Wiki Selling TSLA Options - Be the House

[FS_FRA]

IMO the only thing that is going to drive a rally towards 1400 around ER is the announcement of actual production in either Berlin or Austin at the ER by Elon himself.

Ready to eat these words too, and I'm not opening a CC position either...

 

[euro2012]

Like others have said, my biggest losing positions have been with covered calls and bear call spreads. Makes me a little nervous entering either of these ahead of what we know will be a good earnings report…

 

[juanmedina]

I closed most of my BPS this morning for 90-85% profit they were all under the $900 strike because I am actually trying to stick the at least 20% OTM regiment lol. I also sold a few 1205cc for Friday for $2.5 I wish I had sold more.

 

[ReddyLeaf]

The 1/28 call option premiums seem quite inflated due to the coming earnings report.

Just sold some 1400cc's @1.77 (!). I really don't think this price can be hit by next friday. And if it does, they can take my shares at that price for all I care.

Fun fact, the $1400 strike price is 32% OTM and 12% beyond ATH. IV crush here we come.

EDIT: sold 1/28 1450cc's as well @1.15.

This covers all my shares and leaps, which I rarely do, but I really don't see us getting to $1450 in 9 trading days.

Takes guts to play this ER. Well played. Looking at IV, MaxPain shows ~67% ATM 1/21, ~75% 1/28, ~72% 2/4, then returning to near the 67% baseline after that. So for those with strong convictions, selling FOTM CCs is a good bet. I’ve watched your past trades and been impressed with everything. I might do something similar, but I missed the morning peak. I’m well ahead of my monthly goal and my 1/28 puts are still in play, so no need to do anything. I’m still waiting for sub-1000s to buy with my cash. If that doesn’t happen, oh well.

 

[TheTalkingMule]

Well what are you waiting for? Buy 1/28 1400 calls this instant! /s

I think "very possible" is quite strong wording. I'll go with $1400 is not impossible, but extremely unlikely. Thing is, most ER's where TSLA rallies afterwards, the rally only gets going some trading days after, in this case the week of the 2/4 expiration date.

My reasoning is/was: for $1400 to be hit by 1/28:
- the ER must result in a SP rally;
- the rally must happen withing TWO days;
- the rally must be among the highest ever.

Very unlikely all those boxes are ticked IMO. But you are right I might eat those words later. Keep me accountable!

Sorry I didn't mean 1/28 per se, just in this window of a couple trading weeks beyond earnings. I don't feel the algos will be able to handle al the new price targets, the earnings beats, AND the growth. IMO we get a momentary irrational squeeze at some point before the end of Feb.

$1400 by 1/28 would require a complete macro reversal back to tech/growth starting tomorrow and mega-FOMO this week. I don't see either of those happening. It's probably a huge victory for MM's to keep us under $1200 for the duration, so that's the game of chicken we'll be playing.

 

[jeewee3000]

Sorry I didn't mean 1/28 per se, just in this window of a couple trading weeks beyond earnings. I don't feel the algos will be able to handle al the new price targets, the earnings beats, AND the growth. IMO we get a momentary irrational squeeze at some point before the end of Feb.

$1400 by 1/28 would require a complete macro reversal back to tech/growth starting tomorrow and mega-FOMO this week. I don't see either of those happening. It's probably a huge victory for MM's to keep us under $1200 for the duration, so that's the game of chicken we'll be playing.

Now we're on the same page. I too think the stock is poised for a breakout sometime after earnings. Barring truly rubbish macros, it seems unlikely Tesla can be held below 1200 before March 1st.

If Omicron fears were to dissipate by then, the sky is the limit. (Remember: even weeks of macro doom and gloom like we are seeing now can be undone in mere days. When it happens, get out of the way )

 

[jeewee3000]

Takes guts to play this ER. Well played.

Let's save comments like this for January 28th . But thanks, I'm flattered.

 

[generalenthu]

Both the threads here are pretty slow today, so I am cross posting a bit of analysis from the other thread here, as there is more skin in the game with respect to short term moves here. This relates to the large opex this friday, which manifests itself as low max pain or lot of expiring deltas.

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

Thoughts on Jan-21-2022 DITM calls? Haven't managed to catch up on all the wonderful posts on this thread lately. Someone might've posted on this already, but couldn't find anything at least by searching for "spotgamma". The subject likely was discussed, even if not in the context of spotgamma...

teslamotorsclub.com

Wanted to add a bit more info to the above, that the first trading day of the Opex week last january (read the linked post if missing context) was the weakest and the stock recovered rest of the week. TSLA also substantially under-performed the macros that day. This year's shorter week in contrast, we are starting with a strong performance out of the gate (relative to the macros), which should bode well for the rest of the week.

Also wanted to respond to a comment by @TheTalkingMule that the market makers running a large book unhedged, is hearsay. They might be slightly under hedged, given that's what the models lean towards, or hedge less frequently. But they are nevertheless mostly hedged. Also tagging @Criscmt who originally started the conversation on the main thread.

 

[Tes La Ferrari]

Please dust off your crystal balls.

Interested in some "not-advice" on some 900C Jan 1/ 2022 that I bought for $29 way back. Current price is $151.

EDIT: these are not held in a tax advantaged account.

Was debating taking assignment but it would mean moving some stuff around to avoid adding margin ( & unwanted tax consequences ); and that too at an interesting macro time in the market.

It's do able, because 1/2 of the $90K per call would be returned to margin / buying power upon taking assignment because I would have more chairs.

Wondering if you think there will "likely" be a better than $929 entry point in the near future, in which case selling & closing the calls would be a better way to go.

What would you do ? Thanks in advance to everyone for your "not advice"

 

[generalenthu]

Interested in some "not-advice" on some 900C Jan 1/ 2022 that I bought for $29 way back.

Was debating taking assignment but it would mean moving some stuff around to avoid adding margin at an interesting macro time in the market.

It's do able, because 1/2 of the $90K per call would be returned to margin / buying power upon taking assignment because I would have more chairs.

Wondering if there will possibly be a better than $929 entry point in the near future, in which selling would be a better way to go.

What would you do ? Thanks in advance to everyone for your "not advice"

I believe the implications of the P&D report are yet to be reflected in the stock, and that should become apparent after earnings. A lot of folks tracking the earnings in detail are obviously very bullish.

If I were in your shoes, If its a tax advantaged account roll it to a different expiry or if you want your liquidity / protection, rent it for another week or 3 by taking delivery and buying OTM puts and perhaps financing it with covered calls.

Its a slight contra-view to what this thread prefers, but that's my not advice.

 

[UltradoomY]

Please dust off your crystal balls.

Interested in some "not-advice" on some 900C Jan 1/ 2022 that I bought for $29 way back.

Was debating taking assignment but it would mean moving some stuff around to avoid adding margin ( & unwanted tax consequences ); and that too at an interesting macro time in the market.

It's do able, because 1/2 of the $90K per call would be returned to margin / buying power upon taking assignment because I would have more chairs.

Wondering if you think there will "likely" be a better than $929 entry point in the near future, in which case selling & closing the calls would be a better way to go.

What would you do ? Thanks in advance to everyone for your "not advice"

Depends on what your risk profile and thoughts about TSLA are over the next 24 months?
Also we need some more pics of your LaFerrari pls...

Conservative approach - exercise and have more chairs
Mid - exercise half / roll half to January 23' and 24' $1500's
To the moon aggressive - Roll all of them to January 24' $1800's

 

[Knightshade]

Please dust off your crystal balls.

Interested in some "not-advice" on some 900C Jan 1/ 2022 that I bought for $29 way back. Current price is $151.

EDIT: these are not held in a tax advantaged account.

Was debating taking assignment but it would mean moving some stuff around to avoid adding margin ( & unwanted tax consequences ); and that too at an interesting macro time in the market.

It's do able, because 1/2 of the $90K per call would be returned to margin / buying power upon taking assignment because I would have more chairs.

Wondering if you think there will "likely" be a better than $929 entry point in the near future, in which case selling & closing the calls would be a better way to go.

What would you do ? Thanks in advance to everyone for your "not advice"

So I don't know how Canadian taxation works on this.... in the US if you exercise there's no tax consequences, whereas if you sold the options you'd owe cap gains taxes on the profit (long term or short term rate depending if you held them a year or not)

Thus in a taxable account in the US, assuming you WANT to hold more shares, exercise makes a lot of sense since you'd owe nothing in taxes on that until you sell the shares someday in the future (your cost basis just gets adjusted to 929)

Whereas in a NON taxable account you'd likely be better selling them and buying shares since you'd still get a TINY bit of time value left (again assuming more shares is your goal).


So THAT not helpful bit out of the way- I'm no master predictor or anything- but I think it's unlikely you get to buy cheaper than $929 anytime soon. Maybe not ever. VERY likely not significantly cheaper if at all. NOT financial advice.

 

[Spreadman]

Just opened 1/28 870/820 BPS for 4.10 on this end of day dip. Even with bad macros we’ll should easily stay above that level after ER.

 

[Tes La Ferrari]

I believe the implications of the P&D report are yet to be reflected in the stock, and that should become apparent after earnings. A lot of folks tracking the earnings in detail are obviously very bullish.

If I were in your shoes, If its a tax advantaged account roll it to a different expiry or if you want your liquidity / protection, rent it for another week or 3 by taking delivery and buying OTM puts and perhaps financing it with covered calls.

Its a slight contra-view to what this thread prefers, but that's my not advice.

I too view the P&D to be bullish.

I forgot to mention (just edited now to reflect) that these are not held in a tax advantaged account. Are you suggesting going the put route even in a taxable account ?

The assignment and then selling covered call idea was one I was considering too. What sort of dates and strikes do you like, @generalenthu ?

 

[TheTalkingMule]

I'm fairly extended already, but 1/21 BPS $1000/$900 is looking mighty juicy at ~$17. Great open for all you folks with cash/margin. Enjoy!

Grabbed one of deez at $14 just now. Couldn't resist.

 

[Tes La Ferrari]

Depends on what your risk profile and thoughts about TSLA are over the next 24 months?
Also we need some more pics of your LaFerrari pls...

Conservative approach - exercise and have more chairs
Mid - exercise half / roll half to January 23' and 24' $1500's
To the moon aggressive - Roll all of them to January 24' $1800's

I am definitely bullish on TSLA, and remain so.

If we get a nice spike before exercise date , I may roll them, otherwise leaning to exercising and possibly CC's for now.

The La Ferrari in my avatar pic is not mine. I love and own exotics, but not the one in my avatar. As a funny side note, many friends of mine that own exotics have become Tesla owners after hearing me ; a fellow car guy / gear head talk about them, and disspelling the FUD. Though they still own the exotics for fun weekend toys, they don't miss the 5 figure clutch jobs, and repair bills.

 

[generalenthu]

I too view the P&D to be bullish.

I forgot to mention (just edited now to reflect) that these are not held in a tax advantaged account. Are you suggesting going the put route even in a taxable account ?

The assignment and then selling covered call idea was one I was considering too. What sort of dates and strikes do you like.

i meant buying the put if not in a tax advantaged account, which is the case. If you think of 930 as breakeven, I'd probably sell calls right now for 1200/1250 or so for post earnings (1/28) and buy some puts after assignment next week or even get comfy with margin for a bit (*depends on your exposure / tolerance*). If you are willng to go farther out, you can probably look at 1400 for late feb, that still nets you decent premiums and benefits from IV compression. The flip side of the longer dated call sells is that if the stock gets legs after earnings, IV may go up along with price, leading to some gamma action to the upside, which you may be fine with.

 

[CHGolferJim]

• STO 012122C1075 at 3:40pm for $10.95 -- 45% drop during the day, dang it waited too long hoping for a Monday rebound/FOMO, looks like nothing much happening with SP this week.
• Above is in a $1073 buy-write which has returned 11% in 2 months, 53% annualized, excluding SP change.
• Not doing anything this week against core shares, unless temptation strikes tomorrow (I do have a 10-day trip to FL coming up).

 

[Tes La Ferrari]

So I don't know how Canadian taxation works on this.... in the US if you exercise there's no tax consequences, whereas if you sold the options you'd owe cap gains taxes on the profit (long term or short term rate depending if you held them a year or not)

Thus in a taxable account in the US, assuming you WANT to hold more shares, exercise makes a lot of sense since you'd owe nothing in taxes on that until you sell the shares someday in the future (your cost basis just gets adjusted to 929)

Whereas in a NON taxable account you'd likely be better selling them and buying shares since you'd still get a TINY bit of time value left (again assuming more shares is your goal).


So THAT not helpful bit out of the way- I'm no master predictor or anything- but I think it's unlikely you get to buy cheaper than $929 anytime soon. Maybe not ever. VERY likely not significantly cheaper if at all. NOT financial advice.

Thanks @Knightshade.

My understanding is that Canadian taxation works the same way, and I probably wouldn't sell them if I took assignment; (unless I decided to sell CC, and got assigned)

FWIW, I haven't sold a single share of TSLA since I started buying, and don't intend to assuming the company keeps innovating and executing like they have.

 

[ChefBoyardee]

Based on this chart, it appears that on Jan 24, TSLA is about to.. um.. explode?

I'll see myself out