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Wiki Selling TSLA Options - Be the House

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Violating my own rule about selling into strength I have endeavored to sell calls today into the absolute lowest price possible. When the shares reverse aggressively and push my new 12/23 1000 strike calls deeply ITM, y'all can thank me for my sacrifice. These are all lcc's - I won't be taking assignment on any shares with these.

These are all in retirement accounts so some aggressive rolls for both strike and credits are in the cards if/when they get close to the money.

And if this never-ending slide continues then at least I'll be earning some income on the call side.

edit: oh yeah; 13.30 credit. vs $4 credit for this week.
I looked at those too, but decided they were too borderline for comfort, wrong side of MP too...
 
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Seriously guys thank you for luring me to option selling and including me into the degenerate dark side of investing. Being a long term HODLer in these bear market is beyond depressing. Sold some $795 Puts today just to make myself feel alive again.
You should have pmed me and let me know how bored you were. Could have got my short puts for free.
 
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When I think about what usually happens going into the end of a strong quarter, is seems obvious that we close higher by the end of the week. However, "the market can be irrational longer than you can stay solvent" was ringing in my ears. Do I want to gamble? I decided the answer was "no" and bought to close my 1000 short legs for 12/17 and opened new 700/900 for 12/23. Now I can watch the SP climb back up and I can think about the all the money I just handed to someone else for no reason. (I was going to check in my shorts and see if I still had my balls, but this isn't about that. It's about not gambling and just taking small consistent wins).
Not exactly your 1000 strikes, But had some 985 short puts for this friday and I rolled up and out 1000 puts for Jan 7, booking some tax loss for 2021, and adding some deltas, and some nice moolah. We are sort of due for a bounce at this point, and I'd prefer to be long some deltas.

Also had twice as many 950 puts that I rolled down to 920 for 12/23 for a tiny credit. My position has become essentially a barbell, one delta-light theta-heavy for next week and another theta-light delta-heavy for Jan.

Lets see how this goes. I'd like to call it an experiment from which I'd learn something, but essentially all this depends on where the stock goes in the next month or so. If it rallies, or even stays around here, I'd look like a genius and if it tanks to the 800s, I'd look like an idiot. Hopefully some good rolls from 920 down if needed will be easy next week.
 
And we're off... Positions went from being down 100-200% to having 2 in the green and one down 20%. Intraday volatility aside, I'm hoping we don't continue to see more 3-5% down days for the week.

Edit: for those of you small timers such as my family, we picked up 2 (that's right - two) shares of TSLA this morning at $935. I've kicked the idea around with my parents that they could take some trading profits and roll it into 1 share a month so long as the income hits a min threshold.
 
Regarding the reaction to fed meeting tomorrow, Spotgamma has been somewhat useful in defining what the direction is at least from SPX perspective.

Their reading is that the market (SPX / SPY options) has gone put heavy into 12/17 expiration. And as these puts expire the bias is going to be upwards as dealers have to buy back the index shorts that are hedging these puts on Friday. Come monday, there is much less SPX options tail wagging the index dog, so, it should be a relatively more volatile day, but can go either way.

Add the index rebalance and it should be bullish even with another of Elon's tranches in the mix for this Friday. Though I feel slightly dumb for rolling my 950s for this Friday to 920s for next. Better safe than sorry I guess.
 
Not exactly your 1000 strikes, But had some 985 short puts for this friday and I rolled up and out 1000 puts for Jan 7, booking some tax loss for 2021, and adding some deltas, and some nice moolah. We are sort of due for a bounce at this point, and I'd prefer to be long some deltas.

Also had twice as many 950 puts that I rolled down to 920 for 12/23 for a tiny credit. My position has become essentially a barbell, one delta-light theta-heavy for next week and another theta-light delta-heavy for Jan.

Lets see how this goes. I'd like to call it an experiment from which I'd learn something, but essentially all this depends on where the stock goes in the next month or so. If it rallies, or even stays around here, I'd look like a genius and if it tanks to the 800s, I'd look like an idiot. Hopefully some good rolls from 920 down if needed will be easy next week.

This is basically me. I have some 12/23 930 puts I almost rolled today, but did not. They look happier now. I also have some 12/23 950 puts that when we breached 950, I rolled those to 1/07 and down to 930 for a small credit.

If things go sour with the SP, I will roll the 12/23 930s->1/07 890's for a small credit, otherwise, I sit tight.
 
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Yeah, this is crazy. What we learn from this is that nobody here, or in the main thread, can predict squat short term. If we never dip down to 900 then I gave up a lot of money for nothing. But if we do dip, I'll be better off having removed some risk. I had considered rolling my 700/1000 to Dec 31 or Jan 7 for good premiums because I have the strong belief the SP will be over 1000 - I just don't trust the market to be as smart as me.... :rolleyes:
 
There is a silver lining to this . . . which I have been considering. Don't recall if I mentioned it here, so will toss it out now. Sorry if I have said this before.


There is a tax benefit to rolling a BPS that is negative into next year. I'm looking at multiple 900/950, 910/960, 920/970, and 930/980 all expiring on 12/17. Needless to say I took a lot of "unrealized" losses today.

I'm considering rolling all of those, for break-even or more premium, and at the same or lower strikes, into Jan 2022. By doing so I would realize a large 6-figure loss this year, with the opportunity to recoup that next year whenever TSLA bumps back up and the BPS's can be closed out for profit.

Not advice, just my musings.
Have been traveling the last couple of weeks, so not posting much although was trying to keep the trading going. Turned out to be not such a good idea - very difficult to manage positions when you are in a different timezone and brain keeps miscalculating the time when the market closes.

Anyways, I am of the similar mindset - in my case last week Friday I rolled out almost all positions out to Jan 14 for credit. Since that means I closed out the positions for 2021 all at big losses, this is an advantage in taxes for this year. Plus, with holidays coming up we will be traveling and have guests etc. so don't want to worry about managing positions till end of the year. These are all BPS with short strikes at 1050 and 1010 with spread of 200. So currently deeply deeply in the red. It is amazing though how calm I am thanks to this group and all the learnings here!

Anyways, since I am done with trading for rest of the year, the SP is so far down and IV is not that high I decided to use some of my excess cash that is not tied up for the BPS to buy some call options. I’m expecting the stock will recover between now and end-January so choose to go with the ITM February options at 550 strike. The extrinsic cost on these was $6 so seems like a reasonable deal for getting about 2X leverage compared to buying stock.

So hoping for a good recovery for 4Q ER
 
Yeah, this is crazy. What we learn from this is that nobody here, or in the main thread, can predict squat short term. If we never dip down to 900 then I gave up a lot of money for nothing. But if we do dip, I'll be better off having removed some risk. I had considered rolling my 700/1000 to Dec 31 or Jan 7 for good premiums because I have the strong belief the SP will be over 1000 - I just don't trust the market to be as smart as me.... :rolleyes:
I have a 100% confidence in my incapabilities to predict the stock price movement in the short term. I guess I don’t have the capabilities of a Hedge funds manager to drop a stock by selling millions of shares to say I was correct when I said it would drop that day.
 
An LCC isn't really a "covered call" it's just a call spread.

In this case the long leg of the spread has a significantly far out expiration. The short leg might or might not.


So the tldr is expiration of LCC must be equal to or sooner than the long LEAP, and strike of the LCC must be equal to or higher than the LEAP.

ITM or OTM is irrelevant since as long as the above 2 criteria for strike and expiration are true it's impossible to "owe" any additional money on the position once opened- only that you might be capping gains or giving up a bunch of already-bought time value on the LEAP (and even those are typically manageable to avoid or limit)
 
BTW something I discovered a few weeks ago:

Bull call spreads and bull put spreads with the same strikes and expirations have almost the exact same outcomes!

eric-head.gif


The main differences are what legs end up OTM or ITM, and that with put spreads you get the cash upfront so you could leverage up further for more contracts. Go compare on optionsprofitcalculator.com
 
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BTW something I discovered a few weeks ago:

Bull call spreads and bull put spreads with the same strikes and expirations have almost the exact same outcomes!

View attachment 744434

The main differences are what legs end up OTM or ITM, and that with put spreads you get the cash upfront so you could leverage up further for more contracts. Go compare on optionsprofitcalculator.com/calculator/put-spread.html.
You sir, just solved they mystery of the mysterious arbitrage.
 
An LCC isn't really a "covered call" it's just a call spread.

In this case the long leg of the spread has a significantly far out expiration. The short leg might or might not.


So the tldr is expiration of LCC must be equal to or sooner than the long LEAP, and strike of the LCC must be equal to or higher than the LEAP.

ITM or OTM is irrelevant since as long as the above 2 criteria for strike and expiration are true it's impossible to "owe" any additional money on the position once opened- only that you might be capping gains or giving up a bunch of already-bought time value on the LEAP (and even those are typically manageable to avoid or limit)
Interesting. Just when I thought I understood. Ok. So if one desired to purchase a LEAP and use it as a source of weekly or monthly call premium income, one would want to purchase a LEAP as far out in expiration and as low as affordable to maintain that structure and income as long as possible? Is this also what is referred to as a "Diagonal"?
 
Yeah, this is crazy. What we learn from this is that nobody here, or in the main thread, can predict squat short term.
I disagree. There's always a floor. Having a better understanding of that floor than the hedgies playing these games is a huge advantage.

Knowing where to double down or triple down is great, knowing the true fundamentals will take SP positive within a certain time window is like gold.

People in this thread selling BPS $750-1000 can feel pretty good knowing it's just a matter of how many rolls til they expire those contracts. Nothing's certain, but that's as close as you can get in this type of investing.

I think ignoring this knowledge(guessing) is a big mistake.
 
Interesting. Just when I thought I understood. Ok. So if one desired to purchase a LEAP and use it as a source of weekly or monthly call premium income, one would want to purchase a LEAP as far out in expiration and as low as affordable to maintain that structure and income as long as possible? Is this also what is referred to as a "Diagonal"?
An LCC isn't really a "covered call" it's just a call spread.

In this case the long leg of the spread has a significantly far out expiration. The short leg might or might not.


So the tldr is expiration of LCC must be equal to or sooner than the long LEAP, and strike of the LCC must be equal to or higher than the LEAP.

ITM or OTM is irrelevant since as long as the above 2 criteria for strike and expiration are true it's impossible to "owe" any additional money on the position once opened- only that you might be capping gains or giving up a bunch of already-bought time value on the LEAP (and even those are typically manageable to avoid or limit)
Also, I'm not sure I understand the difference between a "Poor Man's Covered Call" and a LCC. And, why aren't we calling the LCC an LCS (Leap Call Spread)? My apologies, I'm trying to refer to the glossary that @Chenkers created for this thread and clear up some confusions...