Wiki Selling TSLA Options - Be the House

[winfield100]

Well, the idea that Elon selling would cap the SP for the next two weeks sounded good. Didn't age well.... Maybe looking at a +10% today.

I'm glad I rolled my 900/700s to next week near the open today. But I sold some 11/26 BCS too early - 1350/1550. Will be looking to sell more 11/26 1450/1650 later today.

@BornToFly
have you looked at charts recently? specifically, 1 year of Bollinger bands, Average true range bands, Accumulation/Distribution, and 4 week charts of same?

sure looks like about 6 weeks ago they all turned _up_
i may post charts later today in “the other thread”, may change 4 week to 6 week tho.

they do look steep slopes but what do i know.
the spouse has forbidden me to dabble in options but i do still read

 

[FS_FRA]

Interesting price action today. The spike duped me into rolling some 11/19 cc's.

Can't help but feel like we caught a glimpse into the future though.

The spike almost duped me into rolling cc's ... ain't over till the fat lady sings, I guess....interesting experience for me today: when the SP spiked and my cc's went ITM I could feel my emotions taking over from my rational self. I immediately tried to figure out how to avoid having my shares called away and was ready to either close at a loss (wiping out weeks of BPS profits), roll up & out for free to a similarly precarious strike, or roll up and out to a strike that felt "safe" at a (considerable) cost.

Luckily the reason I got out of BPS for the week triggered: I have a really stressful work situation this week and I got called away before I could roll/close/do anything.

When I had time to come back to TSLA, I saw my cc's were OTM again (barely), and since we have a couple of DTE, my rational self took over and started thinking about the options I have, not to panic, not to make emotional decisions, etc.

Some good words from the kind folks here helped

Also my gut-feeling that MMs are trying to get control over this monster again and that we have a 1000 - 1100 channel they'd really like us to stay within.

So, for now, I sit on the 1105 cc's and wait to see how this is developing. I also have a good idea on how to roll up and out of trouble, or rather what I'd like to roll into: if need be I'll roll out 1 week to 11/26 and up as far as I can go. 1 week because I'd like to get out of this cc sooner rather than later.

Safe right now feels like I need to roll beyond 1200 for next week. I actually feel it needs to be >1200 ideally.

As I write this, the SP is heading up again to 1096 (rolling to safety @ 1205 right now would cost $6.03 ....) Also: not advice etc.

 

[Right_Said_Fred]

Still learning the newbie simple stuff, but finally realizing that rolling into the next week is best done later in the week after theta has burned off most of the time value. The next week typically has lower IV and theta, unless significantly changing strikes.

Rolling is not always best later in the week. If the SP makes a big move in the right direction you could be looking at sold options that have already lost most of their value on Tuesday or Wednesday. You can wait for them to lose the remaining value on Wednesday, Thursday and Friday, but that’s pennies. Meanwhile options for a week later are losing dollars, which you could have profited from if you had rolled earlier in the week. So the timing of the roll is different for each situation. I let the remaining premium determine when to roll.

 

[BornToFly]

@BornToFly
have you looked at charts recently? specifically, 1 year of Bollinger bands, Average true range bands, Accumulation/Distribution, and 4 week charts of same?

sure looks like about 6 weeks ago they all turned _up_
i may post charts later today in “the other thread”, may change 4 week to 6 week tho.

they do look steep slopes but what do i know.
the spouse has forbidden me to dabble in options but i do still read

Actually, I haven't looked at the charts in about a week, because I feel like TSLA is running off script right now with the Elon sales. Thank you for reminding me to pull them up. I like the 20D BB, and I like where the SP is at right now. Makes me feel good about all my BPS and BCS.

 

[DaveG_NJ]

I dislike shorting stocks (and can't in my trading/IRA account). As much I like RIVN for the segment they're going after, I felt compelled to participate in today's slide by buying some ATM puts expiring Friday. Not my usual style, but in 90 minutes I was up 28% and got out which almost, but not quite, makes up for getting blindsided by Zillow a couple of weeks ago - that broke my wheel.

 

[winfield100]

Actually, I haven't looked at the charts in about a week, because I feel like TSLA is running off script right now with the Elon sales. Thank you for reminding me to pull them up. I like the 20D BB, and I like where the SP is at right now. Makes me feel good about all my BPS and BCS.

the TSLA SP seems to have “reverted to the mean” of the 20 day SMA, but chart wise slopes upwards, and the accumulation/distribution line has gained ~170 million incremental positive in last 6 weeks, so tiny bits of upwards pressures

 

[MXWing]

Rolling is not always best later in the week. If the SP makes a big move in the right direction you could be looking at sold options that have already lost most of their value on Tuesday or Wednesday. You can wait for them to lose the remaining value on Wednesday, Thursday and Friday, but that’s pennies. Meanwhile options for a week later are losing dollars, which you could have profited from if you had rolled earlier in the week. So the timing of the roll is different for each situation. I let the remaining premium determine when to roll.

Rolling later is better if you are expecting a correction and/or significant move. If you are already well OTM on sold options, any big Vega move won't have much impact on your close to cover.

In exchange, you open up much greater premium at the same strike that you were planning to roll to anyway.

Best case scenario to roll:
DOTM and also a red day.

 

[adiggs]

So, for now, I sit on the 1105 cc's and wait to see how this is developing. I also have a good idea on how to roll up and out of trouble, or rather what I'd like to roll into: if need be I'll roll out 1 week to 11/26 and up as far as I can go. 1 week because I'd like to get out of this cc sooner rather than later.

Something that helps me with cc's that are ATM or going ITM is to ask myself - would I rather take assignment on these calls at this strike (and collected premium), or would I rather roll to something next week and take assignment at that price.

At today's IV and being ATM the answer to that question is almost always "roll and take assignment at the new strike". That question though also gets you thinking about time value of money - maybe you're better off taking assignment right now so you can use that cash for other stuff or for selling put spreads that generate higher income than the covered calls do.

That answer also helps with making decisions when deeper ITM. A roll for the same strike and a $1 credit might be a small enough improvement to take the assignment now for instance.


In my case, and this isn't advice, I believe I can get a really good roll even if $20 or $30 ITM. Assuming that I'm right then that gives me a wider window in which to wait and see what happens with my 1110s (probably chosen using the same logic as your 1105's ).

Putting some #'s to it at this moment in time. Shares at 1099, the 1110's are at $15.45 for this week. I can roll out one week to 1170 and $16.30 or a $.80 credit lets call it. Or I might roll to 1150 for $21.20, yielding a $5.75ish credit and a $40 improvement in the strike. That roll won't be as good if shares are at 1130 instead of 1100. Something like a $30 strike improvement and a $1 credit (doing some math in my head; pretending I have 1070s with shares at 1100 to mimic being $30 ITM, and see what those can roll to).


I like to setup these fake / pretend rolls regularly, especially when I'm getting close to the money and repeat them, sometimes a couple or three times throughout the trading day, to see what range of outcomes I have available. Both of those outcomes look pretty good to me, and the ITM roll looks good to me as it lets me get that much closer to expiration (with correspondingly better outcomes due to less and less time value in the current position) while also buying time by simply waiting. After all the shares might come back down and go back OTM.

As I said - definitely not advice - just one way to think about that to do.

 

[MXWing]

As I said - definitely not advice - just one way to think about that to do.

and me over here be like :

I appreciate the amount of thoughts and insight you put into your posts @adiggs

 

[Bunky]

Ok $1,100 call wall, lets see what your made of.

EDIT:

Well well well if it isn't the $1,100 call wall again. You've got some nerve showing your face around here after that sorry performance earlier.

 

[EnzoXYZ]

Took the opportunity today to close out all BPS that’s >90% profit.

Unfortunately yesterday with my infinite wisdom I opened some 1100 and 1200 cc that I have babysit.

Next weeks premiums for 900p and below isn’t all tempting to me.

 

[Tslynk67]

and me over here be like :

I appreciate the amount of thoughts and insight you put into your posts @adiggs

Not to mention the impressive word-count

 

[ammulder]

Well, I bit the bullet and updated my spreadsheets today. I had been ignoring them since Tuesday -- you know which Tuesday. Much less painful to bring them up to date on a day like today. It says my monthly total will be just fine -- if the price stays around here. Guess we'll see!

 

[FS_FRA]

Putting some #'s to it at this moment in time. Shares at 1099, the 1110's are at $15.45 for this week. I can roll out one week to 1170 and $16.30 or a $.80 credit lets call it. Or I might roll to 1150 for $21.20, yielding a $5.75ish credit and a $40 improvement in the strike. That roll won't be as good if shares are at 1130 instead of 1100. Something like a $30 strike improvement and a $1 credit (doing some math in my head; pretending I have 1070s with shares at 1100 to mimic being $30 ITM, and see what those can roll to).

Thanks for reminding me to do some fake rolls just to see how things play out as part of my regular options exercises!

With my 1105s, and the SP @ 1091 right now, I can roll up and out to next week for a $1ish credit to 1170.

My issue is - taking assignment put's me into an Elon-esque situation: My base for the shares I wrote against is $110, that's a huge amount of cap gains I do not want to pay.

So, assuming I were to roll to 1170 for next week, I'd still not be happy to be assigned at that strike... I'd have to roll again next week a further week out.

I've read somewhere here that there is a limit to the usefulness of perpetual rolling. I'm not concerned about tying up margin while rolling, but at some point something has to give.

I do accept - teeth gnashingly - that I might be assigned and I might have to pay cap gains on that. I'd just like to push that out to a point very far in the future.

 

[InTheShadows]

This is why I believe we need to track two different numbers. They trend towards matching each other over larger time frames, but can be very different over shorter time frames.

There is cash flow (the money received when positions are opened, or rolled into). This is an important reason for the net credit 'rule' - cash flow stays positive as long as rolls are for a net credit.

Separately is realized P/L. This is the net income from the income statement, what will be taxed on, and represents the permanent / realized results from the trading. This is the line item that can turn into that bomb hanging over your head, as you can keep rolling for credits while creating a larger and larger unrealized liability. If you are ever forced to realize that liability, such as by early assignment, it'll finally show up here.


Both are important.

When positions are ending OTM each week then there is very little lag from the cash flow into the realized P/L. This starts getting more dicey on rolls for time.

Another place this can matter are selling options with a many DTE. As one instance I sold the Sep '21 600 put back in Sep '20. I closed it in Jan '21 for a 2/3rds profit give or take. My cash flow was quite large in Sep '20 when I sold the option. My cash flow was also quite large and negative in January '21 when I closed the position (it was a really big position as one might expect from a reasonably deep ITM option with a year to expiration). It was also in Jan '21 when the realized P/L happened that the position was fixed in time for tax purposes. That very large up front premium was mine to play with for all of '20 and the remainder after closing in Jan '21 has been mine to play with for all of this year. I'll finally pay the taxes on that particular trade in early '22.

I agree 100%. My sheet tracks my trades and records the week that they were closed in. That way I can see my weekly trading gains/losses and I also update the weekly account values on another sheet so I can see my unrealized gains or losses as well. My main goal is consistency on the weekly trading gains. The weekly account values can drift with the share price because of shares and my leaps.

Watching and managing these two numbers gives a lot of insight. For example. My weekly values lost 25.95% last week, however my trading gains were +0.95%. I ended up this way because I had some trades I closed last Monday that got me nearly to my weekly goal of 1%. Then the hit the fan. The losses were avoided because I rolled them and they didn’t get booked so they were unrealized as far as my active trades were concerned.

This week so far I have weekly trading gains of 0.25% and account value gains of 20.60%.

 

[Yoona]

is there anyone else thinking of 11/19 1090 Short Straddle? 40.50 credit 2 DTE; breakeven 1050/1130

 

[adiggs]

Thanks for reminding me to do some fake rolls just to see how things play out as part of my regular options exercises!

With my 1105s, and the SP @ 1091 right now, I can roll up and out to next week for a $1ish credit to 1170.

My issue is - taking assignment put's me into an Elon-esque situation: My base for the shares I wrote against is $110, that's a huge amount of cap gains I do not want to pay.

So, assuming I were to roll to 1170 for next week, I'd still not be happy to be assigned at that strike... I'd have to roll again next week a further week out.

I've read somewhere here that there is a limit to the usefulness of perpetual rolling. I'm not concerned about tying up margin while rolling, but at some point something has to give.

I do accept - teeth gnashingly - that I might be assigned and I might have to pay cap gains on that. I'd just like to push that out to a point very far in the future.

In your situation a perpetual roll might not be an issue. In reality a perpetual roll is unlikely as there will always be a reversion. As long as the roll is better than not, then just keep on keepin' on, and eventually if your strike price is close enough then the shares will come back (even if the sequences isn't all that fun along the way).

You can use the rolls to delay those cap gains until they are long term (probably already there), or push them into a particular year for tax purposes (take assignment in Jan over Dec for instance).


And even with the tax consequences, assignment at 1170 will be better than assignment at 1105. Cuz $65 extra is better than not

 

[BornToFly]

Thanks for reminding me to do some fake rolls just to see how things play out as part of my regular options exercises!

With my 1105s, and the SP @ 1091 right now, I can roll up and out to next week for a $1ish credit to 1170.

My issue is - taking assignment put's me into an Elon-esque situation: My base for the shares I wrote against is $110, that's a huge amount of cap gains I do not want to pay.

So, assuming I were to roll to 1170 for next week, I'd still not be happy to be assigned at that strike... I'd have to roll again next week a further week out.

I've read somewhere here that there is a limit to the usefulness of perpetual rolling. I'm not concerned about tying up margin while rolling, but at some point something has to give.

I do accept - teeth gnashingly - that I might be assigned and I might have to pay cap gains on that. I'd just like to push that out to a point very far in the future.

If you can stay ahead of it, there is no limit to the usefulness of perpetual rolling. If you were in a tax-free account, it can be better to take assignment and then write aggressive Puts. But if you are paying a lot in taxes, losing a big chunk of your investment is not good. But losing revenue when aggressive options get ITM is a reason to stay further away, take less premium, but never face weeks of zero income because of rolling for strike improvement.

 

[FS_FRA]

In your situation a perpetual roll might not be an issue. In reality a perpetual roll is unlikely as there will always be a reversion. As long as the roll is better than not, then just keep on keepin' on, and eventually if your strike price is close enough then the shares will come back (even if the sequences isn't all that fun along the way).

You can use the rolls to delay those cap gains until they are long term (probably already there), or push them into a particular year for tax purposes (take assignment in Jan over Dec for instance).


And even with the tax consequences, assignment at 1170 will be better than assignment at 1105. Cuz $65 extra is better than not

In Germany there is no long term on taxes. Cap Gains are taxed at 26.x%, irrespective of a hold for a day or 11 years. Pushing into next year just delays the need to pay them for a year.

And yes, if assignment is inevitable, I'd prefer it to be somewhere north of 1300

 

[euro2012]

I managed to close my 11/19 BPS 900/700 (that I opened Nov 11 for 6.40) for 0.20 during the peak this morning. I then put in an order for 11/26 BPS 950/750 for 6.50 and it managed to fill during one of the dips. I still see the stock having a higher chance of rising than dipping, hence the increase in strike price. We’ll see how that ages.