Wiki Selling TSLA Options - Be the House

[pz1975]

Or increase the width of the spreads to $200. Half the number of contracts, and they behave more like naked Puts. Theoretical max loss the same as 2X $100 spreads, but much less likely to get into max loss territory, and easier to manage.

I’ve gone from $100 to $200 spreads for most of my BPS. My decision was based on @adiggs experiences and then applying them to my own model of risk/reward.

 

[pz1975]

If she spikes into close today, I’ll be buying some weekly calls expecting a jump tomorrow morning.

 

[Cherry Wine]

I’ve gone from $100 to $200 spreads for most of my BPS. My decision was based on @adiggs experiences and then applying them to my own model of risk/reward.

Yeah, my spreads (-1100/+800) going into today were actually $300 wide. I wasn’t worried about managing them at all.

 

[adiggs]

What were the strikes?

Godo question - sorry I forgot those

Was 895/1045s on the spreads, and 1095s on the puts.


I see that so far my 'bet' isn't paying off. Actually it already paid off from my point of view - I had no trouble going back to sleep for 2 or 3 hours afterwards, and I know that wouldn't have happened if those positions were still open.

I'm still expecting nothingburger, but I'm also not daring the market that I'm right

 

[bkp_duke]

Not advice, but I rolled my BPS for 11/12 expiration from 950/1000 to 1015/1065 for $1.65 premium.

The new BPS has a probability of > 97% from optionsprofitcalculator.com, and I can live with that.

My guy tells me we are going to be range bound again for a while after this run-up. I hope my gut is right, but I'm not brave enough yet to add a BCS to this and fill things out to a full IC.

 

[pz1975]

I'll can definitely add to this sentiment. I had the worst sleep and highest stress levels ever with my BCSs the last couple weeks when I ended up losing 7 weeks income and 5% of my total portfolio. I've learned a lot about myself and had to rethink what I am doing and why. My loss aversion actually led me to make dumb mistakes and lose more money that I needed to.

Stress/risk is going to be at top of my list when evaluating new trades going forward.

I’m curious what these “dumb mistakes” based on loss aversion were. We can probably all learn from that!

 

[vikings123]

I’ve gone from $100 to $200 spreads for most of my BPS. My decision was based on @adiggs experiences and then applying them to my own model of risk/reward.

Increasing the spread technically increases your max loss correct? So how is it reducing risk? Or you saying it’s better risk/reward?

Personally I’m not comfortable selling too many of these bull put spreads. I think the risk/reward is better with just cash or margin covered puts and some covered calls.

The worst case scenario for me is if something were to go wrong with Elon’s health, it’s not really about what he says on Twitter. I realize the key man risk is lower with Tesla now but still …

 

[mongo]

Increasing the spread technically increases your max loss correct? So how is it reducing risk? Or you saying it’s better risk/reward?

Personally I’m not comfortable selling too many of these bull put spreads. I think the risk/reward is better with just cash or margin covered puts and some covered calls.

The worst case scenario for me is if something were to go wrong with Elon’s health, it’s not really about what he says on Twitter. I realize the key man risk is lower with Tesla now but still …

Max loss per spread, but less spreads for the same $$$. So it takes more of a movement the wrong way to get the same loss.

The spreads (equal quantities) are lower at risk than pure sold puts since the lowest stock price is capped at the long strike.

 

[pz1975]

Increasing the spread technically increases your max loss correct? So how is it reducing risk? Or you saying it’s better risk/reward?

Personally I’m not comfortable selling too many of these bull put spreads. I think the risk/reward is better with just cash or margin covered puts and some covered calls.

The worst case scenario for me is if something were to go wrong with Elon’s health, it’s not really about what he says on Twitter. I realize the key man risk is lower with Tesla now but still …

It’s less risky based on the amount of margin used. For example, 1 BPS 1100/900 and 2 BPS 1100/1000 use the same amount of margin with the same max loss. The first one has lower risk because it doesn’t get to max loss until 900 (vs 1000) and is easier to manage. First one has also lower profit.

 

[UltradoomY]

STO $1200 straight Puts for 11/19 - $62 each.
Will see how this position ages.
Wanted to do a test selling just outside of the money on the wrong side and see if the share price comes back up.
If not I will be rolling out!

 

[jeewee3000]

STO $1200 straight Puts for 11/19 - $62 each.
Will see how this position ages.
Wanted to do a test selling just outside of the money on the wrong side and see if the share price comes back up.
If not I will be rolling out!

I like your style.

EDIT: on a technical note, "selling just outside of the money on the wrong side" = selling slightly ITM

 

[EnzoXYZ]

I rolled half my underwater 1115 CC expiring this week to 1140 next week this morning. Hopefully I don’t have to babysit these until next year.

Like many here I wasn’t too worried about my BPS that I opened last Wednesday. All showed profits even at the lowest price of the day.

 

[corduroy]

I’m curious what these “dumb mistakes” based on loss aversion were. We can probably all learn from that!

Sure, if my embarrassment can help the group...

Mistake #1 - not closing everything early when it started looking bad. My aversion to taking any loss led me to pass up lots of chances to close at what would have been an inconsequential loss. Sure things might have turned around in my favor, but not this time.

Mistake #2 - I tried to get cute with splitting the spread by selling the long call at what I thought was the top, then planned to buy the short call back after it went down during a dip. This actually would have worked after the first day, but then everything shot back up and I ended up taking more than the max loss of the spread. Yep, I figured out a way to lose more than the max loss of a spread. Lesson learned: max loss and insurance puts are your friend so keep the spread intact. In trying to lessen the loss I caused an even greater loss.

 

[Drezil]

I rolled half my underwater 1115 CC expiring this week to 1140 next week this morning. Hopefully I don’t have to babysit these until next year.

Like many here I wasn’t too worried about my BPS that I opened last Wednesday. All showed profits even at the lowest price of the day.

I would have closed then @ open & reopened them as soon as we hit 1200+ again for the same price I closed them.
Effectively would give you a better roll .

 

[alterac000]

STO $1200 straight Puts for 11/19 - $62 each.
Will see how this position ages.
Wanted to do a test selling just outside of the money on the wrong side and see if the share price comes back up.
If not I will be rolling out!

I'm trying this out in my Roth where I want to actively Wheel for a period of time. I had STO 11/5 1200 Puts that I rolled to 11/12 1200 Puts for a $20 credit this morning, new credit basis $80.24 per Put. Let's compare notes as we go along!

 

[Knightshade]

I know I've said this before, but I think we've got "safe" and "risky" reversed on this forum. To me, risking 2.2M to make 100k (or whatever your actual max profit was) is extremely risky, and would keep me up at night too. Anything "real" happening like Elon dying, China invading Taiwan, etc. is likely to plow through even a 99% chance BPS. And it would take 22 weeks of profit to build up a cash wall against a single black swan event.

Do you think we'll have a black swan more often than once every 22 weeks?

I'd rather have a reasonable plan for what the SP is going to do using the excellent information on this board, and place trades that risk 400k to earn 100k

Do you have some example trades that do that?

25% ROIC seems vastly higher than most trades I've seen reported here.

 

[Ogre]

Just enough of a dip to make it worth buying back my covered call for 25% of what I paid for it, but not enough that my Bull Put Spreads or naked puts are remotely threatened. That’ll do for a Monday “Crash”.

 

[PastorDave]

Do you think we'll have a black swan more often than once every 22 weeks?




Do you have some example trades that do that?

25% ROIC seems vastly higher than most trades I've seen reported here.

No, but what if the black swan is the week you started this strategy? And would you rather spend 4 weeks building back your reserves or 22? (well, 2 weeks or 6-11, in the more likely scenarios were you close early)

Example 25% ROIC trade (I used to report these, but they're directly counter to most of the not-advice here and I put a lot of these on) placed this morning:
11/12 BPS 20x 1120/1105 @ $3.26. This is about 6.5k max gain, 23.5k max loss or 27% ROIC. At the time I sold this, it looked like 1150 was a support and high IV let me get what I considered to be a very good chance at 27% ROIC. If I need to close this early, it will probably be for a reasonable loss, but my only real management strategy is BTC.

Right now a lot of the trades I put on Friday are underwater, but I'm still thinking that we close the week close to 1200 (or at least visit), barring some macro event, and my ICs and trades from this morning are making up the losses.

 

[Tslynk67]

I know I've said this before, but I think we've got "safe" and "risky" reversed on this forum. To me, risking 2.2M to make 100k (or whatever your actual max profit was) is extremely risky, and would keep me up at night too. Anything "real" happening like Elon dying, China invading Taiwan, etc. is likely to plow through even a 99% chance BPS. And it would take 22 weeks of profit to build up a cash wall against a single black swan event.

I'd rather have a reasonable plan for what the SP is going to do using the excellent information on this board, and place trades that risk 400k to earn 100k, and leave 1.8M in cash or in naked puts, which also don't bother me. That way so long as there isn't a black swan once a month, I should be ok. My ICs should be similar; I'm looking for something that earns about 20% so that I can build up cash reserves and don't get wiped out by rare events.

This whole tweet thing only impacted my portfolio by about -100k using approximately the above strategy, so it's closer to risking 100k for 100k, since I could have in theory exited those positions for 100k loss after an 80 point drop this morning. I'm back up to basically even with where I was on Friday now, after selling BPS into the dip. But if it had been a something-burger, I can take a max loss on those trades, roll a few naked puts for a while and sleep just fine.

Anyway, not criticism or advice, just wanted to share my perspective.

These are high-volume, ultra-narrow, close to the money spreads, right?

 

[MikeC]

Example 25% ROIC trade (I used to report these, but they're directly counter to most of the not-advice here and I put a lot of these on) placed this morning:
11/12 BPS 20x 1120/1105 @ $3.26.

Please continue to post your trades, if you don't mind. I don't think anyone wants this thread to be a single-strategy echo chamber. It is helpful to everyone to be able to compare and contrast various levels of risk/reward.