Wiki Selling TSLA Options - Be the House

[FS_FRA]

Right, but the only way to make more money on a new position is to chase the SP since I don't want to go farther than 1/7 just yet. It will all come down to delivery numbers released over the weekend. My mom's IRA is supposed to be my no-gamble zone....

Hence take the 95% and then reassess your next step.

 

[adiggs]

Kicked my 12/31 1100 strike calls out to Jan 7 and 1150 strike this morning and minimal credit.

As my goal is to roll these up to 1200 (if needed) and take assignment on these somewhere at that level or above I was pretty quick on the trigger when we broke 1100.


I'm waiting for a few more pennies for the 750/950 strike puts to close them out. I really shouldn't - just go ahead and close them for .80 instead of .75 or whatever but I don't see a good new position I want to be in today, so get those last couple of pennies and be looking for Jan 7's tomorrow or Wed.

 

[M3Rider]

1/7 $1.3M layered BPS 21 DTE... $1M already realized after 10 days, plus 300k additional theta the next 11 days; $2.6M bet gains 50% in 3 weeks if brought to expiration
this is a "come and get me, boys" trade; trick is not to open a position for the current week coz prem is too low

how did i do it? open 14-21 DTE and close early, then repeat every week; this is to take advantage of higher prems on later weeks

week 1 - STO BPS #1 14-21 DTE
week 2 - STO BPS #2 14-21 DTE
week 3 - BTC BPS #1, STO BPS #3 14-21 DTE
week 4 - BTC BPS #2, STO BPS #4 14-21 DTE
week 5 - BTC BPS #3, STO BPS #5 14-21 DTE
etc

if SP goes south and i am DITM, who cares? profit is too big so i can spend some of it to ride out the storm (even if roll here and there is a debit)

i also add 30-40% DOTM BCS weekly for gravy

not for the faint-hearted and not advice!!! i am normally 20% OTM but sometimes have a "dare" trade

in other news... i am thinking STO 1/14 -p900/+p800 at tomorrow's 10:30am dip

It seems to me like maybe the trick is you opened this when sp was <1000, i.e. bps was ITM to start with and that’s why such high premiums?

How would you manage this if 461 puts were assigned to you, you know, just on the low chance that the assignment can happen before the expiration?

Probably would be out of you control at that point, the broker would start liquidating anything they wanted.

Still trying to figure this out… I guess if SP keeps going up, broker just immediately sells these shares. Maybe assigned 1000, sold at say, 980, then broker sells slightly devalued short leg, probably some small loss…
If SP keeps going down, then it’s max loss in the worst case.

I don’t understand what would happen for sure, so would prob avoid it.

Maybe you can calculate this based on the SP at the time and tell us

Assume that you get assigned immediately after selling and then sp moves $50 to one side or the other before broker reacts and starts closing your positions.

 

[st_lopes]

Closed 880/830 BPS at 95% on one of the upswings this morning.

TSLA's price action has seemingly stalled relative to macros. SPY and QQQ are both at session highs, whereas TSLA has pulled back from its intraday high. 1120 is a key resistance trendline and has yet to be tested. With that in mind, I am still holding on to:

• 1130 cc and lcc --> I don't plan to manage these unless we break and close above 1120. Then I will be looking at weekly rolls, which right now can get me to 1190 for a small credit.
• 1150/1200 BCS --> same as above, will look to manage these if we break and close above 1120. Plan on these will be to split flip roll. Right now I can convert the 1150/1200 BCS to 1000/1050 1240/1290 IC for a small credit. Half the margin, half the max loss, 50% of rolled premium guaranteed.
• 1250/1300 BCS --> not worried about these

I'm not going to chase intra-week premium by adding any new BPS. Did that 3x last week and made my share of gains (3x my weekly realized premium target).

 

[OrthoSurg]

Right, but the only way to make more money on a new position is to chase the SP since I don't want to go farther than 1/7 just yet. It will all come down to delivery numbers released over the weekend. My mom's IRA is supposed to be my no-gamble zone....

I just closed my 10x p895 I opened Thursday for a 90% profit. If I want the same premium I would have to sell in the p1050 option chain. I am still trying to decide if I am comfortable with that idea. I almost opened one this morning but finally resigned to wait for a dip, if there would ever be an intraday or intraweek dip one on the way to the Q4.

 

[ABC2D]

Most of you in this thread are much MUCH more experienced, knowledgeable, and simply braver than me but I just cant find a good entry since Thursday for BPS (just wont do calls at this stage). I hesitated and missed Friday MMD after which stock run away. I also missed today MMD, but appears price is stabilizing and I just might find an entry door

I think this might be the entry point opening up

 

[scubastevo80]

#donefortheyear ...maybe. We closed all 3 of our BPS this morning which were up over 70%. As it sits now, we've made just over $9k (on ~$31k cash) since trading began 11/1 (~27% return in two months) and hold 5 TSLA shares at a cost basis of ~$905. Extremely happy with the result, learned quite a bit including the correlation between premium/strike and personal anxiety, and will likely take the last few days of the year to plan for 2022. Still thinking about trading some weekly premium for more shares/LEAPs, but need to model different setups through 2022.

Happy holidays everyone - wishing you all health and TSLA related prosperity now and into the new year!

As I stare at my own post above, I'm on the phone with my parents wishing them a belated merry xmas and informing them of a royal screw up due to greed. After the post above, I decided to write BCS 1100/1200 (10% from the then current px) to further juice returns and then proceeded to watch all this last week's gains and then some run out the door before closing them this morning. The BCS risk was taken on a belief that we'd trade sideways through year end. We have some additional BPS on right now, but will likely close the year up only $5k. The question "should we shut it down" came up. We settled on revisiting that at the end of January given we'll close in the green up about 13%

Lesson #1 - if trades are made outside typical tolerances (20% OTM), close losers early.
Lesson #2 - don't repeat mistakes. Short of scrolling through past posts, we went for premium over safety and got burnt. We'd be happy to roll BPS downward if they approach the upper strike, but not to roll BCS given our directional view of the stock and what happened this past week (multiple consecutive days up 3-6%).

 

[mickificki]

As I stare at my own post above, I'm on the phone with my parents wishing them a belated merry xmas and informing them of a royal screw up due to greed. After the post above, I decided to write BCS 1100/1200 (10% from the then current px) to further juice returns and then proceeded to watch all this last week's gains and then some run out the door before closing them this morning. The BCS risk was taken on a belief that we'd trade sideways through year end. We have some additional BPS on right now, but will likely close the year up only $5k. The question "should we shut it down" came up. We settled on revisiting that at the end of January given we'll close in the green up about 13%

Lesson #1 - if trades are made outside typical tolerances (20% OTM), close losers early.
Lesson #2 - don't repeat mistakes. Short of scrolling through past posts, we went for premium over safety and got burnt. We'd be happy to roll BPS downward if they approach the upper strike, but not to roll BCS given our directional view of the stock and what happened this past week (multiple consecutive days up 3-6%).

Thanks for sharing, hopefully the next few weeks you can recoup the losses from the BCS. Glad you're still up though!

I went through the same thing the previous quarter, though with CC's....sold CC's as premiums were enticing just before the P&D. Got roasted, had to split and roll my CC's far into the future and used that premium to buy back whatever I could...thankfully Elon's tax tweet allowed me to buy back those far-into-the-future CC's.

What I learned: don't do CC's two weeks out from P&D, and two weeks out from earnings, unless you go WAY OTM. I don't think I'll ever do CC's for the next 3-4 years, it was so painful, I just can't stomach the thought of losing my shares.

Every day I keep reminding myself: slow and steady wins the race, slow and steady wins the race...the compounding effect of that "slow and steady" will build up much quicker than you realize.

 

[LightngMcQueen]

Since I have 3 different brockerage accounts associated with my HoldCo and MedCo, the issue is not liquidity but total margin power separated in 3 different account I am trying to transfer to IBKR but my accountant is not sure how to proceed to roll my holding from MedCo to HoldCo without declaring realized gain. He has been on the project for over 9 months. Enough for me to double my assets. In the meanwhile I am receiving automated Messages from IBKR informing me it has been 60 days since I have opened my account and no funds transferred yet.

Not an advice but you should be able to roll the assets to holdco without triggering capital gains. It is called Section 85 rollover, and it is widely discussed online.
Before doing it you might want to do some planning wrt to issuing shares to family members, as Second generation income from investments in HoldCo is not subject to TOSI and proper share structure may help to lower your family future tax burden. I highlighted in Italic the phrases which produce good google search results with more info.

There are other members here that can comment much better on Canadian Tax.

 

[st_lopes]

I feel IBKR is tighter for the margin management control.
At some point 2 weeks ago I had sold multiple put contracts 30% OTM with strike prices in the 700s when we were in the 900s. When the stock reached its lows my brokerage margin contracted and at some point it was showing a negative number in my margin available. At that point when I wanted to buy back some profitable covered calls it told me someone of the Brockerage team had to review my transaction. I was expecting an email or a call or whatever to correct that -250k negative purchasing power and was ready to move that money from my advisor account that I am trying to merge but never had any call and they did not liquidate any position.

Since I have 3 different brockerage accounts associated with my HoldCo and MedCo, the issue is not liquidity but total margin power separated in 3 different account I am trying to transfer to IBKR but my accountant is not sure how to proceed to roll my holding from MedCo to HoldCo without declaring realized gain. He has been on the project for over 9 months. Enough for me to double my assets. In the meanwhile I am receiving automated Messages from IBKR informing me it has been 60 days since I have opened my account and no funds transferred yet.

Not an advice but you should be able to roll the assets to holdco without triggering capital gains. It is called Section 85 rollover, and it is widely discussed online.
Before doing it you might want to do some planning wrt to issuing shares to family members, as Second generation income from investments in HoldCo is not subject to TOSI and proper share structure may help to lower your family future tax burden. I highlighted in Italic the phrases which produce good google search results with more info.

There are other members here that can comment much better on Canadian Tax.

Assuming both of your corps are Canadian incorporated, a section 85 rollover or section 51 rollover could easily shift those assets between entities. Where things get complicated is if your HoldCo was structured as a non-CCPC. In that case those rollover provisions may not be available and you may not have many (if any) tax efficient ways to get assets moved between those two corps (assuming the OpCo assets have unrealized gains).

What I often see is where OpCo/MedCo generates income, it immediately loans any after tax income to HoldCo. That concentrates investments in HoldCo, maximizes available margin, and you can then look at tax efficient distribution of second generation income from HoldCo.

You also need to be careful if HoldCo has multiple shareholders. Shifting assets from OpCo to HoldCo may result in shareholder benefit rules and deemed taxable dividends to various shareholders if they’re not structured properly. In short, definitely seek out qualified advice.

I wholly recommend that any Canadians with >10M in net worth (even starting at 5M) seek out specialized estate planning services from a Family Office or from a firm like Targeted Solutions. At the very least to help protect from US Estate Tax, which is NASTY.

I’ll take rest of discussion to PMs.

 

[Clueless0_0]

First time posting in this thread, been reading all of your wisdom and experiences. Thanks for all the knowledge you have shared. Figured it was time I provide my options story for others to read.

Sold 12/10 1140P cash covered put for $63 on 12/1 when stock was on it's way down, already in the money thinking it would rebound as it's the only way to get this high of premium, and seem to work for some experienced options traders here.
Well... clueless as I am, it proceed to $900s in the next couple of weeks, I rolled twice during the down trend, each with some premium with the roll, ended at 12/31 1150P. I had confident the stock will be above $1150, just not sure when....
Then came a huge upswing on 12/22 early morning, from that large uptrend momentum, I was able to roll to 1/28/2022 1115P for equal value, that opportunity wasn't there anymore after the stock price stabilized later in the day.

Fast forward to today, where the stock price at $1093, with all the rolling, I am at about even with this trade if I were to buy it back. I'm confident it'll expire worthless on 1/28/2022, I lost a month of time, to get back even. However, it's a good lesson, and now I know what to do if I were ever stuck again. And thanks again for this forum, I saw a lot of you manage your positions to get back positive, and it helps me along the way!

 

[Flehmenlips]

For some reason I'm having a hard time wrapping my head around this one. I am wanting to sell a put at a price I am comfortable buying the stock, however, I don't have enough Option Buying Power to do a "Cash Covered Put", however I DO have enough stock buying power if I am assigned. So I did a vertical credit spread -1050p/+940p 12/31 for about $900 credit. I see that my max loss is about $10k, which is also the amount that my option buying power is decreased by. If I am happy to be assigned at $1050, is this a reasonable way to short sell into a stock position using a much lower 'option buying power' amount? Why would anyone do a full "cash covered put" versus limiting the downside like this? I feel like I am missing something.

 

[Oil4AsphaultOnly]

For some reason I'm having a hard time wrapping my head around this one. I am wanting to sell a put at a price I am comfortable buying the stock, however, I don't have enough Option Buying Power to do a "Cash Covered Put", however I DO have enough stock buying power if I am assigned. So I did a vertical credit spread -1050p/+940p 12/31 for about $900 credit. I see that my max loss is about $10k, which is also the amount that my option buying power is decreased by. If I am happy to be assigned at $1050, is this a reasonable way to short sell into a stock position using a much lower 'option buying power' amount? Why would anyone do a full "cash covered put" versus limiting the downside like this? I feel like I am missing something.

Think about what happens if the stock drops down to $950 by 12/30 and there might be more downside the following week (because Elon announced he's quitting Tesla). Do you still want to buy TSLA at $1050? A cash-covered put can be rolled down for a credit, while the BPS can't be rolled for a credit.

Also remember, when you sell the put option, you've given someone else the right to exercise, so even if the stock ends at 1049, you might NOT get assigned the stock.

 

[MikeC]

For some reason I'm having a hard time wrapping my head around this one. I am wanting to sell a put at a price I am comfortable buying the stock, however, I don't have enough Option Buying Power to do a "Cash Covered Put", however I DO have enough stock buying power if I am assigned. So I did a vertical credit spread -1050p/+940p 12/31 for about $900 credit. I see that my max loss is about $10k, which is also the amount that my option buying power is decreased by. If I am happy to be assigned at $1050, is this a reasonable way to short sell into a stock position using a much lower 'option buying power' amount? Why would anyone do a full "cash covered put" versus limiting the downside like this? I feel like I am missing something.

If you’re happy to be assigned, then max loss isn’t really a concern - the worst downside is you get 100 shares at $1050. So why pay for the lower leg at all?

 

[Ogre]

First time posting in this thread, been reading all of your wisdom and experiences. Thanks for all the knowledge you have shared. Figured it was time I provide my options story for others to read.

Sold 12/10 1140P cash covered put for $63 on 12/1 when stock was on it's way down, already in the money thinking it would rebound as it's the only way to get this high of premium, and seem to work for some experienced options traders here.
Well... clueless as I am, it proceed to $900s in the next couple of weeks, I rolled twice during the down trend, each with some premium with the roll, ended at 12/31 1150P. I had confident the stock will be above $1150, just not sure when....
Then came a huge upswing on 12/22 early morning, from that large uptrend momentum, I was able to roll to 1/28/2022 1115P for equal value, that opportunity wasn't there anymore after the stock price stabilized later in the day.

Fast forward to today, where the stock price at $1093, with all the rolling, I am at about even with this trade if I were to buy it back. I'm confident it'll expire worthless on 1/28/2022, I lost a month of time, to get back even. However, it's a good lesson, and now I know what to do if I were ever stuck again. And thanks again for this forum, I saw a lot of you manage your positions to get back positive, and it helps me along the way!

I was in very nearly the same circumstance. Wound up just taking the stock and watching it drop a bit more and now I'm right about break even myself. Just going to let it ride until it taps the ATH again then start selling calls against it.

 

[Flehmenlips]

If you’re happy to be assigned, then max loss isn’t really a concern - the worst downside is you get 100 shares at $1050. So why pay for the lower leg at all?

Because it reduces the amount of option buying power I am required to have. And allows me to make other trades with my option buying power in the meantime.

 

[MikeC]

Because it reduces the amount of option buying power I am required to have.

I guess it's not clear to me why you have enough buying power to take assignment, but not sell the option in the first place. Are you sure that option selling requires option buying power? If so, I'd at least sell the lower leg as far away as possible to minimize the hit to the premium.

 

[Flehmenlips]

I guess it's not clear to me why you have enough buying power to take assignment, but not sell the option in the first place. Are you sure that option selling requires option buying power? If so, I'd at least sell the lower leg as far away as possible to minimize the hit to the premium.

Right. I wasn’t clear on that either, but it seems to have to do with my cash position which defines my option buying power, versus my stock buying power based on the value of my long shares or marginable value. As I understand it from TDA, yes the short put uses my option buying power. And yes, agreed to buy the lower leg as cheap as possible.

 

[Oil4AsphaultOnly]

Right. I wasn’t clear on that either, but it seems to have to do with my cash position which defines my option buying power, versus my stock buying power based on the value of my long shares or marginable value. As I understand it from TDA, yes the short put uses my option buying power. And yes, agreed to buy the lower leg as cheap as possible.

Just an FYI, since you have TDA as well, the option buying power is constantly re-calculated and is based off of BOTH your cash and equity (stock holdings) postions. As the stock price of your stocks drops, your option buying power also drops. If you sell enough put options, as they go ITM, your buying power could drop enough to put you into a margin call situation.

 

[Flehmenlips]

I guess it's not clear to me why you have enough buying power to take assignment, but not sell the option in the first place. Are you sure that option selling requires option buying power? If so, I'd at least sell the lower leg as far away as possible to minimize the hit to the premium.

Right. I wasn’t clear on that either, but it seems to have to do with my cash position which defines my option buying power, versus my stock buying power based on the value of my long shares or marginable value. As I understand it from TDA, yes the short put uses my option buying power. And yes, agreed to buy the lower leg as cheap as possible

Just an FYI, since you have TDA as well, the option buying power is constantly re-calculated and is based off of BOTH your cash and equity (stock holdings) postions. As the stock price of your stocks drops, your option buying power also drops. If you sell enough put options, as they go ITM, your buying power could drop enough to put you into a margin call situation.

Thank you for that clarification. Good to know. So the warning here is to not over-leverage on these positions. However, based on my original post, is this a reasonable way to sort of play the wheel? Particularly if you are approaching the limits of your cash position to carry a cash covered put?