Wiki Selling TSLA Options - Be the House

[Chenkers]

I've rolled 400 x 1120/1140 BCS out to next week and up to 1160/1200. Happy to keep rolling these as needed but didn't feel confident leaving them in play hoping MM could defend 1100-1120. At least I can roll BCS easily without experiencing any issues with margin.

I also had 200 x 1100/1140 BCS for this week. I've rolled them into 400 x 1130/1175 still for this week and will be watching them closely and will roll if needed. There's also some safer 1050/1180 BCS and 1005/1040 BPS for this week that should expire OK. The action so far appears that MM are defending 1100 so I'm prepared to see how they go and happy to have lightened off this week.

For next week I also have 200 x 1020/1090 BPS that should go OTM after I rolled them from this week. There are a few odds and ends as well that should also resolve OK or be an easy roll.

 

[elasalle]

small RIVN BCS and BABA BPS plays added at open today.

 

[Knightshade]

My 995/1095 BPSes for this week are rolled to 980/1080 for next and (hopefully) they can go die there

Curious for some not-advice... I've got an odd lot # of shares in my IRA (90) isn't useful right now so I was thinking of converting to long(ish) ITM calls. Anybody have thoughts on these choices that the $ from those would cover?

3 $950 strike Jan 20, 2023 TSLA calls (post Q4 2023 P&D but likely pre-Q4 results)
or
4 $950 strike June 17, 2022 TSLA calls (2 weeks before Q2 2022 P&D)
or
5 $950 strike Feb 17, 2022 TSLA calls (likely 3 weeks after Q4 2022 results)

 

[mongo]

But... you said if you sell a put you expect the stock price to go DOWN. At best, that's playing with fire! It may be that you'll maximise theoretical dollars if the stock price goes down a tiny bit, but then if it goes past your put strike, oops.

I think over the longer term you'd be much better off selling the put, watching the stock price rise and letting it expire, selling a higher-price put, rinse and repeat. You'll rake in a lot of premium over time, and it still works when the stock price levels off. You're only in trouble if there's a big/lasting dip. Which feels like the opposite of what you're saying?

I guess you're talking about the very short-term and small stock price movements, and I'm thinking of how the stock behaves, say, over the course of a year while you're selling weekly options all the while?

It's definitely scenario dependent, but here is my thought process, which may be flawed.
For a stock that is expected to decline:
On their own:
A drop while holding stock is a loss.
A drop while holding cash is not a loss.

If selling calls, the premium needs to be higher than the drop to not take a loss, regardless of strike. Expiring ITM makes this worse as they sell at a discount.
If selling puts, a loss only occurs if the stock drops lower than strike - premium. If selling OTM, that is extra buffer (for less return).
Depending on option pricing, one way might work better than the other...

 

[mongo]

It's definitely scenario dependent, but here is my thought process, which may be flawed.
For a stock that is expected to decline:
On their own:
A drop while holding stock is a loss.
A drop while holding cash is not a loss.

If selling calls, the premium needs to be higher than the drop to not take a loss, regardless of strike. Expiring ITM makes this worse as they sell at a discount.
If selling puts, a loss only occurs if the stock drops lower than strike - premium. If selling OTM, that is extra buffer (for less return).
Depending on option pricing, one way might work better than the other...

@ammulder
Given ATM calls are worth more than OTM puts, this line of thought is more geared toward loss minimization in a worst case as opposed gain maximization in a less bad to opposite direction case.

Next week approximate pricing wuth SP of 1100:
1100C $37, breakeven at 1063 on downside, $1137 on up
1060P $22, breakeven at 1038 down, $1122 on up

 

[BornToFly]

My 995/1095 BPSes for this week are rolled to 980/1080 for next and (hopefully) they can go die there

Curious for some not-advice... I've got an odd lot # of shares in my IRA (90) isn't useful right now so I was thinking of converting to long(ish) ITM calls. Anybody have thoughts on these choices that the $ from those would cover?

3 $950 strike Jan 20, 2023 TSLA calls (post Q4 2023 P&D but likely pre-Q4 results)
or
4 $950 strike June 17, 2022 TSLA calls (2 weeks before Q2 2022 P&D)
or
5 $950 strike Feb 17, 2022 TSLA calls (likely 3 weeks after Q4 2022 results)

Those are not very far ITM, so you risk losing all your money. I would go for lower strikes, or the farther 2023 option.

 

[rikkert]

There is no single correct strategy. The goal is to make money. Some traders here have gone to cash and no longer hold TSLA. Chasing higher Puts without being assigned can make you a ton of money if you are selling near the money without fear each week.

Sure, was just curious about your thoughts. Thanks. It makes more sense to me to get assigned when you've gone to cash. Personally I hold core stock and would be worried to lose it and being unable to get back in.

 

[EnzoXYZ]

My 995/1095 BPSes for this week are rolled to 980/1080 for next and (hopefully) they can go die there

Curious for some not-advice... I've got an odd lot # of shares in my IRA (90) isn't useful right now so I was thinking of converting to long(ish) ITM calls. Anybody have thoughts on these choices that the $ from those would cover?

3 $950 strike Jan 20, 2023 TSLA calls (post Q4 2023 P&D but likely pre-Q4 results)
or
4 $950 strike June 17, 2022 TSLA calls (2 weeks before Q2 2022 P&D)
or
5 $950 strike Feb 17, 2022 TSLA calls (likely 3 weeks after Q4 2022 results)

I would do minimum of 850 and no higher. I did similar back when SP was in the 700s and bought 600 March 2022 but I was confident SP would not be lower than 600 going into Q3 and Q4. First couple of weeks after I bought the SP dipped into high 600 and the losses was magnified greatly and I felt buyers remorse for a few days then like a genius when the SP quickly went above 800.

 

[Knightshade]

Normally FWIW I do buy deeper ITMs... my big level ups during S&P and the dip early this year were both 600 strike calls... and all my leaps presently are 550s.

950 just happened to be where the math worked really well for 3/4/5... and this couple weeks even with Elon and the bernie crap had been making 1000 look like a pretty real floor.


Dropping to an $850 strike there's no 5x or 4x options with the $ available
(though 4x Jan 2022 gets CLOSE, but the date's also the shortest by a fair bit)


That leaves
3x $850 strike Sept 2022 (could drop to $840 even)
and
2x $850 strike- well even Jan 2024 doesn't eat all the $... could do Jan 2024 $720x2


Other paths would be:

Use the cash to cover a $1050 put which for next friday is paying $19.25 at the moment...

Just let the 90 shares sit there like the useless lumps they are and reap any SP spikes 1:1.

 

[UltradoomY]

My 995/1095 BPSes for this week are rolled to 980/1080 for next and (hopefully) they can go die there

Curious for some not-advice... I've got an odd lot # of shares in my IRA (90) isn't useful right now so I was thinking of converting to long(ish) ITM calls. Anybody have thoughts on these choices that the $ from those would cover?

3 $950 strike Jan 20, 2023 TSLA calls (post Q4 2023 P&D but likely pre-Q4 results)
or
4 $950 strike June 17, 2022 TSLA calls (2 weeks before Q2 2022 P&D)
or
5 $950 strike Feb 17, 2022 TSLA calls (likely 3 weeks after Q4 2022 results)

are you looking to sell LCC's against them? or just capital appreciation on the underlying?
If you are looking at selling LCC's then I would do something more active - sell the shares today and wait for a red day next week (or buy immediately)
- 4 February $850's and sell LCC's against them until mid December (before the time value really starts to burn off at the 6 week mark)
Then sell them and do the same thing with the next appropriate strike (maybe $900 at that point)
Keep the strategy moving forward and collect a ton of premium
If you are looking for capital appreciation from the stock movement - go with a ladder
Example 1 DITM ($800) for 03/22 - 1 slightly ITM 06/22 ($950) - 2 ATM 01/23 ($1100) - 4 OTM for 06/23 ($2200)

You can adjust the strikes to get enough to do it but that's the gist of it.
Of course, this is definitely *Not Advice*

 

[KTC Lurker]

are you looking to sell LCC's against them? or just capital appreciation on the underlying?
If you are looking at selling LCC's then I would do something more active - sell the shares today and wait for a red day next week (or buy immediately)
- 4 February $850's and sell LCC's against them until mid December (before the time value really starts to burn off at the 6 week mark)
Then sell them and do the same thing with the next appropriate strike (maybe $900 at that point)
Keep the strategy moving forward and collect a ton of premium
If you are looking for capital appreciation from the stock movement - go with a ladder
Example 1 DITM ($800) for 03/22 - 1 slightly ITM 06/22 ($950) - 2 ATM 01/23 ($1100) - 4 OTM for 06/23 ($2200)

You can adjust the strikes to get enough to do it but that's the gist of it.
Of course, this is definitely *Not Advice*

The ladder approach is fantastic, I would have never thought to take this approach. The one topic I'd love to see more discussion on in this thread is LEAP buying. I'm sure there are other strategies and lots of anecdotes to share from past examples of successful and unsuccessful LEAP buying. I pulled the trigger today on some Jan '24 1550's (4x), but have more dry powder waiting around and am thinking of buying some LEAP's on the next big pull back.

 

[Knightshade]

Hadn't actually considered selling calls against them... though now that I've moved the IRA to a broker allowing spreads I suppose I COULD do that in theory...

Yeah I'd originally just wanted to get some more value out of what is currently an odd-lot # of shares, and figuring there'd be decent share appreciation from not just Q4 results, but also from the coming scaling of 2 new factories so getting exposure to upside of 200-400 shares rather than 90 made some sense.

My only concern then is setting strikes where the premiums are worthwhile but I'm still unlikely to have sell/exercise anything.


The ladder idea is also very interesting- need to run some #s to see what's actually available with the $ in question....

 

[FS_FRA]

1100 seems to be the target for the MMs.....it's crept past a bit here and there, but there is not a lot of volume and we're pushed back below. Good for my 1105s...... still more watching than I'd like to have to be doing.

I'm struggling with TWS on IBKR to model out some scenarios for tomorrow - it keeps crashing on my new MBPro with MacOS Monterey. I'd like to model what would a just OTM, ATM or ITM scenario look like. Can anyone point me at a website where I can run some scenarios without having to be a client of that broker/bank?

 

[tradenewbie]

I agree the CC side is scarier. Yesterday I took a small debit to change my 11/26 1300/1500 to 1350/1550 to give a little more room next week. Puts at 900 don't scare me at all because the SP is not going to run away from you in the down direction, and 1) naked Puts are easy to roll 2)ITM Puts are easy to keep rolling ITM without changing the strike for great returns (as long as you do it early enough to avoid assignment risk).

My not-advice is to sell 900 strike Puts (possibly for 12/3). With your CC, roll for maximum strike improvement (no credit) if we breach 1120 or 1130.

Was too nervous watching the SP in pre-market. Immediately at open, decided to take a $1.7 debit to close all my -1200/+1400 BCS (originally got an extra $1.5 premium to roll down from -1300/+1500 on Tues/Wed), so pretty much didn't earn anything by this rolling at the end.

With the price action last few weeks (suddenly up $100 in one day, suddenly down $100 in one day), and most importantly because of the significant loss of BCS few weeks ago, this really makes me getting too conservative even logically there's no way for the SP to go past 1200 this week, esp today is already Thursday.

 

[scubastevo80]

The ladder approach is fantastic, I would have never thought to take this approach. The one topic I'd love to see more discussion on in this thread is LEAP buying. I'm sure there are other strategies and lots of anecdotes to share from past examples of successful and unsuccessful LEAP buying. I pulled the trigger today on some Jan '24 1550's (4x), but have more dry powder waiting around and am thinking of buying some LEAP's on the next big pull back.

Agree - do any of you that sell BPS/BCS or via other income generating strategies use the premium to purchase LEAPs? Is there a minimum amount of $ one would need to do this - assuming 1 LEAP contract? In a perfect world, I'd like to basically like to roll BPS/BCS around the current price and roll LEAPS up and out, but not sure how to do that efficiently. I've seen talk about preference to write DITM leaps, but not sure my parents will agree to put $20k+ at risk.

 

[tradenewbie]

Wondering in the TSLA history, was there any case that there is a 10% jump from Wednesday close to Friday close? Cause usually seems the crazy jump would be during Mon-Wed (maybe because of the call flow?)

 

[Cherry Wine]

Apple Car 2025 rumor to the rescue for all of us with covered calls.

 

[tradenewbie]

Apple Car 2025 rumor to the rescue for all of us with covered calls.

I wish this news come during open so I don't have to do anything during open and relax

 

[Ad Astra]

All, looking for some not advice. BPS 900/950 for 11/26. Too close to the sun?

 

[bkp_duke]

All, looking for some not advice. BPS 900/950 for 11/26. Too close to the sun?

I'm in the same general area. Not advice, but I don't think too close to sun, as momentum seems to be lateral to upward now.