Wiki Selling TSLA Options - Be the House

[vikings123]

Put premiums are the highest I have seen in a long time. It's so tempting to keep going back to the well to open more, but I am at 30% of my margin, which is my limit to carry over weekends. I guess these are the times that our self imposed trading rules are made for.

I have similar thoughts, this is so tempting lol. So many learnings this month, I still have a decent chance to end positive for the month but need some macro love next week.

Positions I have open:

21X Jan28 950/880 Average price 13.10 down 2X
10X Jan 28 940/800 Average price 14.10 down 3X
5X Feb 18 925 puts Average price 61

Have plenty of cash/margin available. I did sell 600 shares earlier this week(around 1040) mostly because these shares had a higher cost basis and I wanted to keep some cash handy in case there was peak fear. Also since I'm doing this as my primary income just wanted to reduce my risk.

Also bought 30X Feb 04 1200 calls @6.55 purely as a gamble, I like the risk reward.

 

[Tes La Ferrari]

Update on my Jan 21/ 22 900C dilemma ( taxable account), paid $29.

After reviewing everyone's helpful suggestions to my previous posts on these - though not 100% yet, but leaning to exercising these still, but am wondering what would happen if the SP drops at the closing cross, would I still be able to exercise ?

Any other "not-advice" before I have to decision these before market close ?

 

[wooter]

Added another Jan28 950/900bps.

 

[intelligator]

Did some of the same, a couple 890/690 bps for 1/28 so that I can be happy while I sweat some at 1000/900 mid next week. I hope to buy back on a pop before the 26th.

 

[BornToFly]

Man, what a difference a couple weeks makes. I went from expecting to make a lot of money this month going into earnings (because, you know, I spend hours reading about Tesla everyday and I'm an "expert" on this ONE stock....), to potentially staring down the worse losses of my life. I no longer have confidence on where the bottom is, otherwise I could just ride this out rolling nice wide spreads. But they might not be wide enough, which means I may have to take some losses to reduce the number of contracts and free up more margin. We need multiple companies to have good earnings next week to turn this ship around.

 

[Tes La Ferrari]

Update: It is a volatile macro time out there, but I decided to take delivery of my $900C shares today. So I effectively payed $929 for these shares.

IMHO, not sure what's going to happen near term, but I might sell some OTM calls against them, or just HODL.

My confidence in Tesla's ability to execute remains unchanged, from when I started buying.

I appreciate the non-advice and sharing.

Live long and prosper, my fellow TMC'ers.

 

[stealthyc]

Man, what a difference a couple weeks makes. I went from expecting to make a lot of money this month going into earnings (because, you know, I spend hours reading about Tesla everyday and I'm an "expert" on this ONE stock....), to potentially staring down the worse losses of my life. I no longer have confidence on where the bottom is, otherwise I could just ride this out rolling nice wide spreads. But they might not be wide enough, which means I may have to take some losses to reduce the number of contracts and free up more margin. We need multiple companies to have good earnings next week to turn this ship around.

I don't remember your positions. Are they near max loss now?

 

[adiggs]

Not the rolls I wanted, and still quite annoyed that I didn't do these yesterday and get some meaningful strike improvements. Instead:

• Rolled 170x 1000/950 1/21 BPS to 130x 1100/1050 1/28 BPS for a credit;
• Rolled 36x 1170/1080 1/21 BPS to 36x 1110/970 1/28 BPS for a credit;

Total credit of about $3.5 per new BPS.

Also sold a 40x 800/770 BPS for $1.85 cr and rage sold 1275cc yesterday (I DARE YOU TO TAKE THAT ITM).

If this isn't the bottom and we don't see a reversal next week, I will be needing to dip in to reserves to continue management.

I may be doing some rolls like these next week. My plan from a week ago was rolling out to 1/28 to skip over this week where the trading is so dominated by the big options expiration piled up over 2 years.

Now I find out on Monday if I was right about how things will play.


Interesting observation from today and an earlier comment(s) about high put IV. My 950/1100 put spreads expiring next week would cost me ~$115 to buy them out right now. Both legs are currently ITM with the 1100 strike still carrying $7 in time value. I'm surprised that its that high. My current plan is to be rolling by Wednesday as the time decay is going to start eating the insurance put pretty aggressively next week and the insurance put is what's keeping this from being $150 to buy out.

I don't plan to buy it out but I need the share price to turn around. Right about NOW would be just fine.

 

[BornToFly]

I don't remember your positions. Are they near max loss now?

No, I have short legs at 1050 and 1100, and long legs at 850, 800, and 750. So I'm basically at the midpoints. I'm just scared to roll out for more time because if the Nasdaq drops another 20%, TSLA will hit below 800. I was planning on protecting myself from the post Q1 ER dip into summer after closing OTM BPS next week, but wasn't expecting a once-in-a-lifetime drop going into earnings that put them all ITM.

 

[jaspa]

I may be doing some rolls like these next week. My plan from a week ago was rolling out to 1/28 to skip over this week where the trading is so dominated by the big options expiration piled up over 2 years.

Now I find out on Monday if I was right about how things will play.


Interesting observation from today and an earlier comment(s) about high put IV. My 950/1100 put spreads expiring next week would cost me ~$115 to buy them out right now. Both legs are currently ITM with the 1100 strike still carrying $7 in time value. I'm surprised that its that high. My current plan is to be rolling by Wednesday as the time decay is going to start eating the insurance put pretty aggressively next week and the insurance put is what's keeping this from being $150 to buy out.

I don't plan to buy it out but I need the share price to turn around. Right about NOW would be just fine.

Hoping with the crazy amount of option expiration this week, we'll see a surge M - W going into earnings. I might roll my higher naked puts and take advantage of the high IV pre earnings, before it comes crashing down. I think we're all bullish going into Q4 earnings, but macros are really dominating and I can see the media cherry picking any negative headlines from the ER (CT delay, gigafactory delay, chip shortage, etc etc.), neutralizing any of the expected benefit of ER.

It also seems uncommon for S&P to close down every single day this week. If i have excess liquidity in my account, i sometimes like to write puts on SPX since they are M, W, F expirations. I was able to sell a SPX 3975 put at the end day today, expiring Monday for $105 credit. I hope we don't get there, but that would imply a ~9.6% tank for S&P by Monday close.

 

[CHGolferJim]

i got so obsessed with having an all-cash environment, that i totally forgot about this temporary buy/write power play

(just need to remember not to use the additional margin)

i am guessing the only downside is if SP drops further (ie 900), then i will be stuck with shares that i don't want (ie capital tied up until SP recovers) and CC prem won't be as good anymore, amiright?

Yes, you can't do buy-writes if you don't want to hold shares!

The risks I've identified so far are:

1. possibility of a downturn in SP < strike price -- if that happens, you can roll down for credit or let CC expire and sell again, in the expectation of an eventual turnaround
2. possibility of a big upsurge in SP > strike price, leaving you missing out on unrealized capital gains -- you can retain CG by closing the calls at a higher price than the previously received premium (recognizing a loss), or roll gradually at low/zero credit in the expectation that SP and strike price will eventually converge.

I've had both things happen occasionally, with #2 in 4Q21 leading to a severe loss because I wanted to uncover and sell shares to reallocate to LEAPs. If I'd been more patient, I would have seen SP and strike price converge, only missed some CC premium, and gotten better prices for the LEAPs. I need to be more patient!!

For an example of #1, on 1/18 I sold 012122C1075 at $10.95 with SP at ~$1030 (cost basis is $1073).....when it dropped to ~$1000 yesterday, I closed at $0.44 and sold 020422C1075 at $29.70 (which closed today at $20.00). I was tempted to close those today and take the 33% profit and hope the same or similar contracts would open higher on Monday, but I left them given the chance of further declines Monday morning.

Today, I bought another X00 shares at $974 to do a second tranche of buy-writes since I realized they are contributing >80% of my total CC income (when writing x buy-writes and 1.8x on 60% of core shares at $100 OTM). I think I can earn more with less risk writing 1.8x buy-write contracts and fewer/higher strike CC on core shares.

The rate of return is not in the ballpark of a lot of your amazing trades (which I have not had time to study and get intuitive with, and have thus avoided), but if I avoid major debits, the buy-writes ROI could reach ~70% annualized by rolling above cost. They are >11% (50% annualized) after 3 months as of 2/4 without any capital gains.

 

[OrthoSurg]

Man, what a difference a couple weeks makes. I went from expecting to make a lot of money this month going into earnings (because, you know, I spend hours reading about Tesla everyday and I'm an "expert" on this ONE stock....), to potentially staring down the worse losses of my life. I no longer have confidence on where the bottom is, otherwise I could just ride this out rolling nice wide spreads. But they might not be wide enough, which means I may have to take some losses to reduce the number of contracts and free up more margin. We need multiple companies to have good earnings next week to turn this ship around.

I had 50% margin available
Now down to 20%
I managed finally to close my 25x 21/1/2022 -p880 for a 85% profit this morning while they were red all week long. Rolled my -p1150 another time and I am getting ready to roll them till the end of eternity. STO 3 x LEAPs which are already -5%

I didn’t close any options at a loss yet but if we go in the low 800s I’ll have to free up some margin by taking losses. Of course they are not in the Ms like yours but it doesn’t feel fun at all.

I was geared up for a SP of 1200 into earnings but raising rates from the Fed changed the game.

I don’t understand how the whole stock market wasn’t pricing in the raising rates which were expected with the inflation before Powell announced it. I hope the stellar earnings are not factored in the TSLA SP too and we will see a gigantic +15% rise AH. Might be wishful thinking but that would be greatly welcomed like the Christmas rally

 

[LightngMcQueen]

Man, what a difference a couple weeks makes. I went from expecting to make a lot of money this month going into earnings (because, you know, I spend hours reading about Tesla everyday and I'm an "expert" on this ONE stock....), to potentially staring down the worse losses of my life. I no longer have confidence on where the bottom is, otherwise I could just ride this out rolling nice wide spreads. But they might not be wide enough, which means I may have to take some losses to reduce the number of contracts and free up more margin. We need multiple companies to have good earnings next week to turn this ship around.

Pretty much what I wanted to write but in much better grammar.

 

[WattsHappening]

Man, what a difference a couple weeks makes. I went from expecting to make a lot of money this month going into earnings (because, you know, I spend hours reading about Tesla everyday and I'm an "expert" on this ONE stock....), to potentially staring down the worse losses of my life. I no longer have confidence on where the bottom is, otherwise I could just ride this out rolling nice wide spreads. But they might not be wide enough, which means I may have to take some losses to reduce the number of contracts and free up more margin. We need multiple companies to have good earnings next week to turn this ship around.

These troubled times too shall pass. The night is darkest before dawn. Live to fight another day. Yada, yada, yada.

Hang in there!

 

[M3Rider]

No, I have short legs at 1050 and 1100, and long legs at 850, 800, and 750. So I'm basically at the midpoints. I'm just scared to roll out for more time because if the Nasdaq drops another 20%, TSLA will hit below 800. I was planning on protecting myself from the post Q1 ER dip into summer after closing OTM BPS next week, but wasn't expecting a once-in-a-lifetime drop going into earnings that put them all ITM.

Mine are probably worse. Without some bump up next week I’m looking at max losses.

-1050/950
-1020/920
-1000/900
-955/850
-910/710

Some are rolls. May end up rolling to, like, April or EOY to save whatever can be saved and stop trading until then.

Looks like rolling yesterday to April would have been a much less riskier option than going with 940 into the next week.

If this crap persists, it may do so through March while FED still taking steps.

Who knew…when these falls and rises are too quick we’re screwed. Wider spread for less risk does seem to make more sense now

 

[Discoducky]

I guess these are the times that our self imposed trading rules are made for.

I'm teaching my 12 yr old trading options and I said the exact same thing.

I showed him Netflix and he about fell out of his chair. And I said, "See, this is why I have trading rules!"

I just have 2/18 and 3/18 BPS and bought calls. This week was nutzo.

 

[UnknownSoldier]

I like living on the edge. I opened some "End of the World" 1/28 BPS 750/700. If we actually reach 700 and my max loss on Friday, I will personally fly to Ukraine and invade it myself.

If we do continue to dip on Monday, I might go in on those deep ITM BPS I posted about before earnings. We'll see.

 

[OrthoSurg]

I may be doing some rolls like these next week. My plan from a week ago was rolling out to 1/28 to skip over this week where the trading is so dominated by the big options expiration piled up over 2 years.

Now I find out on Monday if I was right about how things will play.


Interesting observation from today and an earlier comment(s) about high put IV. My 950/1100 put spreads expiring next week would cost me ~$115 to buy them out right now. Both legs are currently ITM with the 1100 strike still carrying $7 in time value. I'm surprised that its that high. My current plan is to be rolling by Wednesday as the time decay is going to start eating the insurance put pretty aggressively next week and the insurance put is what's keeping this from being $150 to buy out.

I don't plan to buy it out but I need the share price to turn around. Right about NOW would be just fine.

I will sleep well this week end thinking that all the MMs shenanigans were to avoid getting their shares called away from LEAP option buyers and they intentionally pushed all the NASDAQ down to inflict maximum pain to everyone. Starting this Monday the normal bull market resumes. I might be dreaming out loud but this fantasy land will make me sleep happy even if the last 3 weeks were the most savage portfolio losses I have ever witnessed in my life.

 

[M3Rider]

I like living on the edge. I opened some "End of the World" 1/28 BPS 750/700. If we actually reach 700 and my max loss on Friday, I will personally fly to Ukraine and invade it myself.

If we do continue to dip on Monday, I might go in on those deep ITM BPS I posted about before earnings. We'll see.

It seems many are looking for red Monday open, then short covering begins.

So, I’m wondering how long we stay red and what’s the bottom. Will likely fill the gap fully though.

 

[ReddyLeaf]

Ok boys and girls, get buying now! No way this thing is dropping below 950 today. Just changed my 1/28 c1145s for $4.90 and it hit. GLTA.

Well, that didn’t age well. Sorry folks. I was away for the close but; never in my wildest dreams expecting a sub-950 close. Well, anyway a bunch more buys hit, as well as those c1145s. Happy to pick up more shares at a discount, but like others, I really need the SP to rocket next week. If not, someone will happily put shares to me at 1075-1100. Without a turn around or IV crush, I don’t have enough free cash to buyback and roll those puts.