The trend is your friend until it isn't. But following the last few weeks, I'd guess there is a >0 chance that our whales decide to initiate another gamma spike by taking out the $1,250 call wall. If that wall falls, I could see a run all the way to $1,300 by end of day (and after hours tomorrow).
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
The trend is your friend until it isn't. But following the last few weeks, I'd guess there is a >0 chance that our whales decide to initiate another gamma spike by taking out the $1,250 call wall. If that wall falls, I could see a run all the way to $1,300 by end of day (and after hours tomorrow).
I... love this trade. My version:
11/12 975/1000/1450/1475 @ $3.49
240 points to the downside and 210 points to the upside for this to go bad on me; plenty of time to fix things if it looks like it's going bad. And since I think 1300 and 1100 should be strong support/resistance I feel comfortable in this trade. Thanks for sharing!
I believe we are in uncharted territory now:
www.teslarati.com
Tesla (TSLA) makes largest 12-day gain in the history of capital markets: report
Tesla (NASDAQ:TSLA) as a company is no stranger to doing things that were widely thought of as impossible. It made the stigmatized segment of electric vehicles exciting with cars like the original Roadster and the Model S. It also proved that battery production is the next great frontier with...
www.teslarati.com
With newfound cash from selling some shares, STO 140 x 875/775 BPS for 11/12 for $2.2
I had sold a 880CC for my son a few weeks ago. I started rolling it up and out. At the time rolling out 4 weeks worked better than 1 week.
corduroy
Active Member
I guess those of us who had losses should feel better knowing that it only took the biggest move in the history of the stock market to do it.I believe we are in uncharted territory now:
Tesla (TSLA) makes largest 12-day gain in the history of capital markets: report
Tesla (NASDAQ:TSLA) as a company is no stranger to doing things that were widely thought of as impossible. It made the stigmatized segment of electric vehicles exciting with cars like the original Roadster and the Model S. It also proved that battery production is the next great frontier with...
If he comes to Tesla, I’d like to see him audition as President of Europe where he could prove he’s not stuck in legacy auto mindsight. Wouldn’t have to relocate, etc.
Depends on your broker. For me (at IBKR) it is ~50% of the market-value of shares/LEAPs i get as margin. For cash it is 100%.
Look at Theta. I have spreads which yield me ~1-2$ Theta every day. This goes down over time & then i roll them closer to the SP to squeeze out more.
Way less risk & it forces you to wide spreads. I want to farm Theta, not delta/vega with tight spreads.
Knightshade
Well-Known Member
Interesting- so one of you gets NO margin benefit from LEAPs and the other gets 50% same as shares.
Far as I can tell I get none at ML either- only stock shows up as having margin equity value in my margin account.
(and at ML at least this is NOT clearly documented, had to dig into balance info to suss it out, though it also became obvious this past 2 weeks when my margin was growing significantly less quickly than expected given the growth of the overall account value since it's about half shares half LEAPs)
There isn't a rush. Stick with the really conservative stuff while you're getting your feet under you, learning the mechanics, building up your own process for how you decide on strikes, gathering info about the market and stuff. If you think of this as a 10+ year exercise, then even if it takes 6 months of reading, trying stuff out for yourself, and finding your own approach that works for you, then that's fine. In the next 10 years, whether it takes you 1 month, 6 months, or you decide that your current level of risk works well for you - it won't matter how long it takes you to get there.
And you're making money while you're figuring these things out. It's always good to be paid to learn.
I open now to get the weekend time decay. I also open now because IV is so high, and has been so low not so far in the past, that I like to sell that high IV now and lock it in for the week and a bit.
I like rolling covered calls. The process is so much cleaner mentally, at least for me. Do I like assignment at the new position better than I like assignment at the current position. This definitely gets into time value of money and alternative uses for the money. The credits aren't directly comparable either - you'll need to earn very high premiums to match the much more modest put spread premiums (same % credit for the same $ backing).
Good feedback and insight on staying close(r) to the money. You're pretty far back though. and yet you're still improving the strike.
Something I learned from my hell put experience over the front half of the year - also look at the 2/3/4 week rolls when its roll time. There were situations where the 4 week roll was >>4x the 1 week roll. I usually found that the 1, 2, or 4 week rolls were the place to be. A secondary benefit of the 4 week roll is that you're not needing to worry about the position as soon for the next roll. And you save a trivial bit of commission!
Also - rolling the week before expiration when deep ITM seemed to me to be important. I've never been assigned but the early roll was an important part of that. More specifically if the time value on the deep ITM option is getting really small, then the likelihood of exercise is going up. I tended to roll with .50 or so of time value - that was probably too early, but I wouldn't let it get to say .10 for instance. Besides - the sooner you roll when time value is practically 0, then the more time to the next expiration and thus the more time value in the new position that you can use to buy strike improvements and/or bigger net credits.
Better is something that we each decide for ourselves. The theme being that we each make our own decision and experience our own consequences.
One thought for you to consider - %OTM is a 'static' relationship between your short option and the share price. 2 months ago 30% OTM would have been like .25 premium or something and probably not worth doing. Today with high IV there is some money there. Premium size is also a bad metric. But figuring out what that metric is for you - that may take you awhile. In which case the %OTM may be a good placeholder
My take on BCS is that rolls on those are really awkward. If instead of paying for an OTM insurance call you spend a lot more for a deep ITM call that you use as share replacement, and then you sell calls against that, then going deep ITM on the short call always has an easy escape hatch - sell the deep ITM call and BTC the short call. That'll be cash flow positive and probably realized P/L positive. You'll have opportunity cost of missing out on some of the share price rise, but you won't experience permanent loss of capital.
If only our crystal balls would tell us what would happen next.You look smart now, but if the SP had kept dropping yesterday and today instead of rebounding, we would have looked like geniuses.
I'm a big fan of taking positions that I consider good, when they are being offered. Sometimes its too soon, and sometimes it's the peak. Either way it's good by my definition and that had better be good enough for me
Closed my 11/5 900/700 BPS @ 93% profit.
Opened 11/12 900/700 @ $3.976
Opened 11/12 900/700 @ $3.976
scubastevo80
Member
Closed my 11/5 BPS this morning and will close my BCS tomorrow. Opened 11/12 995/920 BPS for $5.74 and 1425/1500 BCS for $5 earlier today. I'm still sticking with my +/-20% safety margin for upward/downward moves until I can spend more time understanding how to more tactically roll/close these out.
bkp_duke
Well-Known Member
Opened 950/1000 BPS Exp 11/12 for $3.60
Still considering BCS to make it an Iron Condor, but probably nothing below 1475 or 1500 for the short call.
Still considering BCS to make it an Iron Condor, but probably nothing below 1475 or 1500 for the short call.
So about these leap covered calls, or poor man's covered call (diagonal call spread?), couple questions, did I get this right:
- buy an ITM call far out to future (LEAP)
- sell eg a weekly otm call, the call is in essence covered by the bought call
- if short call goes itm and rolling is not feasible, just close both legs
Sounds like a low-risk strategy. What's a good entry price for the leap? I guess long call needs to have smaller strike than sold short calls. What am I missing?
I think this could conplement my bps strategy while minimizing the risk of getting shares called away.
In this country, taxation on realized gains can be much lower if you have held the asset for over 10 years.. so I really don't want to sell my shares. Also that is why I don't own any leaps - there are no leaps 10 years into the future.
- buy an ITM call far out to future (LEAP)
- sell eg a weekly otm call, the call is in essence covered by the bought call
- if short call goes itm and rolling is not feasible, just close both legs
Sounds like a low-risk strategy. What's a good entry price for the leap? I guess long call needs to have smaller strike than sold short calls. What am I missing?
I think this could conplement my bps strategy while minimizing the risk of getting shares called away.
In this country, taxation on realized gains can be much lower if you have held the asset for over 10 years.. so I really don't want to sell my shares. Also that is why I don't own any leaps - there are no leaps 10 years into the future.
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One risk is that your short strike goes ITM too fast and loses a lot more money than the long strike gains.
If too DITM, you can essentially lose all the time value from your LEAP and end up with the equivalent of a vertical spread, even though the expiration of the short call is much earlier.
Surely his connections to German auto would be an asset in many ways. IIRC, wasn't he under consideration for a job at Tesla sometime in the past?
pz1975
Active Member
We are getting close to the optimal time for selling options - after a big move in either direction when the SP settles eventually into a predictable range. We are clearly not there yet but I would expect in the next 2-3 weeks to settle into a more stable and predictable SP range. That is the history of TSLA and I don’t see why it won’t be different this time. The reason it is the best time to sell options is of course that the IV will still be high from the recent big move as it takes many weeks for the IV to slowly drop back down to reflect the more stable range.
I am still staying very OTM with puts>>calls for next week and with the high IV still taking in nice premiums. Once the SP is more stable then I will slowly move less OTM and make even better premiums since the IV will still be high.
The worst time (in hindsight) to sell options is like 3 weeks ago after a long flattish period when the IV was low and many of us flew too close to the sun selling OTM calls to get some profit that burned us. Those are also the hardest times to predict - when a big move will happen.
Inevitably the SP will settle downs in the next few weeks and then we will be able to make nice profits selling high IV very OTM puts and calls.
I am still staying very OTM with puts>>calls for next week and with the high IV still taking in nice premiums. Once the SP is more stable then I will slowly move less OTM and make even better premiums since the IV will still be high.
The worst time (in hindsight) to sell options is like 3 weeks ago after a long flattish period when the IV was low and many of us flew too close to the sun selling OTM calls to get some profit that burned us. Those are also the hardest times to predict - when a big move will happen.
Inevitably the SP will settle downs in the next few weeks and then we will be able to make nice profits selling high IV very OTM puts and calls.
bballshinobi
Member
What % of your margin do you allocate for selling naked puts on a weekly basis?
is there a percentage you don’t cross in case of a potential black swan event? Or since you now stay 25% far OTM you take larger positions?
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