Wiki Selling TSLA Options - Be the House

[mongo]

Seems to be some confusion as to whether the sales need to be completed next week or not

I'm of the belief that Monday was the Gamma squeeze unwind and Tuesday was a reverse Gamma squeeze based on massive put buying - this will also need unwinding at some point... the rest of the week was probably influenced by the selling, obviously whomever is performing the act is throttling it so as to keep the price around the 1030-1050 range

The best data point we have is that the employee trading blackout period starts two weeks before the end of the quarter.
Tuesday morning did have a lot of sells by Elon's trust, but it was only 25% or so of the total trades.
Friday's Trust price range was $1,020.18 to $1,044.95.

 

[bonk3125]

Busy doing damage control this week.

Open positions on Monday:
1000/950 BPS 11/12
1040/995 BPS 11/12
900cc 11/12
990cc 11/12

Like most others, this was quite an acid reflux inducing week. Watching potentially weeks of gains dissolve and wondering if my risk appetite was appropriately assessed prior to starting this endeavor.

Moves made/positions as of Friday close:
1. 1000/950 BPS - closed half of contracts for pennies, rolled the other half as below as we were approaching 1000. In hindsight, I should've let all the contracts go till Friday, but that 980s dip was not fun at all.
2. 990/940 BPS 11/19
3. 930/880 BPS 11/19
4. 1045/995 BPS 11/19 - all these rolls were for negligible credit when SP movement and IV were favorable enough to me.
900cc rolled to 11/19 for credit.
5. Opened 1425cc 11/12 then progressively rolled down for incremental credits to 1325cc, 1155c, and then closed. Used these CC and 900cc credits to roll up and out the 990cc to 1080cc 11/19. This is part of the strategy to slowly get out of ITM cc one contract at a time.

All told, I need an 11/19 closing SP > 1000 and < 1080 if everything is left as is. I am sure there will be more volatility this week and will have to wait for opportune moments to close/roll. Lessons learned this week:
1. Don't use all my cash reserve. I don't use margin. My set goal for this capital was to fund my next Teslas. Watching paper gains + initial capital potentially disappear was a gut check. I got greedy. Losing it all wouldn't ruin my life, but it certainly wouldn't make it more pleasant. I told my spouse the status of our trades on Wednesday, and if I am worried about their reaction, then that means I'm taking too much risk.
2. I still like $50 spreads, but perhaps I'll use those for further OTM strikes, and will look into wider spreads for closer OTM strikes.
3. I like dividing my rolls. Kind of like DCA into rolls at different strikes depending on IV and SP movement.

Still net positive (barely) for the week, but with some potential max loss taken off the table. To me, it seems (or I hope) that 1000 is the floor. If I recall correctly, Elon tweeted about reaching $1T market cap with "Wild $T1mes". No selling of his shares this week were under $1000. I think (and/or hope) that we see some bouncing around 1000-1100.

Thanks for reading.

 

[vikings123]

Seems to be some confusion as to whether the sales need to be completed next week or not

I'm of the belief that Monday was the Gamma squeeze unwind and Tuesday was a reverse Gamma squeeze based on massive put buying - this will also need unwinding at some point... the rest of the week was probably influenced by the selling, obviously whomever is performing the act is throttling it so as to keep the price around the 1030-1050 range

I thought this was a very informative blog. It makes sense based on the action we saw on Tuesday. There was a gamma squeeze to start Tuesday and boom the reverse gamma squeeze. I feel like the spotgamma product might be a better investment than option flow.

Elon Sells. Tesla Rallies. What's Up With That? | SpotGamma™

Despite Tesla CEO, Elon Musk, moving to sell 10% of his stake, SpotGamma feels confident in 3 ways that options drove the stock price.

spotgamma.com

 

[Chenkers]

Well that was a crazy week. I collected over $300k in net premiums but a chunk of that is now tied up in rolled BPS that went ITM on Tuesday. I fell for the fake 'nothing burger' on Monday and sold a couple of hundred too many BPS that suffered badly on Tuesday. I've rolled them out to 19/11 and some to 26/11 but a little late and low with some debits, so margin is taking a heavy hit. My largest position is now 180 x 1020/1090 so it probably won't be until Elon is done selling that I'll be able to close them out. Judging by the sales so far we shouldn't get too far below $1000 (unless there's another reverse gamma squeeze), so I should be able to roll these BPS for a while.

The good news is that the downwards pressure from Elon's 10% combined with the ITM BPS, means that I can sell some fairly aggressive BCS. So far I've sold 100 x 1120/1160 @ $3.80 and 100 x 1150/1180 @ $2.30 and will likely sell a lot more on Monday. I expect I'll still be able to clear $100-200k in weekly BCS that will also make it easier to manage margin and the BPS rolls. If the BCS end up ITM, the BPS will have recovered and it's the BPS that give me margin issues and limit the accounts potential. ITM BCS are much easier to manage, but hopefully it doesn't come to that.

 

[adiggs]

I surprised myself to start selling 1225 CCs at the end of last week. I feel like doing so for the next week because of the continuous downward pressure from Elon selling. I am just scared if the possible of a stock split announcement that could have the effect of sending the stock sky high. What are your reasoning on your CCs strike price for the ones who got burned from the Hertz deal announcement? Are you staying away or is it a good time to recover?

I'll be looking for most any sort of a spike on Monday, though I don't expect much of one, and then I'll be selling CC in the .16 delta / 1100 to 1150 range. I've got some more long calls after yesterday and using some of them to back cc is why I own them.

But having those come and go is part of the point, so I'll be more aggressive than you.

One thing to consider, at least in a taxable account, is whether you'd actually take assignment on your cc, or would you eat a loss to avoid selling the shares. I've got some shares in my taxable account that I won't sell, partly because at my marginal tax rate and just how much they've appreciated, the tax hit would bother me deeply.


NOT-ADVICE but 1225 looks safe enough for me anyway

can someone pls translate that for the rookies here... approx guesstimate how many more weeks before SP ?

TIA!

coz i am itching to -P/-C again, nothing to do but watch my 11/26 theta

View attachment 732619

Interesting that Greeks, Mathematiicans, and Physicists aren't option traders. Clearly this needs to be a Venn diagram

 

[MindOverMatcha]

-35K realized damage so far this month but the rolled positions are 40K+ positive on unrealized gains. The biggest loss was the 1100/1040 BPS. OTOH I also did some short term buying of call option trades which lessened the damage. Having plenty of available margin really helped too.

Big lesson learned for me: Manage your spread strikes conservatively and be aggressive with cash/margin covered puts.

I'm getting ready to have a discussion with my boss to quit my job so the events this week could not have come at a better time. It's almost like a gut check. Can you handle the swings and be able to sleep at night like you would normally do. The answer at least for me is a Yes.

I've been re-evaluating what my strategy is now. After being hit with the insane 10+% drop, I'd want to be very conservative with BPS too. But the buffer would have to be 20+% and I'd need to close those or manage them. I'm now leaning more towards the aggressive cash-secured puts where you'd want to be "ok" getting assigned on a great stock. I imagine rolling the put would be easier too if it came down to it.

What's an "aggressive" range you feel for the puts?

 

[vikings123]

I've been re-evaluating what my strategy is now. After being hit with the insane 10+% drop, I'd want to be very conservative with BPS too. But the buffer would have to be 20+% and I'd need to close those or manage them. I'm now leaning more towards the aggressive cash-secured puts where you'd want to be "ok" getting assigned on a great stock. I imagine rolling the put would be easier too if it came down to it.

What's an "aggressive" range you feel for the puts?

It depends on two things for me and you already touched on them.

1. Are you looking to get assigned? I will be more aggressive if I'm to accumulate shares. If it's about a weekly return then obviously I will be a bit conservative. For example in my Roth IRA I sold most of my LEAPS last week and sold two 1000$(got 23$ for them) puts for next week. I'm looking to get assigned and will play the wheel if I get assigned. In my taxable account I went with 5X 920 puts expiring next week, this is just making use of my margin to give me some low risk income.
2. What is your strategy if *sugar* hits the fan? Plan for the worst possible scenario.

I'm not a big fan of setting stop limit losses but it is something I'm thinking about to help with flash crashes. When the action is fast and furious it is sometimes difficult to act quickly. How is everyone handling this? Are you setting up any stop limit orders?

 

[MindOverMatcha]

It depends on two things for me and you already touched on them.

1. Are you looking to get assigned? I will be more aggressive if I'm to accumulate shares. If it's about a weekly return then obviously I will be a bit conservative. For example in my Roth IRA I sold most of my LEAPS last week and sold two 1000$(got 23$ for them) puts for next week. I'm looking to get assigned and will play the wheel if I get assigned. In my taxable account I went with 5X 920 puts expiring next week, this is just making use of my margin to give me some low risk income.
2. What is your strategy if *sugar* hits the fan? Plan for the worst possible scenario.

I'm not a big fan of setting stop limit losses but it is something I'm thinking about to help with flash crashes. When the action is fast and furious it is sometimes difficult to act quickly. How is everyone handling this? Are you setting up any stop limit orders?

Your examples are helpful here. I may sell a put the week of expiration to stay away from any possible negative weekend news. I guess prevention/buffer is the best way I can plan for a bad scenario so that I can close it out early.

A balance of getting back shares and income to slowly make up my losses over the months is the slow and steady game I'll take. I fear catching falling knives, so am thinking of making amends with getting less money per week in exchange for sleeping better by selling weekly puts. The fact that there's no real support between 1,000 to 900 is what makes me weary.

 

[CHGolferJim]

It depends on two things for me and you already touched on them.

1. Are you looking to get assigned? I will be more aggressive if I'm to accumulate shares. If it's about a weekly return then obviously I will be a bit conservative. For example in my Roth IRA I sold most of my LEAPS last week and sold two 1000$(got 23$ for them) puts for next week. I'm looking to get assigned and will play the wheel if I get assigned. In my taxable account I went with 5X 920 puts expiring next week, this is just making use of my margin to give me some low risk income.
2. What is your strategy if *sugar* hits the fan? Plan for the worst possible scenario.

I'm not a big fan of setting stop limit losses but it is something I'm thinking about to help with flash crashes. When the action is fast and furious it is sometimes difficult to act quickly. How is everyone handling this? Are you setting up any stop limit orders?

My broker explained to me that “stop orders” execute at the fixed price or below, while “stop limit orders” execute when SP hits the order price from above or below. During the day it wouldn’t matter, but if trading ends one day above your price and begins the next day at below the price, it wouldn’t execute. [If I’m phrasing it correctly.]

 

[adiggs]

Thanks for these comments. I actually did have long calls with profits higher than the BTC cost, but I looked at those profits as fungible assets near-cash, so still selling something to cover a loss/BTC. My brokerage won’t let me sell calls against LEAPs within the Roth IRA, only against shares. Your post suggests the idea of buying more shorter duration long calls for 3-6 month recovery — something like June/Dec 2022 1000s.

I’ve now sold 1/2 of shares and rolled and purchased new LEAPs to get close to where I want to be positioned for the next 12 months, with the exception of the 031822C900s still to be closed somehow.

The specific permission that enables me to sell cc against long calls in my Roth IRA is Spreads Trading. It might be that your broker has a separate application for spreads trading, over and above the other options trading permission that you need to apply for.

At Fidelity they have Options level 1 and 2 available in IRAs. They you also can apply for Spreads Trading, as well as IRA margin. WHich isn't actual margin as you'd be accustomed to in a brokerage - it just enables you to trade with unsettled cash (so you aren't wait for a day or two after a close, before opening a new position).

 

[Drezil]

My broker explained to me that “stop orders” execute at the fixed price or below, while “stop limit orders” execute when SP hits the order price from above or below. During the day it wouldn’t matter, but if trading ends one day above your price and begins the next day at below the price, it wouldn’t execute. [If I’m phrasing it correctly.]

At ibkr a stop order ist Just trigger@sp -> market order. Stop limit is trigger@sp -> limit order (with possible offset)
But there you also have all other types (~20) of orders

I think every Broker is different.

 

[vikings123]

At ibkr a stop order ist Just trigger@sp -> market order. Stop limit is trigger@sp -> limit order (with possible offset)
But there you also have all other types (~20) of orders

I think every Broker is different.

I use IB too so have seen the options you mentioned above. Seems like a stop limit with offset would be the way to go. Have you ever tried stop limit for spreads/puts with IB? How was the execution?

 

[mickificki]

Is anyone else thinking of opening aggressive BPS positions starting in December?

With 4q numbers likely to be very solid as well as Giga Texas and Berlin (Berlin may be a little late) to open soon, and with Elon's selling out of the way, I'm leaning to being more aggressive in my BPS. Maybe $50 spreads instead of $100, and $150 or $100 from the SP on the short side. At least that's what I consider aggressive.

Just seems like a prime opportunity to ramp things up.

 

[Zhelko Dimic]

I surprised myself to start selling 1225 CCs at the end of last week. I feel like doing so for the next week because of the continuous downward pressure from Elon selling. I am just scared if the possible of a stock split announcement that could have the effect of sending the stock sky high. What are your reasoning on your CCs strike price for the ones who got burned from the Hertz deal announcement? Are you staying away or is it a good time to recover?

When I start getting each to sell covered calls, I know stock will break out soon.
I barely stopped myself from selling covered calls for $800 a month or two ago.
My experience has been that I can pick up lots of pennies in front of that steamroller, but eventually I get being sorry.

So, I don't bother anymore. I sell long-term puts instead...

 

[MindOverMatcha]

When I start getting each to sell covered calls, I know stock will break out soon.
I barely stopped myself from selling covered calls for $800 a month or two ago.
My experience has been that I can pick up lots of pennies in front of that steamroller, but eventually I get being sorry.

So, I don't bother anymore. I sell long-term puts instead...

How long-term do you go? I got burned by CCs a few months ago and stopped. Feeling more comfortable selling puts.

 

[OrthoSurg]

When I start getting each to sell covered calls, I know stock will break out soon.
I barely stopped myself from selling covered calls for $800 a month or two ago.
My experience has been that I can pick up lots of pennies in front of that steamroller, but eventually I get being sorry.

So, I don't bother anymore. I sell long-term puts instead...

I would expect at least 6 months before the next breakout and the downward pressure from Elon selling shares are 2 factors pushing me towards closer CC strike price. I might be totally wrong and the climb might resume as soon as Elon had ended selling his shares in 10 days maybe, who knows

 

[Drezil]

I use IB too so have seen the options you mentioned above. Seems like a stop limit with offset would be the way to go. Have you ever tried stop limit for spreads/puts with IB? How was the execution?

I prefer TRAIL to STP. And with market orders. The problem with limit orders is, that the price can fall too quick, especially with options and then you get a nofill, because your limit was too high. And the price keeps falling.

 

[traxila]

I prefer TRAIL to STP. And with market orders. The problem with limit orders is, that the price can fall too quick, especially with options and then you get a nofill, because your limit was too high. And the price keeps falling.

Yes this has happened to me. Stock blows through your limit so fast. The sell order does not go in until the stop number hit, but in that 30 milliseconds the stock is gone and you never sell. With a stop limit the actual sell point should be set below the trigger price if you really want out.

 

[traxila]

I would expect at least 6 months before the next breakout and the downward pressure from Elon selling shares are 2 factors pushing me towards closer CC strike price. I might be totally wrong and the climb might resume as soon as Elon had ended selling his shares in 10 days maybe, who knows

The breakout may be six months away, but there are so many catalysts in the next two months that I would be surprised if we did not retest the highs recently set when Elon announces he is done. People will definitely be looking for a gamma squeeze there. Will certainly be interpreted as an all clear and all in short term signal. One of the reasons my CCs are being set weekly at a minimum of 250 points for now.

EDIT: Of course, macros permitting but time of year does tend to lend itself to Santa Claus. Now when that new born baby year gets into town…. Well you know young people like to shake things up.

 

[Tslynk67]

I've been messing about with the options calculator, specifically looking at some IC's...

500x 11/26 +p1020/-p1025 -c1035/+c1040 = $237k premiums, $12.5k max loss, 1900% roic, 6.7% probability

So, OK, low chance it wins, but so little at risk and so much to gain, has a certain allure... if one were to roll-up the winning side, would reduce the max loss, maybe try with less than 500x to start with though