pz1975
Active Member
I made the exact same trade.
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
welcome to my world... IC is my fave strategy (just need to learn using wider spreads)I think I'm a little bit of a masochist. When I was doing naked Puts, I only had to worry about drops (only a little). Now with iron condors I freak out when the stock starts to drop, and I freak out when the stock starts to climb. Basically I'm constantly freaking out. Can't be healthy....
if you do it right, it's a piece of cake and easy as pie... i sell it like hotcakes.
it's my bread and butter and the apple of my eye if i am a smart cookie about it and use my noodles; it brings home the bacon, it's my cup of tea, and it's my gravy train packed like sardines as long as i remain cool as a cucumber and don't go bananas and don't go nuts about it until i have an egg on my face.
Knightshade
Well-Known Member
A thank you to Yoona both for the wisdom routinely brought to the thread and also for prompting me to go make lunch
AquaY
Member
I'm hungrywelcome to my world... IC is my fave strategy (just need to learn using wider spreads)
if you do it right, it's a piece of cake and easy as pie... i sell it like hotcakes.
it's my bread and butter and the apple of my eye if i am a smart cookie about it and use my noodles; it brings home the bacon, it's my cup of tea, and it's my gravy train packed like sardines as long as i remain cool as a cucumber and don't go bananas and don't go nuts about it until i have an egg on my face.
It's feeling a bit like the price gets up toward $1100, someone starts selling Elon's shares. Gets down toward $1050/1060, either the selling slows or the buying picks up. It really seems to help to know that Elon has sold/is selling and it's not just "the market losing confidence" or the top blowing off down to some unknown bottom or whatever. I've been pleasantly surprised that the inflation numbers (and corresponding rise in the 10 year) haven't further cratered the stock.
I'm sort of assuming this will carry on for a while and then we'll recover up toward $1100/1200 afterward. No guarantees of course, but I'm content rolling out a week for the moment (and doing it again next week if this is still going on). Prices for rolls seem good enough.
The down side is I'm still using more margin than I'd like given the stock price is down and thus my available margin is down. I have rolled most everything rather than closing for next to nothing, so I no longer have the opportunity this week to close more out and use less margin for next week. There seem to be enough peaks and valleys that next week I should be able to close more out if the current action continues. I just have to be strategic and not roll again too early.
I'm sort of assuming this will carry on for a while and then we'll recover up toward $1100/1200 afterward. No guarantees of course, but I'm content rolling out a week for the moment (and doing it again next week if this is still going on). Prices for rolls seem good enough.
The down side is I'm still using more margin than I'd like given the stock price is down and thus my available margin is down. I have rolled most everything rather than closing for next to nothing, so I no longer have the opportunity this week to close more out and use less margin for next week. There seem to be enough peaks and valleys that next week I should be able to close more out if the current action continues. I just have to be strategic and not roll again too early.
I took an unnecessary $5000 loss yesterday because I panicked but it should still be a good week for me. I think I am going to take a break next week because I am making mistakes and I need to reset. I am finding that having a lot cash is not a good idea for me haha; I did the math earlier and I had about $1M in spreads for this week which is way too much for the size of my account. Yeah this is not healthy at all.
Gotta love that day-before time decay. My 1100 strike calls are down $4 while the shares are up $4. Something tells me that I'll be closing these out towards the end of the day.
Might need to add this to @Yoona's list.
Know thyself.
Might need to add this to @Yoona's list.
looks like a decent bet 1000-1150 will be the range for next week. Shifted to 950 puts + 1200 CCs for next week in small size. Premiums are pretty decent. Have to cover the CCs as soon as Elon is done with the sales.
I set some moderately aggressive BTC on the 1150 and 1100 cc I had for tomorrow and both have closed. Not great $$ but much better than beer & sushi money for a 1 day trade.
With the shares slightly down on the day at this point, I've decided that this qualifies as selling into strength and I've opened +600p/-900p for next week. The thing about selling into strength for puts - that really means "sell into a perceived local minima". I'm starting to think that somewhere around this price, maybe down to 1000, is our lower bound for at least a few days. The upcoming Q4 results continue to provide a potential catalyst that I believe limits the downside. I also view 900 as a potential support as the previous ATH (even if only visited briefly), plus the wide spread will make for a wide range of management choices.
My thinking is that this provides me with some leverage in the retirement accounts while keeping the behavior very short put like. It also restrains my enthusiasm from opening too many of these. In particular cash secured 900 strike puts will need $90k as backing, while these spreads will need $30k as backing. So I can get 3x the positions for nearly the same premium/position.
The position opened at around 5.38 - .26 (5.10ish). I was also considering $400 wide spreads but I decided that the incremental savings on the insurance put wasn't enough (about .12 for the 600s).
For reference the 700 strike put was around .63. From an income generation perspective the $200 wide spread will do quite a bit better given the same position size (1/3rd more contracts, with a very small reduction in the spread premium). But I'm still in "Elon is selling; the FUD will continue" mode and a combination of fewer contracts and a wider range in which management will work a lot like naked puts is where I'm finding my sweet spot.
A bit of a sidebar - in the brokerage I've gone for cash secured, which just means that I didn't sell more than my cash can't cover in a max loss situation. Were I to use all of the available buying power, if I did the math right, then Fidelity will cheerfully allow me to sell 4x MORE than I've already sold. Talk about scary
I might add as much as 25% or 50% more in future weeks so that I start dipping into the margin, but not enough to even use 10% of the margin. It's kind of scary just how much margin / credit they'll extend.
For reference - Fidelity is holding margin of just under $150 for these spreads (vs. the $300 being held in the retirement accounts). I have so many ways to bury myself using margin!
Now I'm looking for an up move to open some calls for next week. The 1200 strike is around $6 right now. I'm going to wait on that for now, but the 1200 or 1250 range is where I'm looking to position the cc's. I plan to be more aggressive with these positions that I can take that are close to our new ATH figuring that I can roll upwards into actual ATH territory should I desire, and I've got some imbalances in my accounts cash|shares balance that I repair by selling some long calls (not a formula for when to sell/buy - a target that I evaluate periodically).
With the shares slightly down on the day at this point, I've decided that this qualifies as selling into strength and I've opened +600p/-900p for next week. The thing about selling into strength for puts - that really means "sell into a perceived local minima". I'm starting to think that somewhere around this price, maybe down to 1000, is our lower bound for at least a few days. The upcoming Q4 results continue to provide a potential catalyst that I believe limits the downside. I also view 900 as a potential support as the previous ATH (even if only visited briefly), plus the wide spread will make for a wide range of management choices.
My thinking is that this provides me with some leverage in the retirement accounts while keeping the behavior very short put like. It also restrains my enthusiasm from opening too many of these. In particular cash secured 900 strike puts will need $90k as backing, while these spreads will need $30k as backing. So I can get 3x the positions for nearly the same premium/position.
The position opened at around 5.38 - .26 (5.10ish). I was also considering $400 wide spreads but I decided that the incremental savings on the insurance put wasn't enough (about .12 for the 600s).
For reference the 700 strike put was around .63. From an income generation perspective the $200 wide spread will do quite a bit better given the same position size (1/3rd more contracts, with a very small reduction in the spread premium). But I'm still in "Elon is selling; the FUD will continue" mode and a combination of fewer contracts and a wider range in which management will work a lot like naked puts is where I'm finding my sweet spot.
A bit of a sidebar - in the brokerage I've gone for cash secured, which just means that I didn't sell more than my cash can't cover in a max loss situation. Were I to use all of the available buying power, if I did the math right, then Fidelity will cheerfully allow me to sell 4x MORE than I've already sold. Talk about scary
I might add as much as 25% or 50% more in future weeks so that I start dipping into the margin, but not enough to even use 10% of the margin. It's kind of scary just how much margin / credit they'll extend.For reference - Fidelity is holding margin of just under $150 for these spreads (vs. the $300 being held in the retirement accounts). I have so many ways to bury myself using margin!
Now I'm looking for an up move to open some calls for next week. The 1200 strike is around $6 right now. I'm going to wait on that for now, but the 1200 or 1250 range is where I'm looking to position the cc's. I plan to be more aggressive with these positions that I can take that are close to our new ATH figuring that I can roll upwards into actual ATH territory should I desire, and I've got some imbalances in my accounts cash|shares balance that I repair by selling some long calls (not a formula for when to sell/buy - a target that I evaluate periodically).
My goal for rest of 2021 is to bat 100%... not going to worry about weekly income.
Opened BPS 860/660 for next week. About 1/4 of usual position. Feels like the continuing Elon selling will give another opportunity for a drop.
Got few CC to closed tomorrow.
Opened BPS 860/660 for next week. About 1/4 of usual position. Feels like the continuing Elon selling will give another opportunity for a drop.
Got few CC to closed tomorrow.
Have made money on all my test spread trades. Could potentially have been ten to fifty times larger across the board.
But I am too busy right now with both family and work. You guys are working for real here, this ain't no cushy detail.
Will stick with CCs and cash puts for now unless madness overtakes me. I tend to cluster around 250 to 350 from SP to the upside and 200 to 250 to the downside. Premiums aren't much... but I do have a decent amount of shares and I just want mostly stress-free income.
I do believe Elon will keep selling and we WILL see crazy moves continue. Am waiting for indication that he is spent to load up on naked calls for 4Q. Wonder when that will be...
This forum is exceptional and so are you all! Keep up the good work!
But I am too busy right now with both family and work. You guys are working for real here, this ain't no cushy detail.
Will stick with CCs and cash puts for now unless madness overtakes me. I tend to cluster around 250 to 350 from SP to the upside and 200 to 250 to the downside. Premiums aren't much... but I do have a decent amount of shares and I just want mostly stress-free income.
I do believe Elon will keep selling and we WILL see crazy moves continue. Am waiting for indication that he is spent to load up on naked calls for 4Q. Wonder when that will be...
This forum is exceptional and so are you all! Keep up the good work!
So if I'm understanding it, rolling a ITM BPS may be best to do later in the week, like Thursday, rather than a Tuesday?
I don't think Q4 delivery number support will solidify for another month. So I am not as confident as I would like with my 900/700s for next week yet. If this was mid December, and the stock was 1060, I would be using every dollar of margin to write more 900/700s.
Tough question. What you are asking depends a lot on volatility and stock price trend. Generally it is better to roll when there is little Theta left in your contracts. The problem with spreads going into the money is that you don't know if the SP is going to keep moving against you and cause a partial loss to go to full loss, so it may be better to close/roll earlier if things aren't going well.
What I was trying to say in the post you quoted is that selling an option closer to expiration is safer because there are obviously fewer days for the share price to get away from you. If a 10% move puts my spread in the money, I would rather have to bight my nails for one week rather than two. If I survive the one week, I would like to do a new spread for the following week with the latest stock price (not the SP from a week ago, which is kind of what you are doing with a two week spread at the half way point).
Oh I see. This would be different if the SP is going against you, then better to keep ahead of the SP. Gotcha. In my situation, I am hoping for the SP to rise up, just unsure which week that may be. So I have some ITM BPS expiring 11/19 and some 11/26 that I rolled yesterday when we touched 90s then bounced up to 1070.
Know thyself. A fantastic example.
I agree that this IS real work. At least for me, I believe that to do this well, there has to be at least something about this that is fascination to fun about it. If this were work, in the sense of something that I was making myself do, then I wouldn't be doing it well.
NOT-ADVICE; just way that I see things. Worth working out your own examples to see if you agree.
The way I see rolling in general, and spreads more particularly... when a position is close to the money or in the money, and the purpose of the roll being considered is to buy time for the share price to turn around and the position to move back OTM (vs, a convenience roll - confirm the profit for this week, while opening the position for next week), then:
There is a balance between rolling too soon, and rolling too late that we're looking for. Of course if the crystal ball was always clear then it'd be easy, but the crystal ball is cloudy.
The factors that affect the roll - everything else being equal we'd like to roll with the time value as close to 0 as possible. The rationale is that on a roll we are buying out the time value remaining in the old position so we can sell the time value in the new position. The less time value in the old position, the less there is to buy out. Or a different way of thinking about the same thing - our earnings are in the time value; the less of there is remaining, the more that we've earned. That mostly means that the closer to expiration, the better.
The other factor is just how deeply ITM one goes. Generally speaking the quality of the available roll decreases as the share price approaches the short strike and continues getting worse as you go further and further ITM. It seems like the very best rolls are ATM or slightly OTM, but are still good enough that waiting a few extra days while going slightly ITM is a better tradeoff (time value melting away).
Too soon and you're buying out more time value than you want to (lower quality position to roll into), and too late may see you get too deeply ITM, thereby lowering the quality of the position you can roll to.
My own bias in this tradeoff is to roll early and for maximum strike improvement (subject to a net credit). There are two reasons for this:
1) The maximum strike improvement is going to get me the best protection if THIS move is a biggie. Most of them aren't, but if this is the one, then I'd like to have given myself the very best chance of staying ahead of it, so the shares can reverse.
2) I view the roll as buying time and that means I'll have a week (or more) of effectively no earnings. Earnings going to 0 for a week or more is way better than realizing losses. And since I'm in this for income, and I've got enough buffer from the weeks that win, one of the uses for those winning weeks is to allow for weeks with no income. Oh - and realized losses are bad, really bad, for income
Rolling early if the shares aren't gapping up and down will bias towards still OTM. If I'm close to expiration and OTM, then I might split the difference on the roll - find out my max strike improvement and then come back 1 strike so I get a bit of income that week while still providing lots of coverage if this is a BIG move against me.
From what I've seen high IV provides significantly better rolling choices, while also being an environment in which more rolls are needed (can't get something for nothing).
I learned at the beginning of the year when IV was high that I could get an effective roll while $80 ITM. Shares around 720 and strike around 800 on some puts, so 10% ITM at that point, where effective = credit + strike improvement available, whether I take the strike improvement or not. A month later with IV down, I no longer had an effective roll when $40 or $50 ITM. I don't have a formula here - I just regularly setup candidate rolls when its possible that I might be needing them soonish so I can see just what's available.
I learned that there are situations where a 1 week roll is barely or not effective, while the 2 week roll IS effective. Or 1 week vs 3 or 4 weeks. I personally choose to not roll out to more than 4 weeks, at least without a lot of thought about it. I've rolled out to 1 and 2 years before and really didn't like that dynamic. Once I'm up to 3-5 weeks to expiration then it might be time to take assignment (or the loss) and move on.
I've seen situations where the 2-4 week roll is much more than 2-4 1 week rolls. And heck - if you're deep enough in the doodoo, then I've rolled for as much as a month just to avoid the weekly work (and get a better credit).
When really deeply ITM on naked puts and calls, the time value will approach 0 much sooner than the day before expiration. I keep an eye on that and have been in situations where I was rolling 1 week ahead of expiration to avoid early assignment (a good time to be considering monthly rolls). That doesn't guarantee no early assignment - I just don't try to push time value really, really low. Probably around .30 to .50 is as close as I've gone (guessing at the number - it is at least directionally accurate).
And last that I can think of right now - spreads have different roll characteristics from plain short options. These are best seen in a really tight spread, but the dynamic applies to some degree to any spread. To the degree that a spread behaves like a short put|call, then the rolls that maintain the spread size should be expected to behave similarly or the same. From what I've seen this relationship holds pretty well through 1/4th of the way into the spread. So $50 on a $200 wide spread.
The spread stops rolling for a credit or strike improvement at the mid point.
Rolls past the midpoint of the spread are a net worsening of the position, either by paying a debit to maintain the strikes, worsening the strikes, and/or bringing more capital into the trade.
And somewhere in there - probably the midpoint and lower - adding more time to the roll doesn't change the quality of the roll that is available. I think that what's going on here is that the % change in time value for the long and short legs are now changing roughly the same, so whether you add 1 week or 4, the time value relationship between the two changes about the same, thus little or no extra value in more time. Maybe even a worse roll with more time - I haven't tested this though.
I
I told myself I would only sell Puts if I ever got into option trading. However, my option was activated after the second greatest run up in the stock history. I could not help myself but to open strangles since selling puts was riskier than selling covered calls after the run up.
I have discussed a new strategy with my wife trying to use her engineering brain to average down my risk taking brain.
For a given week.
Monday: at the MMD sell puts 40% away from SP expiring on Friday. When the stock recovers sell CCs 40% above the SP. Open a safe strangle on both side using maybe 35% away of the covered calls from shares.
Tuesday: same thing but open a strangle 30% away from the new SP
Wednesday: 25% away
Thursday: 20% away
Friday: 15% away
I’m trying to set a simple safe strategy that my wife can follow the day I am too busy to even look at the stock price.
I’m trying to be safe from a 12% daily downturn and from a 12% run up. Safe from a drop of 17% over 2 days.
Please critic that strategy. I am trying to optimize the time spent following the stock/profit generated free of stress. High probability of success without having to manage rolling ITM BPS while not available in a doomsday scenario. Feel free to share not advice on how to tweak it to make it more profitable, less risk, more fun, etc…
I am tempted to reduce all the percentage by 5% closer ITM when I place my trades however my wife would stay 50% away. I’m trying to find common ground here.
My 2 older boys had day off from the school. We spent the day at the skatepark with the new skateboard their grandmother bought my oldest for his birthday. I sold some 1225 CCs for tomorrow just before trying it again like old days when I was 14 and careless. I’m preparing my retirement by taunting the devil with bilateral wrist fractures.This thread is quiet this morning. Stock price behavior going according to plan. Everyone sitting on their hands watching theta melt away. Next set of trades in about a week. This is the way it is supposed to work....
I told myself I would only sell Puts if I ever got into option trading. However, my option was activated after the second greatest run up in the stock history. I could not help myself but to open strangles since selling puts was riskier than selling covered calls after the run up.
I have discussed a new strategy with my wife trying to use her engineering brain to average down my risk taking brain.
For a given week.
Monday: at the MMD sell puts 40% away from SP expiring on Friday. When the stock recovers sell CCs 40% above the SP. Open a safe strangle on both side using maybe 35% away of the covered calls from shares.
Tuesday: same thing but open a strangle 30% away from the new SP
Wednesday: 25% away
Thursday: 20% away
Friday: 15% away
I’m trying to set a simple safe strategy that my wife can follow the day I am too busy to even look at the stock price.
I’m trying to be safe from a 12% daily downturn and from a 12% run up. Safe from a drop of 17% over 2 days.
Please critic that strategy. I am trying to optimize the time spent following the stock/profit generated free of stress. High probability of success without having to manage rolling ITM BPS while not available in a doomsday scenario. Feel free to share not advice on how to tweak it to make it more profitable, less risk, more fun, etc…
I am tempted to reduce all the percentage by 5% closer ITM when I place my trades however my wife would stay 50% away. I’m trying to find common ground here.
Similar threads
