Wiki Selling TSLA Options - Be the House

[MP3Mike]

Take half the contracts and flip roll to a BCS, roll the other half to a BPS. Ideally in a way that you now have an Iron Condor/Fly/Butterfly. Benefit is you cut your margin req in half and you « guarantee » that you can recover at least half the position if not more depending on what kind of width you can achieve in strikes.

I'm trying to visualize that, and having problems. I'm looking at how things were at close and a roll to next week was priced at ~$16.55, while a flip to a 950/1150 BCS was priced at $172.02. So the flip/roll would cost $188.57, which is only slightly lower than the $200 max loss. And you would still have $100 at risk.

Can you give an example of what you were thinking of?

 

[st_lopes]

I'm trying to visualize that, and having problems. I'm looking at how things were at close and a roll to next week was priced at ~$16.55, while a flip to a 950/1150 BCS was priced at $172.02. So the flip/roll would cost $188.57, which is only slightly lower than the $200 max loss. And you would still have $100 at risk.

Can you give an example of what you were thinking of?

Say you had -10x BPS.

Convert that by rolling to -5x BCS and -5x BPS with the same $200 spread on each leg. Take whatever credit you may get on entering the first leg to pay a debit to improve strikes on the second leg.

I would need to be at my laptop to see what kind of strikes would be available, but in doing that you’ve cut your max loss in half because it’s now shared between the two legs, and one of those legs will be “guaranteed” to expire worthless. It won’t work if the strikes on the BCS are below the BPS though.

 

[generalenthu]

What's your latest read on rebalancing tomorrow?

Nothing particular other than my 1.5 million estimate. The share count is based off of November 12th shares outstanding. So only the first few days of sales count for free float calculations that determine index weight.

This used to be based off of December 1st week free float, but unfortunately S&P changed the cutoff dates for weight factor calculation some time in Q3 this year.

 

[MaxPain]

Open question

Which trading platform or broker is best for these various option spread rolling strategies?

I am using TD Ameritrade, Thinkorswim and it feels a bit clunky and it sometimes gets confused by my trades. It’s possible that I’m not savvy enough though

I really like StreetSmart Edge from Schwab. Very intuitive for all sorts of options strategies.

Here is a screen shot of a view I'm on often

 

[FlamingPIG]

After Fed talk yesterday, market flip from red to green at end of day. I thought that’s the bottom for TSLA, around 930.
Held 5x Dec 17 900/800p with 80% profit.

This morning, share price drop sharply from 994 to 960 within 30 mins. Immediately, I was being "smart" and greedy: STO 5x 910/850p DEC 17 for $1.5k. Then SP drops more, all the way to 930 within 1.5 hrs.

I was stressful all morning long because it may or may not break below 930, option may get assigned. It broke 930.
2 minutes before close, end up rolling 5x 910/800p to next week for some credit.
Kept 5x 900/850p Dec 17

Lesson learn -
dont be too greedy - what is too greedy : selling less than 10% OTM.
Close at 70-80% profit
I'm not "smart" and are sugar at predicting price movement.

Hope for a boring or green morning tomorrow to roll/close the remaining 5x BPS.

selling option is very fascinating and a roller coaster of learning the unknown....... HODL only is much less stressful and..........boring

 

[traxila]

I closed out my 12/17 990 / 940 and 950 / 850 when it was at 930 for losses. Frustrated the orders I put in to close them this AM just did not trigger. They were not large positions as I was testing stuff out to keep myself occupied from nasty stuff in real life but honestly I am clueless as to what Elon and market may do in the next few days, especially if Elon has simply scheduled everything to sell and SP be damned, which is very possible as he has always made it clear he has no time for traders. Don't think he has an active dislike, but they do not enter into his calculations. Has made it clear his mission is the mission and to reward long term hodlers.

For personal reasons, I cannot focus right now and it is stressful to deal with the stock moves of the past couple of weeks on a part time basis. Did not even intend to trade at all but as I said was trying to distract myself. Picked up some medium term in the money calls that should make up for losses assuming the market is actually interested in acknowledging TSLA's record 4Q in the next few months.

Hopefully I get my head straight and get back my losses in the future.

 

[BornToFly]

For personal reasons, I cannot focus right now

I hope everything works out. In the last two years I unexpectedly lost my 16 year old son, and then my father. Sometimes life is really hard. Try to stay positive and appreciate the good stuff.

 

[Oil4AsphaultOnly]

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.

Welps, your hoping paid off. He sold today:

SEC FORM 4

SEC FORM 4

Sorry, too lazy to see how many total, but it looked like a little under a million shares.

 

[Cherry Wine]

Welps, your hoping paid off. He sold today:

SEC FORM 4

SEC FORM 4

Sorry, too lazy to see how many total, but it looked like a little under a million shares.

Good. Let’s just get this over with.

 

[traxila]

I hope everything works out. In the last two years I unexpectedly lost my 16 year old son, and then my father. Sometimes life is really hard. Try to stay positive and appreciate the good stuff.

That is devastating. I am sorry for your losses. That is about as hard as it can get.

I buried my father on Monday. Thank you for your wishes and advice.

 

[intelligator]

Well fukk....fat fingered a roll 3 min from closing - wanted to roll my 12/17 -900/700 to 12/23 -850/650 (for a nice $4 credit), instead rolled to 850/-650 (creating a bear put spread)..... manage to close it out immediately at the cost of last weeks premiums

In time, you'll earn it back! End of day was only time I had free, rolled out of 930/820 to 900/800 BPS improved strike, reduced margin, net credit 9.33 ... but had to go out to the 31st. I'd realized I just don't have the time while keeping a day job. Oh how I'd like to close these out for good. Meanwhile, snagging a premium to get out of the steam rollers way seems okay.

 

[intelligator]

I hope everything works out. In the last two years I unexpectedly lost my 16 year old son, and then my father. Sometimes life is really hard. Try to stay positive and appreciate the good stuff.

Tragic, no words remain.

That is devastating. I am sorry for your losses. That is about as hard as it can get.

I buried my father on Monday. Thank you for your wishes and advice.

Recall the goodness, that's what I try to do each day. This year I buried my father in April, mother in August. As tough as it will be, good days will come. Peace.

 

[tradenewbie]

I haven't sold any BPS until yesterday because I feel uncomfortable about the FOMC this week. Yesterday I couldn't wait and decided to sell some BPS.

I was thinking about 2 options: sell the -850/+650 (expiry this week) for around $3-$3.5, or -800/+600 (expiry 12/31) for $9-$10. Eventually I decided to sell the 12/31 expiry one. The logic behind is I want to have a relatively lower strike while having similar premium / week. But to look back, it seems it might be a better idea to take the expiry this week and then roll if the SP starts coming close to 850 this week (higher cost to BTC, but also higher premium to STO)?

Any non-advice from you guys?

I was planning to BTC all -800/+600 (expiry 12/31) at open immediately yesterday but it only achieve around 60% profit so I waited until SP to get to $1000, but then it started to drop and so I still have this open. Then I thought I was smart to open more BPS -810/+710 (also expiry 12/31) when the SP drop to around 955 and I continue to open more BPS until 930 (thought it's the bottom). Also, bought a bit more shares around $933.

Well, turn out Tesla is still Tesla...

 

[kakamora]

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.

New to this thread. It’s an awesome read and very informative.

Can someone please help me understand why Elons selling is getting soo much blame / attention when it’s less than 1% of weekly volume?

Sorry if I have missed prior posts on this.
Thanks in advance.

PS planning a sizeable stock replacement if we get to 850
-for every 100 common
+2*500c 2024
-2*1700 June 2022

Any advice

 

[samppa]

Rolling for the credit is certainly nice, but you'll also be moving your target price up to 1250 from 1150. 1250 is ATH territory - that'll be a really positive view on how the share price will move. Alternatively you'll be moving up the strike at which you start lowering the max loss from 950 to 1050.

You'll be increasing your odds of a max loss - then again you're already at that point. You will also be making it harder for the share price to recover and at least shave off SOME of that loss.


A question to ponder - if you bought out / realized the loss right now, what would you do for a new position? In a sense you've been paying off this loss for the last month, so you'd get to start off with a clean slate - is that a better place to be?

You can certainly realize a big position improvement on a position that is so far ITM, but if you don't get that big move, then you've earned an incremental $1/share ($100/contract) while you await the max loss and hope for a big increase in the share price. Except now you need a $1250 share price (max gain) instead of a $1150 share price.


NOT-ADVICE.
If I had that position then I would hope for a pop first thing tomorrow that takes the shares above 950 and presumably provide you with a (slightly) less than max loss. Then take what gets offered and move on (max loss or not). I would definitely act well before closing, as early assignment becomes more and more of a thing as the close of trading arrives.

Or at least roll earlier than later - you're far enough ITM and close enough to expiration that early assignment on the short options is already a thing.

If the shares open down then eat the loss and open a new BPS priced where you would want it to be, and start earning back that loss.

Looks like it ain't gonna pop.. I'll see what options I have once market opens.
Might just have to suck it up and eat the loss.
I'm tempted to try to roll for these next couple weeks, there's still a chance of it popping.. and if not I can close and take the loss now in december, which will affect this years tax burden.

Note to myself: don't be a greedy idiot.. I really don't need such ridiculous premiums and income I've been getting these past few months. I do not need to take on so much risk.

 

[Tslynk67]

New to this thread. It’s an awesome read and very informative.

Can someone please help me understand why Elons selling is getting soo much blame / attention when it’s less than 1% of weekly volume?

Sorry if I have missed prior posts on this.
Thanks in advance.

PS planning a sizeable stock replacement if we get to 850
-for every 100 common
+2*500c 2024
-2*1700 June 2022

Any advice

Two main reasons:
- Hedge-funds are aware he's selling (they have the tools to detect this) and they front-run the situation by selling first, then rebutting at a cheaper price
- Supply & demand - normally $TSLA is quite float constrained, yes you may see 20m, 30m shares traded in a day, but most of these are HF traders buying/selling the same shares multiple times, now Elon is throwing 1m shares into the the ring, which is way more liquidity than usual, so the demand decreases, and the price with it

 

[Tslynk67]

This is all temporary. Stay rational out there.

Sir, yes sir!

Normally I'm pretty resilient, feeling spooked this time... OK, don't want to clog the thread

 

[FS_FRA]

Sir, yes sir!

Normally I'm pretty resilient, feeling spooked this time... OK, don't want to clog the thread

See my fat-finger trade of yesterday - also not feeling as calm as I should….

Breathe….

 

[jeewee3000]

Around $910 / $900 (pick one), an important gap will have filled on the TSLA chart. At least one of these levels should provide very decent support. Let's see if we bounce off of one of these today. If so, this could prove encouraging for the last days of the quarter. Expect two more Elon sales next week and two in the final week of the year, every time the preplanned amount around 930k shares.

After that, we might go vertical to $1050 for all we know.

 

[JustMe]

I expect a Green Day today
Buying a couple $920c at the open. It’s a gamble, of course. Insert gif of Kramer at the horse race here.

I’ve been amazed by the huge daily swings. My hat’s off to those that managed to profit through the wild market this week.

Good luck everyone