One thought that occurs to me is that a buy/sell of the same position might trigger a (minor) wash sale, or a pattern day trader designation - something of that ilk. I don't know really and I suppose you can give it a whirl and tell us all about it.

But the real answer is I'm clueless on this topic . I've solved the problem for myself by using so little margin that I'm indifferent to the details about how positions are grouped for margin purposes. Fidelity has mine grouped differently from how I opened the positions right now as well. That's ok - it'll take a minor bit of additional work to close them, but nothing onerous.

Wash only matters for taxed accounts versus this IRA.

 

[juanmedina]

I sold some naked puts $900 and BPS 790/690 for 11/12.

 

[ChefBoyardee]

Do you have a reading from that channel on the support strikes? It does look like 1000ish on the way down - can you tell what the slope is? I'm wondering what those big channel lines suggest the support level will be for next Friday in particular. I suppose there are 4 of them on the chart (the 4 lines below the current share price).

Thanks!

It lines up right around 1000, and since that's a nice whole number I think that'll be good support, but I'm not super confident in that. I'm still waiting for a couple tests of new trendlines before using more margin (I only have small positions on right now)

Edit: The top of the previous channel is at 840 for next week

 

[MindOverMatcha]

I've covered my strategies here before, but for the ITM strategy, it's very similar to just buying a long call, but with capped gains. So in the example I used above 1275/1250 @ $22, I risked about 9k (30 x $3) to make a max of 66k (30 x $22). As the strike gets closer, this slowly gains value until it hits about 50/50 ($13.5 - $10.5 profit) when the SP hits the short strike (assuming short time frame; obviously it hits full value if it goes over the short strike with 1 minute before expiration). The advantage over long calls is that it does well with a more drawn out rise, as you gain theta and delta instead of those two canceling each other out. I'd have probably been better off with just long calls due to the speed of the move (which I also had). Also this loses value more slowly, which should be great for me this morning, lol. I'm not sure exactly were it will be, but that position should be about even as I put it on yesterday morning. If the SP fell down to 1100, it would probably have lost 30-50% (just a wild guess; I should probably do the math, but it's a busy morning for me). Have to say I feel lucky to have risked off yesterday! I'm wondering if we buy the dip this morning or if shorts pile on and we head back to 1100, 1050 or 1000? I'm guessing the market retests one of those levels and then buys the dip, but maybe we shoot up at the open too.

Thank you for going the extra mile to further explain your strategy. I'll look through previous posts to dive deeper. I'm shooting for 50%-60% profits now to close my short positions. I was able to wait out for 90% before earnings, but each week (day?) is a different climate. I'm experimenting with executing short positions at different times of the day/week. I see that on a Monday rise, the morning is the best time since you can ride the trend throughout the day. Today, like last week, maybe our 1 red day of the week before a "buy the dip" rage occurs.

 

[MindOverMatcha]

Makes one think...if these lines hold, was I wrong thinking that the early run-up this year was all irrational exuberance? Did buyers get too euphoric or did market get too bearish 3 months later?

Anyway, we're running out of lines to draw. I'm praying to God this is it and not even religious.

There are no atheists in foxholes
Before a big match, I would always pray. Otherwise, I'm an atheist the other 99.9%.

 

[BornToFly]

Same for me. That is: missed out on the peak. I rolled p860's 11/5 to 11/12 for a net gain of $5. Five minutes later it reached $6. Well, I guess you can't have it all. But I've learned my lesson and for my p850's put in a roll order for $7. Also looking to roll my p810's by a week, likely to a higher strike like 850 or 860.

The stock went vertical for a week. Now it might be coming down. Nobody knows what it will do. I don't understand rolling on Tuesday to next Friday all ready. What if we drop to $1000 by this Friday? You will probably get the same premium for a much lower strike in a few days, and maybe have more clarity about what next week will bring. It just seems to me that when the stock has been doing the unexpected, the least number of days between your trade and expiration is probably best. Patience....

 

[vwman111]

There are no atheists in foxholes
Before a big match, I would always pray. Otherwise, I'm an atheist the other 99.9%.

So when you buy $TSLA you are a bull, but a bear the other 99.9%?

 

[st_lopes]

Sorry to circle back, but Fidelity was no help.

I bought a debit call spread months back, Jun2023 -1300/+1000. Bull(debit) call spreads require no cash or shares as margin, but due to some actions from Fidelity, my two contracts became unpaired. Now the sold portion is holding 100 shares of margin I'd rather use for other purposes.

View attachment 728503

Can I just create a 4 leg ticket to "sell" and "rebuy" this position and the new(same) position will likely pair properly without any share margin held?

Try calling Fidelity they may correct the pairing. Happened on my brokerage this week that they didn’t pair BPS with BCS so both were consuming margin. Quick call and resolved.

 

[BornToFly]

Not that I expect anyone to care, but anyone selling a premature BPS today (as we start dropping from the ATH), for NEXT Friday, is getting a from me today

 

[mickificki]

Not that I expect anyone to care, but anyone selling a premature BPS today (as we start dropping from the ATH), for NEXT Friday, is getting a from me today

i opened some bps for next week earlier this morning, 785/685...hoping we don't drop that low...sigh...

 

[BornToFly]

i opened some bps for next week earlier this morning, 785/685...hoping we don't drop that low...sigh...

I think you're safe, but would probably make more money if we drop 10-20% first. The point is we don't know - a lot of trading still to happen the next few days. After my massive burn last week, I am all for more clarity.

 

[BrownOuttaSpec]

Not that I expect anyone to care, but anyone selling a premature BPS today (as we start dropping from the ATH), for NEXT Friday, is getting a from me today

I noticed I got a little trigger happy to see premiums starting to rise. It wasn't a large order but THANK YOU for keeping my head in check.

Teamwork!