Wiki Selling TSLA Options - Be the House

[Yoona]

newbie . . . he he, you are so coy.

Are you allowed to use that moniker after making 1m+ on an executed options strategy?

Asking for a friend.

haha
wait 'til u see my BPS $1.3M 21 DTE expiring 1/7
fingers crossed and i promise to reveal how it was done if it's not a fail
wink

 

[Drezil]

I opened a dec 31/jan 22 1050 Calendar Call with similar outlook.

Strategy: pocket 5$ premium if we are below 1050 on year end. If we land above then roll out & up 1 week before expiry/as soon as we touch 1050.

Ideal return: use aggressive selling of calls above 1050 to extract maximum premium. Should be ~2k/week per contract if opened ATM & expire worthless each week.

Downside risks: if we rise too fast then roll out & up is not possible anymore & the jan call is not rising as fast as the short call.

i opened the position @20$, currently worth ~24$. On 1050 at year end it will be worth 40$ & then diminish symetrically from there (unless the short call is closed/rolled).

This is a bit more agressive than the LCC we usually have around here - the underlying 1050 will expire in 1 month. But it is a thing that can be VERY lucrative if rolled correctly in rising environments, while also being able to pay off the premium payed for the underlying 1050 call with short calls until that expires if no such rise occurs and we just stagnate.

Update on that trade:
as we reached 1010 i rolled the dec 31 1050 to jan 7 1100. Effective cost-basis now: 1.18$. Next roll @1080 SP (or expiry before jan 7). Basically i got the jan 28 1050 call for "free" now

 

[chiller]

I hope the options experts here can sanity check my ideas and assumptions. I've got quite a lot of Tesla shares, enough that Norways 1% wealth tax is eating hard into my spending money from my regular job and regular income.
At the same time Norwegian tax laws will tax any earnings with about 35% and after the FIFO principle. The result of this is my earnings are locked in and unless I sell my shares and then spend 65% of that on fun stuff the shares are only a liability and not an asset for practical purposes.

So my idea is that I start selling covered calls. I'm in the process of transfering 500 shares to Interactive Brokers from my Norwegian broker. No Norwegian broker AFAIK lets you sell american style covered calls, so I had to set up an account with a US broker.

I "need" to generate around 1% of my assets in yearly income to help me pay my tax bill, but at the same time I'd rather not sell until 2023-2024 ish when we might use part of this money for a house upgrade. So looking at covered calls it seems to me I can generate a small income with weekly/biweekly calls with strikes around 20% above the current TSLA stock price.
I'm fairly new to this so probably start conservative with just 1 or 2 calls and maybe start at 25% OTM.

If my shares gets called away that is of course not a big problem, but I will then get a tax bill around $35 000 next year and my income can't cover that so that means those 100 shares stays sold. So I'd rather roll or buy back any call that goes against me before they force me to sell the shares.

Does this sound like a decent strategy, any risks I haven't considered?

Me being in the same boat as you (being in Norway) I have landed on selling PUTs and not covered calls. To offset 1% per year you can stay insanely far out of the money. You can get 10 USD per share selling 350 puts for Jan 2023 if you don't want to do any work. If you are okay with (or even find enjoyment) doing some work, selling weeklies should give you a much better income. So much in fact, that your daytime job might be in danger.

 

[Tslynk67]

I hope the options experts here can sanity check my ideas and assumptions. I've got quite a lot of Tesla shares, enough that Norways 1% wealth tax is eating hard into my spending money from my regular job and regular income.
At the same time Norwegian tax laws will tax any earnings with about 35% and after the FIFO principle. The result of this is my earnings are locked in and unless I sell my shares and then spend 65% of that on fun stuff the shares are only a liability and not an asset for practical purposes.

So my idea is that I start selling covered calls. I'm in the process of transfering 500 shares to Interactive Brokers from my Norwegian broker. No Norwegian broker AFAIK lets you sell american style covered calls, so I had to set up an account with a US broker.

I "need" to generate around 1% of my assets in yearly income to help me pay my tax bill, but at the same time I'd rather not sell until 2023-2024 ish when we might use part of this money for a house upgrade. So looking at covered calls it seems to me I can generate a small income with weekly/biweekly calls with strikes around 20% above the current TSLA stock price.
I'm fairly new to this so probably start conservative with just 1 or 2 calls and maybe start at 25% OTM.

If my shares gets called away that is of course not a big problem, but I will then get a tax bill around $35 000 next year and my income can't cover that so that means those 100 shares stays sold. So I'd rather roll or buy back any call that goes against me before they force me to sell the shares.

Does this sound like a decent strategy, any risks I haven't considered?

Selling 20% out is indeed normally safe, 20% rises in a single week are not very common and rolling sold calls forward is pretty straight-foward

The question is more around the income you can expect, and that's totally dependent on the IV - today it's running pretty high for calls, a 31/12 c1200 will net you $3, but I consider that exceptional, more often than not it would be more like $1. So you could probably imagine $500 to $1500 a week if you manage it well, so maybe $50k per year if things go in your favour (I pull this number out of my rear-end, but feels about right)

Other approach, if you're prepared to risk it a bit is to study the tea-leaves and make educated guesses with lower strikes, then maybe you could flip to playing The Wheel, or would the tax hit be too great?

 

[Right_Said_Fred]

That's quite a run-up, maybe a tad too enthusiastic. At 1010 I said goodbye to 10 p1025 for 12/31. Still have another 10 p1025 for 12/31 and 5 p1025 for 1/7. Will see if I can re-enter the other 10 at a lower level. If not, no love lost.

 

[generalenthu]

This week may see a bit of pull to 1k, but the shackles if any should come off Monday. Let's see.

 

[LightngMcQueen]

I "need" to generate around 1% of my assets in yearly income to help me pay my tax bill, but at the same time I'd rather not sell until 2023-2024 ish when we might use part of this money for a house upgrade. So looking at covered calls it seems to me I can generate a small income with weekly/biweekly calls with strikes around 20% above the current TSLA stock price.
I'm fairly new to this so probably start conservative with just 1 or 2 calls and maybe start at 25% OTM.

You could also consider selling LEAP PUTs, especially ATM or ITM leaps.
For example: I recently sold Jan 2023 $1200 PUTs at slightly over $400.

That is approximately 30% return on locked margin (40k/120k) if share price goes over $1200 in the year or 16% return (20k/120k) if SP is still $1000 in a year.

It would take 2023 SP dropping to $800 to start loosing money, should it happen, I would try to lock in this price by buying calls - similarly to you I do not want to change cost basis of shares in that account. Also keep in mind that with current inflation $800 in 2023 is like $750 today.

I do not know Norway tax code but it may also give you better tax treatment, since actual gain is not realized until LEAP expires.

 

[TheTalkingMule]

This week may see a bit of pull to 1k, but the shackles if any should come off Monday. Let's see.

Though I doubt it, Elon could very easily be selling tomorrow. And if not tomorrow, very likely Monday. IMO the fact he sold this week at all points to a 50/50 chance of more selling by the end of the year.

The front-running we've seen is unlikely to occur, but it would add some lube to the MM's shenanigans. I haven't looked at the open interest, but if they can avoid $1k next week that's probably a nice victory.

 

[winfield100]

(yay, i think i figured out noobie links!)
2nd S4 form filed from yesterday

Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

Mid-morning…FOMO.

teslamotorsclub.com

 

[Cobos]

Me being in the same boat as you (being in Norway) I have landed on selling PUTs and not covered calls. To offset 1% per year you can stay insanely far out of the money. You can get 10 USD per share selling 350 puts for Jan 2023 if you don't want to do any work. If you are okay with (or even find enjoyment) doing some work, selling weeklies should give you a much better income. So much in fact, that your daytime job might be in danger.

I might be going to puts eventually, but I barely understand options right now even though I'm a fairly fast learner, so I'll get started with covered calls and get some experience and then branch out

 

[Cobos]

Selling 20% out is indeed normally safe, 20% rises in a single week and not very common and rolling sold calls forward is pretty straight-foward

The question is more around the income you can expect, and that's totally dependent on the IV - today it's running pretty high for calls, a 31/12 c1200 will net you $3, but I consider that exceptional, more often than not it would be more like $1. So you could probably imagine $500 to $1500 a week if you manage it well, so maybe $50k per year if things go in your favour (I pull this number out of my rear-end, but feels about right)

Other approach, if you're prepared to risk it a bit is to study the tea-leaves and make educated guesses with lower strikes, then maybe you could flip to playing The Wheel, or would the tax hit be too great?

My stretch goal is to get maybe $15 000 out of this per year so $500 - $1500/week seems to be decent pay for a realtime course in options

Thanks for letting me know I've got a decent idea. And yeah I figure I might climb down to 10% or maybe even 5% above as I get more comfortable and a better feel for the payouts and how things move.

 

[Tslynk67]

My stretch goal is to get maybe $15 000 out of this per year so $500 - $1500/week seems to be decent pay for a realtime course in options

Thanks for letting me know I've got a decent idea. And yeah I figure I might climb down to 10% or maybe even 5% above as I get more comfortable and a better feel for the payouts and how things move.

What you could do is mix it up a bit - with 500 shares you can write 5 covered calls, so sell 4 of them 20% out, but one 5% out, dare it to exercise, then play the Wheel with that. Not much ventured, but you'll pick it up quickly enough

 

[Knightshade]

I have several BPS/puts open that are doing great, but I'm wondering if anyone bought calls? I thought about it yesterday, was mainly going to just buy some more LEAPs if we went close to $850.

I converted my IRA shares into a bit more DITMs LEAPs (similar total delta exposure) and will be using the relatively decent chunk of cash left over to sell BPS now that my IRA is in an account that allows spreads.

Will also sell ~20% OTM weekly calls against the LEAPs which should at least pay off the marginal time cost I paid for em since again I'm finally in an IRA that allows selling calls against other calls.

 

[Cobos]

You could also consider selling LEAP PUTs, especially ATM or ITM leaps.
For example: I recently sold Jan 2023 $1200 PUTs at slightly over $400.

That is approximately 30% return on locked margin (40k/120k) if share price goes over $1200 in the year or 16% return (20k/120k) if SP is still $1000 in a year.

It would take 2023 SP dropping to $800 to start loosing money, should it happen, I would try to lock in this price by buying calls - similarly to you I do not want to change cost basis of shares in that account. Also keep in mind that with current inflation $800 in 2023 is like $750 today.

I do not know Norway tax code but it may also give you better tax treatment, since actual gain is not realized until LEAP expires.

Neither do I, so I need to educate myself both on puts and their tax consequences before I start making big tax plunders. But it seems lots of people prefer selling puts instead of covered calls.

 

[Cobos]

What you could do is mix it up a bit - with 500 shares you can write 5 covered calls, so sell 4 of them 20% out, but one 5% out, dare it to exercise, then play the Wheel with that. Not much ventured, but you'll pick it up quickly enough

Yeah that was kind of the idea but I need to understand what the Wheel actually IS before I can use it. I know what a wheel is but I'm guessing it's not the round thing I have 4 of on my Tesla?

And Norwegian tax law is usually pretty straightforward, but I need to be sure I'm not doing something really stupid there. I get the feeling many of these concepts and systems are made for the US tax code while it might be very different for me in Norway.

 

[st_lopes]

newbie question... does anyone know why there is a need for the SP to eventually visit that range untouched by market hours? is that a technical analysis thing? we were already at those prices during Hertz.

knowing the reason adds to risk assessment (ie never open future BPS higher than -p935 unless SP touched 940 first)

View attachment 746987

TIA!

Algo traders are often built around TA and the general consensus on TA is that gaps get filled. Not a matter of if, but a matter of when. See our last gap fill back to 910 as an example. Note there still is a gap at 843-851 (both on daily and weekly charts), though the longer we consolidate above that price, the less probabilistic it is that we will fill it, especially with more of the MAs now above that price.

It's also generally a healthier, sustainable rally when there aren't gaps in the rear view mirror. One reason that many TA analysts would say we are due for a 10-15% correction on indices, because there are a number of gaps sitting un-closed on SPY and QQQ.

This particularly holds true where price action is relatively close to that gap. Algos will pile on to the price action to push to that fill and then close positions once filled. Another reason why gap fills are self-fulfilling resistance and support levels.

Even on Tesla's massive 2020 run up, only one gap went un-filled, 246-253 around the end of June 2020.

 

[Yoona]

Your aggregation period is set to minutes ("MIN"), so that's the 50 minute average. 50 daily SMA is 1032.6.

THANKS!

 

[chiller]

Yeah that was kind of the idea but I need to understand what the Wheel actually IS before I can use it. I know what a wheel is but I'm guessing it's not the round thing I have 4 of on my Tesla?

And Norwegian tax law is usually pretty straightforward, but I need to be sure I'm not doing something really stupid there. I get the feeling many of these concepts and systems are made for the US tax code while it might be very different for me in Norway.

Unfortunately, the wheel will not work for you, as the main part is taking assignments of both calls and puts.
Taking assignment of one call option will trigger your taxes, so that is a no-go.

 

[Cobos]

Unfortunately, the wheel will not work for you, as the main part is taking assignments of both calls and puts.
Taking assignment of one call option will trigger your taxes, so that is a no-go.

There you go, I learn something every day. Yeah trying not to trigger big tax bills is usually a good idea.

 

[mickificki]

https://twitter.com/x/status/1473712710563028993