Indeed. I mean, the OA is a very good primer in all things options trading, no doubt about it. But once you've done OA to understand the concept, you need to come here and understand the concept together with how TSLA moves.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
I use about 90% of cash for 7-14 DTE and look at 20% OTM and delta and Prob.OTM.
No stocks in acct so margin isn't an issue. So far, so good. Very very very tempted to roll into 1000 or 950. Still hesitating. What if there is another "rotation from tech sector" the next 8 days? Or one of those predictable "futures are down due to Omicron" every. single. Monday. right. on. cue.
The remaining cash is for quick 1-3 DTE daytrading plays.
I will go back to 14-21 DTE again after 1/28. This is my comfort zone when we are not near the quarterlies and where i get the big bucks.
I am thinking STO 1/28 -p1000/+p800 would be a good idea at today's dip for IV profiteering. But delta 22 so i am still hesitating.
As long as the SP reverses, you can roll and eventually catch up. The problem occurs when your strikes are so far OTM that the options follow the stock, with no premium value for time. For example, if badly timed, one could have sold an ATM Jan 7th 1200p on 1/3 for around $30, which subsequently became ITM by $174 on that Friday. Oops, that’s a pretty big problem, so requiring a roll to 1/14. But that put is still now $95, better because of the SP rise, but still not expiring worthless. Ok, so roll again to 1165p on 1/28 for little debit/credit. See the problem, still ITM, and rolling out 2-3 weeks didn’t solve the problem, and the SP must still return to “near” the original sale price (ok 1165 is “near” 1200) to close out the trade for a profit. If the SP doesn’t reverse enough, the trade becomes an albatross, which ties up capital for weeks or months without producing premiums. As long as the SP goes up, eventually rolled puts expire worthless. Unfortunately, that’s not necessarily the case with covered calls. If the SP rises faster than $10-20/wk (this is TSLA after all), the CCs fall farther and farther behind. I lost shares via CC during the Hertz price rise (didn’t have enough cash to buyback-roll in my IRAs) and I’m now selling puts trying to get them back at a comparable cost basis. It takes quite a long time to get back a $300 loss at $10-$30/wk.
Well stated. I lost a bundle last fall trying to rescue covered calls, I think largely due to two factors: 1) in too much of a hurry to convert to 50/50 shares and LEAPs where I had to uncover the shares in order to sell, and 2) so optimistic about appreciation with all the coming catalysts that I wasn’t patient enough to just keep rolling and wait for a dip. An expensive lesson that I hope the new approach will avoid.
jeewee3000
Active Member
Have you stopped selling ICs? Straight puts and calls only now? (For the non day trades)
TheTalkingMule
Distributed Energy Enthusiast
All this talk of "targeting" return rates worries me. By definition you're setting yourself up to be steamrolled when the outcome is somehow informing your decision making.
IMO the whole advantage we have here is our knowledge of Tesla and TSLA being far beyond nearly all analysts/hedgies. That's what dictates my return.
Logically wouldn't you trade in the range generally described as "safe" and then wait for opportune moments to trade in a more aggressive style that brings you 2-30% returns? That should be the sweet spot. Just like in poker, you MUST change gears strategically to beat be best players out there. Otherwise they'll use your rigidity and their resource advantage to wear you down over time.
I've sold nearly ITM BPS 7-14 DTE recently and felt perfectly safe because I "knew" these SP manipulations couldn't last in this 4Q earnings window. I've pocketed 15-30% premiums on $100-wide BPS because it's the right thing to do in this window. After we run up a bit, I'll probably just go back to netting 1% per week in "safe" mode.
Your goal should be to never have to do anything.
IMO the whole advantage we have here is our knowledge of Tesla and TSLA being far beyond nearly all analysts/hedgies. That's what dictates my return.
Logically wouldn't you trade in the range generally described as "safe" and then wait for opportune moments to trade in a more aggressive style that brings you 2-30% returns? That should be the sweet spot. Just like in poker, you MUST change gears strategically to beat be best players out there. Otherwise they'll use your rigidity and their resource advantage to wear you down over time.
I've sold nearly ITM BPS 7-14 DTE recently and felt perfectly safe because I "knew" these SP manipulations couldn't last in this 4Q earnings window. I've pocketed 15-30% premiums on $100-wide BPS because it's the right thing to do in this window. After we run up a bit, I'll probably just go back to netting 1% per week in "safe" mode.
Your goal should be to never have to do anything.
scubastevo80
Member
For takeaway #3: How does everyone determine high win rates? High probability of profit (e.g. >90%) or are there some other combination of metrics one looks at? Still trying to figure out how to more methodically enter opportunistic trades that have higher probabilities of success that aren't based on my own personal view of what I believe will happen (i.e. the stock creeps higher through earnings, but volatility remains throughout the rest of the year given macro impact on the stock).
jeewee3000
Active Member
Except buy OTM lotto calls
.All jokes aside, I agree with this and have stated so above. "Targeting" should be interpreted very loosely.
Targets and targeting........
I am not in a unique situation but I do have needs now and not wants.
My wife retired last year in October after 20 years as a Nurse Practitioner here in Florida (I don't care if people know who I am on the internet!) and we are in our 40's.
Because she was a high earner for much of that we were able to save and invest in other companies and own a couple of businesses. We ran the numbers a million times and felt comfortable with it...... but I find myself wanting and making myself feel like I need to replace her income - so there is no draw down of investments - especially with twin 2 year olds....
And because of that, I find myself targeting making her salary every week/month/etc.
But what has been really crazy is that even being cautious and sometimes on the wrong side of a trade, I am making way more than both her and my income from options - and that is also with being out of the market (no options / just shares and leaps) for sometimes multiple weeks in a row if I don't feel confident.
These things are counter balanced in my head, and maybe that's a little of the personal chaos I like to have and the drive needed to sell options, maybe not.
But another thing that really really really helps is that I LOVE doing this. It is so complex, so much fun math, reading, and most fun of all is driving my Tesla's!
Patience is the key - pick a trade or position that has a high success rate, pick safe plays with your money and gambling plays with the house money.
Do nothing if you don't see anything great.
I don't know why I feel like typing out a message that is very similar to so many that everyone else posts. I guess it's to make sure that we are a community, we keep learning from each other but also reinforcing the same points of being cautious, and starting small.
I am not in a unique situation but I do have needs now and not wants.
My wife retired last year in October after 20 years as a Nurse Practitioner here in Florida (I don't care if people know who I am on the internet!) and we are in our 40's.
Because she was a high earner for much of that we were able to save and invest in other companies and own a couple of businesses. We ran the numbers a million times and felt comfortable with it...... but I find myself wanting and making myself feel like I need to replace her income - so there is no draw down of investments - especially with twin 2 year olds....
And because of that, I find myself targeting making her salary every week/month/etc.
But what has been really crazy is that even being cautious and sometimes on the wrong side of a trade, I am making way more than both her and my income from options - and that is also with being out of the market (no options / just shares and leaps) for sometimes multiple weeks in a row if I don't feel confident.
These things are counter balanced in my head, and maybe that's a little of the personal chaos I like to have and the drive needed to sell options, maybe not.
But another thing that really really really helps is that I LOVE doing this. It is so complex, so much fun math, reading, and most fun of all is driving my Tesla's!
Patience is the key - pick a trade or position that has a high success rate, pick safe plays with your money and gambling plays with the house money.
Do nothing if you don't see anything great.
I don't know why I feel like typing out a message that is very similar to so many that everyone else posts. I guess it's to make sure that we are a community, we keep learning from each other but also reinforcing the same points of being cautious, and starting small.
I believe earnings on the 26th will be fantastic and should cause a further bump. But I am a little worried about the fact they are giving a production update on Cyber, Semi, and Roadster. If those are delayed, we could see a FUD induced drop (short seller attack) in the SP rather than a climb, especially the first two days after earnings before everyone does the math and understands what earnings will look like for the rest of the year even without those products. I may close out my BPS on the 26th and give up the IV burn that usually comes the next day.... Thoughts?
Those have already been identified as delayed by Elon/ Tesla and that all new products are gated on cells/ semiconductors. Cybertruck was bumped to the end of this year already, hard to bump it out further at this time.
It doesn't seem like current earning projections rely on new product launch. Timing of Ys from Brandenburg and Austin would be more impactful, but even those are being under-promised as ramping is hard.
That said, the market can react contrary to the earning news, so ... *shrugg*
BTO 1/14 1100 Put @13.93 with BTC at 50% profit, I can't imagine the MM will keep SP > 1100 all day?
I will be looking to sell some ATM strangles - Puts ATM and CC's about 15% out and close right after for the IV crush that comes with a binary event.
This is an earning play though so using maybe 3% of portfolio ish... depending on how the pricing looks.
scubastevo80
Member
We want to be out of core positions (BPS/BCS) for the announcement, but will be trading as if there's a move higher up to that date. Perhaps a small opportunistic trade depending on what things look like on the 25/26th, but I don't want to be caught holding slightly OTM BPS if we get a short attack. If we do get a short attack, BPS to the rescue the following day, or perhaps some LEAP spreads if we go low enough.
For most of my sources I leverage for news/viewpoints, I think patience will be key this year. There will be 10-20% corrections and those times will be critical to deploy cash for outsized returns. Just my 1.5cents.
jeewee3000
Active Member
IMO the Q4 update letter or at least the conference call will discuss Austin and Berlin starting production/deliveries, which can cause a bump.
Also, most ER's don't cause volatile stock movements that same week. Many times the stock is rangebound quite heavily and only goes berserk the week after.
Not advice, each ER can go both ways. This ER I'm feeling cautiously optimistic. I won't buy calls though.
Yep, the "update" might be a "bummer" and we'll need to wait longer for the future which could impact the stock negatively.
I have no open positions for that week currently.
I'm hoping for positive news surrounding Semi and 4680s at a minimum and anything else positive would be gravy.
I have open 2/18 BPSs 950/700 which are at 70% profit, I'll let those go until 2/17.
And bought $1000 strike calls for 2/18 as well. They are sitting at 45% currently, but will be watching those are we close in on earnings.
jeewee3000
Active Member
Due to circumstances I'm holding (among other things):
1/14 -1120c
1/14 -1080p/+990p
Quite a small gap I want the SP to be by tomorrow afternoon and it's behaving perfectly for now. It's been a long time since I've been this close to the money this close to expiration. Fun fact: no stress whatsoever regarding the position. My risk muscle has strengthened greatly the last couple of months.
1/14 -1120c
1/14 -1080p/+990p
Quite a small gap I want the SP to be by tomorrow afternoon and it's behaving perfectly for now. It's been a long time since I've been this close to the money this close to expiration. Fun fact: no stress whatsoever regarding the position. My risk muscle has strengthened greatly the last couple of months.
All this got me thinking about work and goals.. I retired from my job because I could.
Now, if I would set a monthly goal to be the same as my salary was when I was working.. I would need about.. 0.5%/month. So that's what, 0.15%/week?
Just a thought..
Now, if I would set a monthly goal to be the same as my salary was when I was working.. I would need about.. 0.5%/month. So that's what, 0.15%/week?
Just a thought..
cash acct - no BCS until Feb
retirement accts (only CC allowed here) - CC 1/21 1300
bkp_duke
Well-Known Member
Similar thoughts. I've tried to position for a run-up pre-earnings, but am looking to probably close out 1/2 the position or more on or before the 26th, assuming there is a run up.
Not advice, of course.
I have 5x Jan21 1200/1300bcs which I don't lose sleep over, but the truth is that I expect the SP to go up towards the Q4 results. They're nearing break-even now with the recent drop in SP, so I am thinking about taking a tiny profit and exiting that position.
I have also Jan21 1050/980p, Jan21 1100/980p and Jan28 1000/930's which I feel comfortable about. For now.
I have also Jan21 1050/980p, Jan21 1100/980p and Jan28 1000/930's which I feel comfortable about. For now.
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