Wiki Selling TSLA Options - Be the House

[generalenthu]

5 million shares auction it looks like. Some big volume moving for sure.

Edit: That was a pretty weak sauce close on some big volume. Can I haz some Forms 4s tonight. Pretty plz..

 

[Tslynk67]

87k of the 0 DTE 950s traded today against less than 7k Open interest. Should be interesting to see what happens to these going into closing cross. Looking sticky here.

I think they pushed it down like crazy into close to protect the Closing Cross, and rightly so, 5.4m shares traded at that moment - Wall Street looking after its own...

 

[Discoducky]

Ok, so I did 10x BPS 950/700 Feb18 $82 premium. We'll see how that plays out...as I think that q4 will be a blow out.

 

[Tslynk67]

I don’t know what is going to happen, because my broker closed 49 out of 50 of my -950/850 spreads 50 minutes before the market close before I could do it myself.

I had 100k+ of margin left, no margin calls prior and this is the first time something like this happens to me. I’m very puzzled.

It worked out ok, I just don’t understand the logic behind it. Maybe I should call them.

My broker has an "auto sell feature" that I need to explicitly disable for every long trade...

 

[Yoona]

I don’t know what is going to happen, because my broker closed 49 out of 50 of my -950/850 spreads 50 minutes before the market close before I could do it myself.

I had 100k+ of margin left, no margin calls prior and this is the first time something like this happens to me. I’m very puzzled.

It worked out ok, I just don’t understand the logic behind it. Maybe I should call them.

TD (Canada) helpdesk once told me that they will call and email before 3pm Fri if any positions are ITM at 0 DTE; if they can't reach me, they will BTC automatically and there is a service fee PER underlying (ie 10 contracts = 10 x 100 fees)

 

[Tslynk67]

OH! And just to highlight how incredibly poor those flip/split decisions were. IFF I had simply rolled those ITM covered calls out 4 weeks, They would've ALL closed OTM today!

At least that's how I feel now. But hindsight being 20/20. I made the what I thought were the best decisions I could've made, at the time they were made. kicking myself with coulda/woulda/shoulda doesn't help. Just gotta live to trade another day.

Hindsight is a harsh mistress, we can only make decisions in the moment based on what we know or feel at that time, beating yourself up after the event is pointless, learning from it is priceless

I'm still in the former camp...

 

[M3Rider]

Definitely call them!
Also please let us know what broker you use!

I’m with Firstrade, had account with them for 15-20 years, not the top choice broker, but pretty convenient phone app for trading.

So, called them and here’s what they said - since the spread was ITM, I can be assigned any time. If I had enough cash to exercise, they wouldn’t touch them, but since I didn’t, they want to mitigate the risk to their clients and close ITM puts.

They start scanning accounts for this condition 2 hours before the market close. So, my turn came up 1:10 later.

Makes sense, good to know.

 

[DGates]

I’m with Firstrade, had account with them for 15-20 years, not the top choice broker, but pretty convenient phone app for trading.

So, called them and here’s what they said - since the spread was ITM, I can be assigned any time. If I had enough cash to exercise, they wouldn’t touch them, but since I didn’t, they want to mitigate the risk to their clients and close ITM puts.

They start scanning accounts for this condition 2 hours before the market close. So, my turn came up 1:10 later.

Makes sense, good to know.

I had a bunch of short legs of my 950/840 BPS liquidated today by IBKR at $8.40. I missed closing these earlier when the stock price was up above 950 and once it started heading back down I got the notice. First time this has happened to me so took me a minute to understand what happened. I wouldn't have been able to take assignment on the shares, even though I had enough margin to cover the spread. Probably best that they did, I was holing out for another move back to 950 which never came.

 

[adiggs]

OH! And just to highlight how incredibly poor those flip/split decisions were. IFF I had simply rolled those ITM covered calls out 4 weeks, They would've ALL closed OTM today!

At least that's how I feel now. But hindsight being 20/20. I made the what I thought were the best decisions I could've made, at the time they were made. kicking myself with coulda/woulda/shoulda doesn't help. Just gotta live to trade another day.

You're onto something here. The hindsight / coulda / woulda / shoulda thing isn't helpful. We're all geniuses with the benefit of hindsight.

But what can be hugely valuable is contemplating what you knew then, what you did about it, and what you would do differently in the future given the same or similar situation and information.

As an example from my own trading - I've found that I improve my overall results when I take early positive closes. I don't know that I'm not leaving a lot of money on the table, and I know that I am on many individual trades. But the benefit of looking at overall results rather than individual trade results has left me in good shape (your results may vary, no warranty is express or implied, future results may vary substantially, etc ..).

Today is a particular example. I closed some 650/850 put spreads this morning when I noticed they were ahead ~55%. These were pretty big premium positions so I left a lot of potential earnings from this particular position on the table. They also weren't as far OTM as I'd like and I don't know what will happen on Monday. I consider another week of more down than up to be reasonable though I also think that to-the-moon is about to set in any moment. And besides my own objective is income and that 55% result might generate in 1 week my monthly target. Either way I got the 55% and now I'm free to re-enter if/when I get a good opportunity. Then later in the day the shares have traded from the 950ish range down to 930ish. It might already be a good re-entry!

If I had really been on the ball then I would have also closed the 1000 calls later in the day. With the late move down those have reached a 57% profit (from 25% earlier in the morning). If I'd have closed them then I'd be out of the market on both sides and ready to reenter on Monday whatever direction we open up with. That sounds like a better position to be in than what I'm in right now (but good either way).


Another example from 13ish years back. I found a stock that was paying out nearly 11% annual dividends, with -quarterly- increases to that dividend for several previous years. The company could also identify roughly 60% of the annual revenue for 2 or 3 years into the future due to contracted purchases of their service. Took me 2 weeks of looking at it backwards and forwards to finally figure out that it really was what it looked like.

Then I dabbled. I got $5k worth when I should have gotten $50k worth (or more). I was kicking myself for years afterwards as the investment worked exactly as I expected it to.

The learning - when I have a conviction (and they are rare), then don't dabble. Fortunately I learned that lesson before TSLA came along. When I found TSLA we opened the biggest position we were willing to open in any individual company at the time. Hello early retirement.

I couldn't change the previous coulda / woulda / shoulda situation, but I did learn something valuable.

 

[st_lopes]

I’m with Firstrade, had account with them for 15-20 years, not the top choice broker, but pretty convenient phone app for trading.

So, called them and here’s what they said - since the spread was ITM, I can be assigned any time. If I had enough cash to exercise, they wouldn’t touch them, but since I didn’t, they want to mitigate the risk to their clients and close ITM puts.

They start scanning accounts for this condition 2 hours before the market close. So, my turn came up 1:10 later.

Makes sense, good to know.

Yep, quite common from brokerages to give you until 2PM at 0 DTE to settle any ITM positions. Between 2 and 4, you're at their mercy. I've tried many times to tell them to leave my position alone and that I would manage it by 4PM. No exceptions! That's a significant variable to why I try to avoid holding positions until 0 DTE.

 

[adiggs]

I had a bunch of short legs of my 950/840 BPS liquidated today by IBKR at $8.40. I missed closing these earlier when the stock price was up above 950 and once it started heading back down I got the notice. First time this has happened to me so took me a minute to understand what happened. I wouldn't have been able to take assignment on the shares, even though I had enough margin to cover the spread. Probably best that they did, I was holing out for another move back to 950 which never came.

This is good stuff to learn. Spreads are relatively new in these parts (roughly since summer, while the thread was started a year ago in the spring). Some of these dynamics are things we're still learning. I know I'll use this info - I tend to early close anyway but I also know there are situations where I might be holding right up to closing as that'll be when the serious price drops will happen.

One thing I get out of this, to make up an example, if I think that $900 is as low as the shares will go and might even be the closing price on expiration day, then I want the position to be more like 880 or 850 at most. I want a fair bit of room to what I think the close will be so that I can ride the position into close if I desire, which I won't be able to do if I'm right and I've got 900 as my short leg.


In similar news I've noticed that big premiums and close positions don't age % wise as quickly as further out positions with smaller premiums. Those further out positions are frequently good early close candidates, while the big premium positions frequently need two good favorable moves to become good early close candidates. Or so it seems to me.

 

[ChefBoyardee]

Little update on my endless rolling in case it helps anyone:

1150 -> 1100 -> 1050 -> 1000 ->
Mainly 950/900 now for Jan 7
Some 890/850 for Jan 7
Some 900/850 for Dec 23
Some 840/820 for Dec 23
Tiny protective 910/905 bear put spread for Dec 23 to help with any rolls

Target scenario is the dec 23rd’s expire, giving me more margin to roll the jan 7’s down below 900 (if needed).

820 is the long term trend line, which is rising, so worst case scenario I’ll roll the 950s out to March where the trend line crosses.

And for anyone not caught in the sell off, the 820/800 spreads under the trend line are trading at 5% RoC, so we’re entering the range where new BPS’s may be a good trade.

We’re almost there!

 

[DGates]

This is good stuff to learn. Spreads are relatively new in these parts (roughly since summer, while the thread was started a year ago in the spring). Some of these dynamics are things we're still learning. I know I'll use this info - I tend to early close anyway but I also know there are situations where I might be holding right up to closing as that'll be when the serious price drops will happen.

One thing I get out of this, to make up an example, if I think that $900 is as low as the shares will go and might even be the closing price on expiration day, then I want the position to be more like 880 or 850 at most. I want a fair bit of room to what I think the close will be so that I can ride the position into close if I desire, which I won't be able to do if I'm right and I've got 900 as my short leg.


In similar news I've noticed that big premiums and close positions don't age % wise as quickly as further out positions with smaller premiums. Those further out positions are frequently good early close candidates, while the big premium positions frequently need two good favorable moves to become good early close candidates. Or so it seems to me.

Yeah I watched my spreads go nicely green when the stock price was going up through 950 and was close to closing them, but because the short put was basically right ATM there was still a few dollars of theta to burn, and I thought the price would stay above 950, close closer to 960.

Once it started dropping of course the short put went ITM and I guess it triggered some IBKR algorithm. I got a popup in Trader Workstation saying I had violated a margin requirement and my position had been liquidated with a market order. Only the short 950 puts got closed out, the long 840 was left untouched.

Was a bit of a crazy day, holding 950/840 BPS, 900/700 BPS and some short 950 PUTs. The week turned out OK but just barely. I didn't open any new positions, will wait for Monday.

 

[M3Rider]

So now we wait in suspense to learn if Elon planned in Sept to throw in some shares into the closing cross on triple witching day.

If not, possibly one more week of misery.
I’m thinking when he has 2M left to sell there should be no push downs like we saw, buyers should start showing up.

 

[generalenthu]

So now we wait in suspense to learn if Elon planned in Sept to throw in some shares into the closing cross on triple witching day.

If not, possibly one more week of misery.
I’m thinking when he has 2M left to sell there should be no push downs like we saw, buyers should start showing up.

It was really strategic of him to sell all his discretionary shares before November 12th, so that they can create index demand today.

I suppose he has some good advisors.

 

[vikings123]

It was really strategic of him to sell all his discretionary shares before November 12th, so that they can create index demand today.

I suppose he has some good advisors.

Good point. It's pretty amazing how the stock has held up despite the extended uncertainty about the timing of his stock sales. I'm honestly sick of people complaining about how Elon wrecked the stock, punished "investors" etc etc. GB just cannot stop talking about this topic, his signal to noise ratio on this topic has only got worse.

There were even people who thought Elon executed the sale on one single day lol(the day most on here lost at least a million dollars, unrealized ). Elon can be many things but he is not reckless.

I'm also looking forward to any form 4 filings later today. If word spreads over the weekend that he is either close to wrapping it up or potentially done with his selling I think it could set us up for a huge week.

 

[BornToFly]

Hi everyone!

Is it a good week to start selling options? I just put my first trade in, jan 7 -890p +870p after going through the 3 OptionAlpha tracks from the 1st post. I did break the rule about only applying 1-5% of my resources to one position, though, but seeing this is $TSLA and Elon should be wrapping up his selling, I feel it's a calculated gamble. Or not.

Welcome. Did you really just start? Do you have experience selling naked Puts? Spreads are much more difficult. Your 890/870 is not very far OTM, and an SP drop to 870 will be max loss that will cost you money to roll, even trying to keep the same strikes. Don't risk too much money until you've been doing this for a while, and have experienced some unexpected SP drops. Most people who try this lose money, so go slow. A friend of mine is starting and I am having him do $400 spreads, so the long leg costs nothing, the short leg acts like a naked Put and is easy to roll, but he can do twice as many contracts as he could with naked Puts alone. Most of us did not expect an SP this low so close to the end of the quarter, and it's starting to hurt....

 

[wooter]

Welcome. Did you really just start? Do you have experience selling naked Puts? Spreads are much more difficult. Your 890/870 is not very far OTM, and an SP drop to 870 will be max loss that will cost you money to roll, even trying to keep the same strikes. Don't risk too much money until you've been doing this for a while, and have experienced some unexpected SP drops. Most people who try this lose money, so go slow. A friend of mine is starting and I am having him do $400 spreads, so the long leg costs nothing, the short leg acts like a naked Put and is easy to roll, but he can do twice as many contracts as he could with naked Puts alone. Most of us did not expect an SP this low so close to the end of the quarter, and it's starting to hurt....

I've had some time going through all the courses and paid attention on pricing spreads and probability (but honestly, probability for $TSLA is hard to believe the last few weeks). I've not done naked puts.

Sure I risked too much, but I was trying out different spreads on different smaller stock, but with pricing taken in account and had no takers. I tried a few $TSLA spreads and my pricing also seemed a bit high, but while I was preparing a very low impact NIO spread, one of my open TSLA spreads for jan 7 got taken. So here we are.

The $400 spread is an interesting idea. A January 21 -890p +490p spread would be 71% profitable, generate 5K at best and still be break-even at $840.

But I shouldn't get greedy. OptionAlpha is all about small, many options, with ~70% probability, because ~30% will probably always fail, but maybe in TSLA this works differently because up to 4 weeks ago a pullback like this was unheard of?

 

[BornToFly]

The $400 spread is an interesting idea. A January 21 -890p +490p spread would be 71% profitable, generate 5K at best and still be break-even at $840.

But I shouldn't get greedy. OptionAlpha is all about small, many options, with ~70% probability, because ~30% will probably always fail, but maybe in TSLA this works differently because up to 4 weeks ago a pullback like this was unheard of?

OptionAlpha uses 70% probability because you are doing 50-100 different stocks. If you are only doing Tesla, and you have 70% probability of success with a narrow spread, it won't be long before you lose your money. The $400 spread isn't about breaking even at $840, it is about being able to easily roll an SP drop down to 690.

 

[JustMe]

Well, no form 4s submitted yet for Friday, although it seemed many people were convincing themselves that Elon Musk had actually sold two or more tranches yesterday.

I think it’s pretty likely we will see selling Monday, but I don’t expect a precipitous fall. There’s going to be plenty of buyers if we dip below $900.