Wiki Selling TSLA Options - Be the House

[traxila]

Had an order to close the 950 puts at 3….

Did not get there. Really need to sit in front of computer for this kind of stuff. Too much on my plate lately.

Guess will roll later today. I did think today was lining up as an Elon should have been less aggressive with order I placed in pre market….

 

[juanmedina]

I sold some 1075cc's for $1 and a $960 put for $17.5 for some weekend money.

 

[TheTalkingMule]

You can't know what the stock will do, there have been plenty of weeks and days where waiting for a better open would not have been better. Ultimately you are trying to capture the extrinsic value when selling options. You can certainly try to be opportunistic when the stock moves, but you are not just giving up 30% of your profits by rolling rather than separate exit/entry points. Sometimes it works to your advantage and sometimes it does not.

There's no way of knowing what the stock will do, though I would argue we generally have a decent idea of where the stock currently sits in the "arc of rational valuation". But I will accept your point of uncertainty as 100% accurate for this instance.

That doesn't change the fact you're very likely to be closing positions on a spike, whether that's intra-day or somewhere within a Wed/Thurs window. Therefore you're by definition more likely to be opening that new position at a suboptimal moment. Of course this only applies if you're purely selling BPS rather than some combination of put/call spreads.

From my very early observations it seems you can roll every week if you're always trading put/call spreads in combination or if you want to expend literally zero maintenance effort and just roll way OTM BPS on a regular schedule every week.

 

[scubastevo80]

About 30 min in this morning we rolled (2) 12/17 890/790 to 12/23 895/790 for a $6.60 credit. We debated closing this at the open and waiting like BornToFly but timing didn't work out. In retrospect, we should have rolled down the short strike (instead of up) for peace of mind vs the extra premium. We intend to keep exposure on for half of our money and the other half will be used tactically for BPS if we get a 3%+ drop.

 

[BornToFly]

I ended up closing the 900, waiting a little, and opened the new 700/900 near the 10am bottom. I could be wrong but it feels like we hit the bottom for the day.

 

[BornToFly]

I ended up closing the 900, waiting a little, and opened the new 700/900 near the 10am bottom. I could be wrong but it feels like we hit the bottom for the day.

Wow, it literally dropped another % as soon as I posted that....

Let me see if I can reverse it.... DEFINITELY dropping below 940 today...

 

[mickificki]

so...Elon selling again today? That's quite an accelerated drop.

 

[TheTalkingMule]

Sold 12/23 BPS $890/$790 @ $13

Very happy with that and have 20% of margin reserved for any bear raid Monday. If the SP heads for $910 next week I may overextend myself a bit since I think this is a relatively unique window.

 

[doddiozil]

On Elon selling days it looks like the selling usually ends around 2pm... 3 more hours

 

[Tslynk67]

I think this is general macro weakness. NVDA for example had a similar drop to TSLA. Volume is below average I think.

Looks a bit like Nasdaq rotating into DJ, TBH, but still, given that $TSLA is very oversold, the drop seems suspect

 

[ReddyLeaf]

Well, I managed to predict today’s action pretty well and complete some gymnastics to get out of some DITM puts (1140&1150) for this week. Definitely not perfect and would have benefited from closing exactly at open and delaying the selling until a few hours later, but didn’t want to risk it. Once again, I was short on cash in my ROTH and my brokerage doesn’t have a single trade roll function so….
Sold shares near the open at $985.xx.
Bought 12/17 p1140 at $151.xx, p1150 at $168.xx
Sold 12/23 p1000s at $45.20 (debit, but frees up $140).
Bought back shares at $929.xx-$934.xx
I will probably roll the p1000s again tomorrow or next week if the MMD looks “normal” and I can benefit from the drop.

In other account there was enough free cash so easily rolled 12/31 -p900s to 1/07 p920s for $20cr. Didn’t need to do the trade, but pushed the stress until after Christmas holidays.

 

[WattsHappening]

I'm visiting here from the main investor thread, where I am spending a ridiculously inordinate amount of time.

I've always been a buy-and-hodl type. I do have several LEAPs dating out to Jan and March 2023.

With the recent drop in SP, I'm seriously considering leveraging up by selling shares and buying LEAPs. So I'm coming here for some edjumacation.

Any advice for a relative newb? Do I just go back and try to read through the pages of posts on this thread? Any other thread you recommend for what I'm trying to do? How do you all feel about specific leverage options? I'm thinking something like sell a lot of shares and buy 3 or 4 LEAPs. I understand the trade-offs of lower versus higher leverage; just looking for the experts' thoughts.

TIA!

 

[UltradoomY]

Having a little fun this afternoon and figured the best way to get the SP to jump was to either do a Buy/Write or sell some ATM CC's for the 23rd......
So why not both!
STO - 12/23 $950 CC's @ $30 each
Buy/Write $936 - $945 CC @ $35 each

 

[generalenthu]

Have a few 1000 strike CCs for next week. My biggest worry is that Elon would sneakily sell all his shares on 3 consecutive days, and announce via form 4 that he's done. That would ignite a mad scramble to get long. That would be max entertainment, and he's not one to not think of it. Worries me a bit that the volume this week has been much higher than average though we only have a form 4 for Monday.

Have multiple more short puts /bps, but the CCs are the ones that make me nervous.

 

[Cherry Wine]

Have a few 1000 strike CCs for next week. My biggest worry is that Elon would sneakily sell all his shares on 3 consecutive days, and announce via form 4 that he's done. That would ignite a mad scramble to get long. That would be max entertainment, and he's not one to not think of it. Worries me a bit that the volume this week has been much higher than average though we only have a form 4 for Monday.

Have multiple more short puts /bps, but the CCs are the ones that make me nervous.

My hope is that he's selling again today and plans to use the extra liquidity from tomorrow to wrap up. What's your latest read on rebalancing tomorrow? Absent some bullish action from that, I'm pretty bearish on very short-term movements unless we somehow close above $950 again today.

Nasdaq as a whole is just getting hammered.

 

[ggr]

A quick cautionary tale. I have a margin account that was about 55% TSLA, 20% various mostly long call options in TSLA, and the other 25% in various ETFs and other stocks. One of the long calls expires tomorrow (bought April this year) and had a strike price of $700, and I'm trying to minimize the tax on selling that option, so yesterday I sold other profitable calls (but less profitable so less gains) and exercised the $700 calls. That, and the closing blip up in the price of TSLA, brought the proportion of TSLA stock versus total stock to 70.31%.

Previous to this the margin requirement on TSLA from ETrade was 40%. But just after market close, the risk management department raised it to 50%. That generated an instant margin call of about 10% of the value of the account. (Yes, I ride the edge of margin in this account. It isn't my main account.) But to satisfy this margin call by selling stock would require me to sell more than that value of stock, whether it is TSLA or some other stock with an even lower margin maintenance percentage. To sell enough stock proportionally across all the holding would have meant liquidating about 16% of the account!

I've been here before. The right answer is to call the broker, explain that I was more concerned about minimizing tax and hence was exercising options and not paying attention to the concentration in the account, but because of the margin call I couldn't buy other stock to diversify! "So please call the risk department and get them to give me a day to fix it." Which they did. I sold/covered my other remaining calls, which I intended to do before end of year anyway for accounting purposes, and sold a chunk of shares of TSLA at the highest cost basis, and bought other stocks (STLD and AAPL) to diversify back down to about 65% TSLA.

Remember to watch your stock concentration limits if you hold lots of TSLA stock versus other marginable stock in a margin account. This time it was self-inflicted, caused by me exercising DITM calls, but it's happened to me before when TSLA goes up 10% one day, or 15% over a couple of days, and I think "Great!" and then get hit with a margin call because the risk department increases the maintenance requirement, just for me!

 

[adiggs]

Wow, it literally dropped another % as soon as I posted that....

Let me see if I can reverse it.... DEFINITELY dropping below 940 today...

You're not doing it right. I think you need to sell some I-dare-you covered calls; put some skin in the game so the share price knows you're really serious and it needs to come bushwhack you

 

[adiggs]

I'm visiting here from the main investor thread, where I am spending a ridiculously inordinate amount of time.

I've always been a buy-and-hodl type. I do have several LEAPs dating out to Jan and March 2023.

With the recent drop in SP, I'm seriously considering leveraging up by selling shares and buying LEAPs. So I'm coming here for some edjumacation.

Any advice for a relative newb? Do I just go back and try to read through the pages of posts on this thread? Any other thread you recommend for what I'm trying to do? How do you all feel about specific leverage options? I'm thinking something like sell a lot of shares and buy 3 or 4 LEAPs. I understand the trade-offs of lower versus higher leverage; just looking for the experts' thoughts.

TIA!

I'm a buy and hold and option selling investor in TSLA, so my buying call options input is, at best, suspect

That being said, I do buy and hold long dated calls (such as those 2023's you mentioned), partly to back covered calls so I can sell even more of them. Thus I purchase DITM calls, and those have been working well.


I divide the world up into share replacement calls (DITM) and speculative calls. The speculative side - I got nothing. Then again I think you're asking more about share replacement options anyway. For these the deeper ITM and the further out in time, the more and more that they look like share replacements.

One of the ways I choose is to go out to the furthest available strike (Jan 2024 right now I believe) and then look for the strike that is priced at about 1/2 of the share price. For these options I can buy 2 of them for the cost of 100 shares. Those 2 options will be around the .80 or .85 delta, so I end up with around 1.6 to 1.7 leverage, or 160 to 170 share equivalents vs. the 100 shares I'd have from owning 100 shares.

I might also lower the cost (increase the strike) on the purchased calls so that I get more like 5 options for 200 shares - that turns into something like .80*5 = 400 shares vs. 200 share equivalents. That higher strike / lower cost option gets me closer to 2:1 leverage.

The first choice minimize the amount of time value I'm purchasing. That minimizes my Theta exposure (time value decay) as well as Vega exposure (changes in the option price due to changes in IV) as both of those affect the extrinsic or time value on the option I'm buying, and have no impact on the intrinsic value (the $ amount ITM).

Those long dated calls also have the possibility, assuming a taxable account, of reaching long term capital gains status.


There are some other more generic option trading threads here in the forum, though not nearly as active as you've seen. Option Trading Strategies & Advice is the name of one I think; Advanced Option Trading.. is another. You'll have to search for them though.

EDIT to add: and welcome! We don't bite, and like it when new folks show up.

 

[vikings123]

930 wall finally breached? They kept working at it. Pretty impressive lol.

 

[Flehmenlips]

A quick cautionary tale. I have a margin account that was about 55% TSLA, 20% various mostly long call options in TSLA, and the other 25% in various ETFs and other stocks. One of the long calls expires tomorrow (bought April this year) and had a strike price of $700, and I'm trying to minimize the tax on selling that option, so yesterday I sold other profitable calls (but less profitable so less gains) and exercised the $700 calls. That, and the closing blip up in the price of TSLA, brought the proportion of TSLA stock versus total stock to 70.31%.

Previous to this the margin requirement on TSLA from ETrade was 40%. But just after market close, the risk management department raised it to 50%. That generated an instant margin call of about 10% of the value of the account. (Yes, I ride the edge of margin in this account. It isn't my main account.) But to satisfy this margin call by selling stock would require me to sell more than that value of stock, whether it is TSLA or some other stock with an even lower margin maintenance percentage. To sell enough stock proportionally across all the holding would have meant liquidating about 16% of the account!

I've been here before. The right answer is to call the broker, explain that I was more concerned about minimizing tax and hence was exercising options and not paying attention to the concentration in the account, but because of the margin call I couldn't buy other stock to diversify! "So please call the risk department and get them to give me a day to fix it." Which they did. I sold/covered my other remaining calls, which I intended to do before end of year anyway for accounting purposes, and sold a chunk of shares of TSLA at the highest cost basis, and bought other stocks (STLD and AAPL) to diversify back down to about 65% TSLA.

Remember to watch your stock concentration limits if you hold lots of TSLA stock versus other marginable stock in a margin account. This time it was self-inflicted, caused by me exercising DITM calls, but it's happened to me before when TSLA goes up 10% one day, or 15% over a couple of days, and I think "Great!" and then get hit with a margin call because the risk department increases the maintenance requirement, just for me!

I was in a similar position and bought a married put (also called a protective put) against one contract which greatly increased my margin headroom. It seemed preferable to selling shares. It's worked out pretty well so far.