Wiki Selling TSLA Options - Be the House

[ChefBoyardee]

That is interesting and likely something not many of us have considered. What are some suggested approaches to leverage the high IV before it gets crushed while attempting to manage a ITM spread? There are 3 possibilities based on what ITM spreads one is holding:
1. price rallies and ITM spread becomes OTM and expires worthless on Friday.
2. price rallies and long leg is ITM but short leg remains OTM on Friday - this needs to be managed/rolled. Question is before IV crush or after.
3. price rallies or falls and ITM spread remains 100% ITM - this needs to be managed/rolled. Question is before IV crush or after.

Feb 25 and beyond have much lower IV, so you could roll (same / similar strikes) to one of those expirations before the crush happens

If you have a lot of buying power, rolling down to OTM for this week or next week would also make use of the high IV

One approach I sometimes use is to roll my ITM positions out & up (under the trendline), and use the freed-up margin to sell some OTM spreads for the current week

Basically going from ITM high IV or OTM low IV -> ITM low IV or OTM high IV will tend to give better rolls

 

[mickificki]

Yeah if the SP closes above the short strike at the end of Friday's after-hours trading, they'll expire worthless - you would keep the full credit

I always recommend closing them before market close on Friday for a few cents just in case we tank after-hours

Actually have a question about closing out my BPS. I've tried closing them out a few times in my brokerage app by right clicking and setting a closing price (so it'll auto set the price to buy to close the short leg and sell to close the long leg in one order), and it never closes.

Do I have to close out the short leg and long leg individually?

 

[ChefBoyardee]

Actually have a question about closing out my BPS. I've tried closing them out a few times in my brokerage app by right clicking and setting a closing price (so it'll auto set the price to buy to close the short leg and sell to close the long leg in one order), and it never closes.

Do I have to close out the short leg and long leg individually?

You should be able to close both legs in one order. It could be the price - I start at the mid price and if it doesn’t fill in a few seconds I bump the price up a few cents at a time until it fills.

Sometimes on expiration day if the spread worth like .02 it gets hard to fill because of low volume too - in that case, closing them individually, starting with the short leg to avoid your margin blowing up, would help. I recommend just tweaking the price until it fills though

 

[M3Rider]

I rolled my -1050/950 to July -1100/1000 for some ~7 debit. With max pain at 1000, wanted to de-risk and get these out of the way.

Still holding
-1020, -1000, -955 100-wide bps.

 

[InTheShadows]

IV-crush will ALWAYS help you if your spread is over the midpoint & hurt you if you are under the midpoint
Thats how the math works

Thanks. So I need to be focusing on my spreads that are under the midpoint now, not the other way around. I was focusing on the better ones first.

 

[scubastevo80]

Is anyone rolling options that are at max loss out a ways? We can roll my 1/28 -1050/+960 to 6/17 -1075/+975 at no cost, but am basically forgoing half the year for premium collection and compounding. Curious as to how folks that have rolled out a ways manage those positions. Do you close and eat losses if we get a spike, or will you actually ride it out until most of the theta is gone?

 

[Drezil]

Is anyone rolling options that are at max loss out a ways? We can roll my 1/28 -1050/+960 to 6/17 -1075/+975 at no cost, but am basically forgoing half the year for premium collection and compounding. Curious as to how folks that have rolled out a ways manage those positions. Do you close and eat losses if we get a spike, or will you actually ride it out until most of the theta is gone?

Hope™ or daytrading.
close it on upswings, reopen after downswing..
If downswing doesnt come, eat loss.

But i only do this with very small positions as you give up on recouping your loss if the SP explodes - see my post about closing the short-side @market if we slide after powell speech later, just to reopen it 1-2 minutes later when we hit resistance.

 

[intelligator]

I didn't look at the charts pasted, was picturing the 2/4 chart from a couple days ago with the huge call spike at 1200. Just like it changed from then til now, if we go to 1100 this week as that current chart and market sentiment implies, then the 2/4 chart will quickly revert to a megaspike at 1200. Probably a decent one at 1300 as well.

I guess it matters which chart you paste in the post first!

Thanks to the contributions of so many, I'm ingesting some interesting bits about IV crush and call walls; more seat time will allow me to wrap my head around each.

For 2/4 expiry, I also have -1050/+850, -1000/+875, -975/+850 BPS. I rolled into these well before knowing how things were going to go down these past few weeks. Does the IV crush and roll opportunity to lower IV expiries apply to these or take a wait and see approach? Although I can roll each at same strike or better at a credit, the cost of the new spreads are huge, reluctant to move if I can find good reason to not fret just yet.

 

[cbh03]

I was hoping to open some new, conservative BPS today to take advantage of an IV crush and the possibility of the FED and/or an earnings beat keeping the SP at or above current price. I'm thinking that -800/+600 is a conservative position even with a sell the news event. Any not advice? Is anyone opening any 2/4 BPS before Powell speaks this afternoon? If anyone is planning to open BPS after Powell speaks but before the ER, what is your game plan? TIA

 

[JustMe]

Just because most people don't know it, and not trying to be overly pedantic, but the phrase is "bated breath"

Not necessarily. . .

“The fish was waiting with baited breath to see if it would be released back to the sea”

 

[JustMe]

I was hoping to open some new, conservative BPS today to take advantage of an IV crush and the possibility of the FED and/or an earnings beat keeping the SP at or above current price. I'm thinking that -800/+600 is a conservative position even with a sell the news event. Any not advice? Is anyone opening any 2/4 BPS before Powell speaks this afternoon? If anyone is planning to open BPS after Powell speaks but before the ER, what is your game plan? TIA

I took advantage of the sp rise over $950 to roll some positions down and out. Holding nothing expiring for the next 2 weeks now.

I’m waiting until after Powell speaks and may sell some conservative 1/28 or 2/4 bps before market close. Like 800/700 or thereabouts.

 

[bkp_duke]

Just because most people don't know it, and not trying to be overly pedantic, but the phrase is "bated breath"

Thanks. I'm an 800 Math SAT guy, but verbal has always been "average" by comparison and I often will misspell, wrong phrase, etc. Drives my wife bonkers since she's Ivy League and those little things she picks up instantly. Always learning, if not, I must be dead.

 

[OrthoSurg]

I sold 5 calls 1270 and 5 calls 1285 for 2/4, at @3.00 each (during the upswing). These are 33 to 35% OTM and with 8 trading days to go I feel confident about them. I expect Tesla to exceed expectations, but the stock also to sell the news. Combined with the tricky macro environment I don't see it rising above ATH in such a short period. IV crush will also be big after tomorrow.

I'm not sure if I timed it right, because Powell can push the market up later today. But I still feel safe enough.

I'm also short 20 puts 1/28 and 2/4, so I'll still be happy if we go up a lot.

I also have done something similar. Today, I closed my 28/1 1300 CC that I sold last Thursday for a +40% profit and Sold 1285 CCs for 4/2. If my shares get called away it means all my puts will finally stop drawning so my overall position will be more than profitable.

 

[adiggs]

I have

also have done something similar. Today, I closed my 28/1 1300 CC that I sold last Thursday for a +40% profit and Sold 1285 CCs for 4/2. If my shares get called away it means all my puts will finally stop drawning so my overall position will be more than profitable.

Plus rolling those covered calls, if you decide to, will be trivial. Unless the shares take off all the way to 1500 or something.

 

[vwman111]

Is anyone rolling options that are at max loss out a ways? We can roll my 1/28 -1050/+960 to 6/17 -1075/+975 at no cost, but am basically forgoing half the year for premium collection and compounding. Curious as to how folks that have rolled out a ways manage those positions. Do you close and eat losses if we get a spike, or will you actually ride it out until most of the theta is gone?

I am trying to better understand this dynamic as well. If we stay flat for 6 months, it is a way of surviving, although not generating any additional premiums. IF we start climbing over the 6 month period, those June will become OTM and lose value, they can then be better managed, meaning you could roll back in to a shorter expiry. You're ability to manage the position increases as the stock price increases which means you aren't necessarily "stuck" with that spread for 6 months.

 

[Flehmenlips]

With all of the rolls from week to week for credits, strike modifications, spread mods etc., it can become very difficult to keep track of exactly how profitable or not your positions are. Does anyone have a good method for tracking this? I don't trust the P/L calculations that Thinkorswim is giving me based on my rolls. Some of my DITM short put legs are showing break even in the P/L column, and I am tempted to buy them back, but they are quite pricey and I want to make sure I am actually breaking even...

 

[InTheShadows]

I was hoping to open some new, conservative BPS today to take advantage of an IV crush and the possibility of the FED and/or an earnings beat keeping the SP at or above current price. I'm thinking that -800/+600 is a conservative position even with a sell the news event. Any not advice? Is anyone opening any 2/4 BPS before Powell speaks this afternoon? If anyone is planning to open BPS after Powell speaks but before the ER, what is your game plan? TIA

That is where I would be at if I was able to right now.

 

[Zhelko Dimic]

@tivoboy Will there be another opportunity to buy in this range, or lower in your opinion?

I've been trying to transfer out from TD Direct to IB since Jan 3rd, and they keep screwing transfer up, and then impose onerous concentration rules on me. They forced me to sell few hundred shares last Friday, that I would have 0 problem holding almost anywhere else. Basically they limit purchasing power at 750K for $2.8M TSLA. And have been refusing to let me go - I think not intentionally, probably just incompetence and not caring.

Write-up about this experience coming.

 

[OrthoSurg]

I want to buy some cheap calls that won't hurt too much if they expire worthless, but that will pay well (like 10X) if we have a 10% bump tomorrow.

So do the call buyers in the group have any non-advice?

I am sure someone on WSB is YOLOing OTM call options expiring tomorrow expecting a +10% increase. I am sure the stock will go up 10% sometime next year, the question is which day. Probability of being wrong is only 364/365.

 

[M3Rider]

I am trying to better understand this dynamic as well. If we stay flat for 6 months, it is a way of surviving, although not generating any additional premiums. IF we start climbing over the 6 month period, those June will become OTM and lose value, they can then be better managed, meaning you could roll back in to a shorter expiry. You're ability to manage the position increases as the stock price increases which means you aren't necessarily "stuck" with that spread for 6 months.

Yes, with macro in the dumpsters, we may continue to have a downtrend until the FED’s actions impact is mostly out of the way.

I don’t have high expectations from Feb/March, can go either way. So, I don’t want to manage -1050/950 again if I roll it too near, so moved to July.

I still have margin in lower strikes bps, which I hope to close this week, so will still have ability to make some money and possibly buy out that position later, especially if it loses value as SP goes up. Or I may just let it sit and expire, not sure which.