Artful Dodger
"Neko no me"
Lok, I already posted that just after 3:26 pm today (but edited it out because I didn't think folks could face the inevitable).
MA(50) already touched After-hrs, so no-harm no-foul now though, right?
Cheers!
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Lok, I already posted that just after 3:26 pm today (but edited it out because I didn't think folks could face the inevitable).
MA(50) already touched After-hrs, so no-harm no-foul now though, right?
Cheers!
Ummm....you must be new here. Option contracts trade in lots of 100 shares, so that would be more accurately shown as 8 x 850/1050. Best of luck with your trading and welcome to the forum.I sure hope so. I have a $1.2m payout next week if we can stay above 1100 next Friday. Won't be a total loss if I need to roll, but I'll still be disappointed.
800X 850/1050 and 200X 850/1100. (If I opened them now instead of the previous two days, they would have been worth $2.8m...)
/s
Unless I too am wrong, I think the math is right. Price out the same number of BPS at todays options table, comes out near $3m.
So I guess 6 years ago it didn't climb? lolI looked back 5 years. Nasdaq has always climbed in January. Hopefully this is short lived!
That’s the post I needed to read for a good night sleep.I looked back 5 years. Nasdaq has always climbed in January. Hopefully this is short lived!
With a bit of effort, you can discover the rolling options. Depending upon your trading platform, after hours, pretend to roll a BPS that is OTM, just ITM at STO or ITM at BTO. Then play with spread 50, 100, 200 and 300. You will discover your comfort level with rolling.
The real experience happens when you experience a huge drop such as last month with the Elon sale...
I actually don't know. I stopped looking after 5....
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The only problem with pretending, is that things change when the SP is moving against you. Part of the reason I got into trouble with BCS Hertz week is that I had looked at rolling $50 spreads when the SP wasn't shooting up, premiums were low, and I came to the conclusion that rolling was not a problem if the SP started threatening my short leg. Then the SP took off and started to threaten my short leg and all of a sudden the premiums were MUCH, MUCH higher, along with the losses, and everything I had "figured out before hand" no longer worked. That being said, with the SP dropping and Put premiums skyrocketing, now is a great time to look at options chains on rolling pretend BPS.
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Just a reminder, that even though I'm opening more contracts than most, my crystal ball is not better than anyone else's. None of us would have believed after the action on Monday that we would be at this SP today. We all post our trades so we can learn from each other. Those of us who have been burned a few times may not make as many "rookie" mistakes, but we still lose money when the market does the unexpected, so never blindly copy someone's trade thinking they know something you don't.... I'm currently trying to figure out if I roll any of my spreads to 1/28 for really nice credits, but lock in my strikes by doing so. The other option, of course, is strike improvement and giving up further gains this month. Or, waiting to see what happens with the SP since I'm good down to 950 and 975 on the 850/1050 and 850/1100 respectively. Part of my problem is I'm flying during part of the trading day tomorrow, so no computer.
I’ve got myself a new crystal ball that shows exactly the opposite of what is going to happen. At least I’ve learned to roll contracts after listening to what my crystal ball has suggested. It is always nice to share our trades and contemplate the rationality of this group compared to the irrationality of the market. This one hell of a rollercoaster ride sure makes us feel more alive. If tomorrow is another red day I am wondering if I should be rolling my 14/1 -p1115 or still wait till next week. I hope my -p990 7/1 are safe. My trigger to roll is if the SP breaches 1000. If we finish this week below 1000, I will give my name to participate in the next Squid Game.Just a reminder, that even though I'm opening more contracts than most, my crystal ball is not better than anyone else's. None of us would have believed after the action on Monday that we would be at this SP today. We all post our trades so we can learn from each other. Those of us who have been burned a few times may not make as many "rookie" mistakes, but we still lose money when the market does the unexpected, so never blindly copy someone's trade thinking they know something you don't.... I'm currently trying to figure out if I roll any of my spreads to 1/28 for really nice credits, but lock in my strikes by doing so. The other option, of course, is strike improvement and giving up further gains this month. Or, waiting to see what happens with the SP since I'm good down to 950 and 975 on the 850/1050 and 850/1100 respectively. Part of my problem is I'm flying during part of the trading day tomorrow, so no computer.
If it is a naked Put, you have nothing to worry about. Roll it out if it is significantly in the money next week to buy more time and avoid assignment. I have some naked 1200 Puts I've been rolling for credit for a month no problem. Spreads are what screw you....
Flehmenlips
Member
I want to know more. "Spreads are what screw you..." I know this has been discussed, but reminders are oh so helpful...
Flehmenlips
Member
This is a fantastic post. I wish I could upvote it many times. Let me recommend it for the "posts of notable merit in the 'Be the House' thread".Just a reminder, that even though I'm opening more contracts than most, my crystal ball is not better than anyone else's. None of us would have believed after the action on Monday that we would be at this SP today. We all post our trades so we can learn from each other. Those of us who have been burned a few times may not make as many "rookie" mistakes, but we still lose money when the market does the unexpected, so never blindly copy someone's trade thinking they know something you don't.... I'm currently trying to figure out if I roll any of my spreads to 1/28 for really nice credits, but lock in my strikes by doing so. The other option, of course, is strike improvement and giving up further gains this month. Or, waiting to see what happens with the SP since I'm good down to 950 and 975 on the 850/1050 and 850/1100 respectively. Part of my problem is I'm flying during part of the trading day tomorrow, so no computer.
Flehmenlips
Member
Shortly before close, I opened BPS 1/14 -900/+850. I just enjoy pain and suffering, also if TSLA actually drops below 900 before earnings this month I deserve the max loss and will never try to be clever like you guys ever again.
I guess we’re all in the same boat. Remember all my juicy gains on Monday which I was so thrilled about? Well I gave up a big chunk of them today when I had to roll all my positions out by a week. Easy come easy go I guess. Not feeling too bad about it, pretty certain I can continue to roll till the SP recovers.
Kept 10X of my 7Jan -1090/+990 BPS - of the remaining rolled out half for same strikes for 14Jan for credit and the remaining for strike improvement to -1050/+920. My CCs for this week triggered the BTC orders for 85% gain, which covers a tiny % of the losses on the BPS this week.
Oh well, hope the macros get better soon.
I think many others responded to your questions already, my strategy is similar to theirs. I am expecting the SP to recover over next few weeks, so I am mostly maintaining the strikes the same and rolling one week at a time for credit.
For more detailed discussion on strategies for rolling, search for @adiggs posts on this thread. They extensively discussed this a few months back, including when to roll BPS, the spread size etc. it is good information to get you more educated on the concepts. At the end of the day, you have to decide on your own comfort level on strategy, which often comes down to gut feelings!
And a good thing they are to get your head around. A good starting point with the put credit spreads is your own experience with naked puts. I started with naked puts and use that knowledge to organize my put spread approaches.
There are good reasons for wide and good reasons for narrow spreads. I do my figuring in terms of US retirement accounts as it simplifies thing (no margin).
I prefer wide spreads. The example you have - if you set up some different / pretend rolls you will discover that when the spread is 1/2 of the way ITM that the roll will be for $0 credit and no change in strike. (the bid/ask slippage will make the roll slightly negative). This is one of the observations that leads me to wide spreads - if my spread is $200 wide then I can go $100 ITM and still have a neutral roll.
You'll also discover that the spread reacts much the same as a naked put for some period once ITM - as best I can tell that's about 1/4th of the way ITM (or $50 on a $200 wide spread).
With those $150 wide spreads you mention you can get $75 ITM and still have a neutral roll and ~$37 ITM and still have a roll similar to a naked put.
The key to this - set up some experimental positions and see how they would work. Share price is $1088 tonight - pull up the option chain and see what a 930/1080 put spread can be rolled to from the 1/7 expiration to the 1/14 expiration. That should be a pretty decent roll for a $150 wide spread. Look and see what a 1000/1150 roll would look like. That's about $60 ITM and is pretty close to the midpoint. You might also setup a 1020 / 1170 roll where you're slightly past the midpoint. For these middle of the range rolls especially, also look at what happens with later expirations -- 1/21, Feb monthly. You'll find that the time value is pretty close to equal on each side and therefore, rolling for more time won't change the range of available rolls. You'll just get more time with the longer rolls - not access to better strike improvements (which you WILL still have available when you're not as deeply ITM).
While you're at it setup a disaster spread of 1100/1250 for this week and see what the roll to next week looks like. These different made up spreads are designed to get you a feel for what the rolls from these made up spreads to new positions would look like.
When to roll .... lwhen to roll ....
It's the big question that will regularly arise as positions will inevitably need to be managed and this is the first and primary method.
NOT-ADVICE
I do have some thoughts on this and I'm also still tinkering myself. I haven't found much in the way of hard and fast rules.
One of my early observations (about a year ago) is that everything else being equal rolling when the time to expiration is as short as possible (and more specifically when the time value is as close to $0 as possible) makes for the very best rolls. Until of course it doesn't
But everything else being equal waiting to roll at low time value / near expiration is better than much earlier; say Thursday instead of Monday of expiration week. The reason is that when you roll you will be buying out the time value in the current position and the more of that there is, the more that the new position needs to be paying for.
Thus the idea of Roll Thursday - don't wait until the last moment to roll (avoid early assignment on the day of expiration) and more broadly, roll those deeply ITM positions before the time value nears 0. But also avoid rolling on Monday of expiration week - there is probably still a lot of time value at that point, even when the position gets touched.
But the conflicting circumstance is that the position doesn't just go slightly ITM where a good to great roll is still available. Instead it just keeps getting deeper and deeper ITM until there aren't any good rolls remaining. But hey - at least the time value is mostly gone now!@! This is what happened to me at the beginning of the year when I didn't roll some puts down aggressively enough. I got stuck in the high 700s when the shares were down in the 500s and low 600s for about 5 months waiting for the shares to recover.
Because I was waiting for low time value to do my rolls, and one of those weeks we went from $800 to $700 or so and there wasn't a good roll for a 760 strike put at that point. But there had been earlier in that week when I decided to wait and let a bit more of the time value decay.
Put spreads don't have that same freedom of the perma-roll as naked and cash secured puts.
With my income orientation I like the wide spreads to give myself room to manage them in. I also use wide spreads to keep my contract count down. Given $100k worth of cash I'll sell 5 of those $200 wide spreads to stop myself from selling 20 of the $50 wide spreads. They both have the same max loss - its just that the $50 wide spread can achieve that max loss way, way quicker than the $200 wide spread can.
Considering this is week 1 of 52, and this trade doubles my normal monthly working income, I'm pretty happy to be exhibiting that much self-control
Whelp....just as I place a pretty conservative BPS, the market takes a collective dump (thanks Powell) and now the self-control is looking aggressive.
My 1/14 -990/+790 BPS is looking poorly...however with more than a week to go, and rolling options down to a SP of around 900, I'm not too worried. Yet.
Will be interesting to see if the MMs manage to protect their interests down through the 1100/1080/1050/1000 put walls , or if again, like when Elon was selling, they give up.
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