mickificki
Member
When the head of IBKR says peeps are trading lots of vertical spreads, you know they're on to us.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Maybe they are just trying to help you learn better timing.
Anyway, I took the MMMD (massive MMD) as an opportunity to buyback my 995/1000/1005 CCs @ 75-90% profit, and then add shares from 894.xx-904.xx. Still have some $88x buys in, just in case the bottom falls out. I specifically DID NOT buy YOLO calls because almost every time I do, the SP drops farther. I’m just leaving it for you. Your welcome!
I now regularly buy tight Bear Put Spreads at the end of the day fearing a gap-down.
Usually sell them again at the morning dip & reopen them during the day/at days end - depending on the development of the SP.
Example:
Bought 20x 910/880 BearPS @8.xx yesterday, sold in 2 batches for an average @10.93 today (sold WAY too early - we hit 13.88 later in the day!). After on the runup rebought 10x @10.80 or so to again sell @15.00 if we really dip. have another order in to buy the other half again @8.00.
Other account:
Bought 30x 900/880 BearPS @4.60 average yesterday. Sold 40 today @6.87 average, already bought 20 again @5.47 (10 of them sold again & included in the prior average). Order to buy 20 more @4.50 is live - current price hovers @7.50.
=> in total ~12k scalped off by this tactic and still get "decent" overnight-protection (total position ~30k, if we fall <880 profit would be >100% covering ~60% of the losses i would take on the other position).
At least that gives me something to do during the day when the stock cannot decide on a direction ...
Usually sell them again at the morning dip & reopen them during the day/at days end - depending on the development of the SP.
Example:
Bought 20x 910/880 BearPS @8.xx yesterday, sold in 2 batches for an average @10.93 today (sold WAY too early - we hit 13.88 later in the day!). After on the runup rebought 10x @10.80 or so to again sell @15.00 if we really dip. have another order in to buy the other half again @8.00.
Other account:
Bought 30x 900/880 BearPS @4.60 average yesterday. Sold 40 today @6.87 average, already bought 20 again @5.47 (10 of them sold again & included in the prior average). Order to buy 20 more @4.50 is live - current price hovers @7.50.
=> in total ~12k scalped off by this tactic and still get "decent" overnight-protection (total position ~30k, if we fall <880 profit would be >100% covering ~60% of the losses i would take on the other position).
At least that gives me something to do during the day when the stock cannot decide on a direction ...
Something that popped up in my IBKR-Feed 30 minutes ago & is related to other people tracking whales:
I found the bottom 2 trades interesting. And think that they were a spread.
So i remodeld them:
Lo and behold:
It is (nearly) a delta-neutral strategy farming that theta until friday if SP does not move much.
Also depending on your portfolio it may free up a lot of margin because of the put that far out. Delta is only ±0.2 in the area of interest (880-920) which is not much compared to the ~0.5 you can get with a direct vertical spread. So it got more POP if both sides are closed on friday after the short put has no money in it left.
I think i will try 1 of those as an experiment (albeit choosing 895/825 diagonal as those are profitable from 880-950; basically between the call & put-walls).
I found the bottom 2 trades interesting. And think that they were a spread.
So i remodeld them:
Lo and behold:
It is (nearly) a delta-neutral strategy farming that theta until friday if SP does not move much.
Also depending on your portfolio it may free up a lot of margin because of the put that far out. Delta is only ±0.2 in the area of interest (880-920) which is not much compared to the ~0.5 you can get with a direct vertical spread. So it got more POP if both sides are closed on friday after the short put has no money in it left.
I think i will try 1 of those as an experiment (albeit choosing 895/825 diagonal as those are profitable from 880-950; basically between the call & put-walls).
ChefBoyardee
Member
One thing to note- Diagonals and calendars gain if IV goes up, lose if IV goes down. You can throw it in optionsprofitcalculator and tweak the IV Change setting to see how it reacts
Sounds too complicated for me. Is the primarily goal here to increase your available margin?
think of it as a BPS, but with the long further out so theta on that one decays way slower => faster decay of theta => earlier closeable for a profit.
The margin is only a side-effect on my net-long TSLA-Positions if things go wrong (and i manage to close the short put in time).
But as @ChefBoyardee noted: it has more IV-Impact. But IV is "quite low" for it being TSLA. And the further out expirations don't change IV that fast. IV rises most, if the Stock tanks fast - another hedge against the short-put if things go wrong. The vega on the long cancels out a bit of the delta on the short while still maintaining the theta-advantage.
I could not think of those things myself - but i think it is a good theoretic exercise to see where the road can be going in the future
wow Facebook -22%... what's with companies moving like that in single day? BPS seem really scary with moves like that. I bought some FB shares to sell CC's and might do some BPS for this Friday. I still have my Tesla 1050CC's and a $895 put for Friday. For Google I got $935 March 4 calls and I was planning on rolling them as time passes but I sold them already for a few bucks. I might load again tomorrow with ATM calls. Not advice I am just gambling with a little money.
edit: 895p
edit: 895p
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Sold 2/4 -p900 at $15.6x right before close. Since I was buying shares this AM at more than $885, that seemed like a decent trade. Now after FB dump, maybe not so much so. Also, sold -c955 for $3.7x to balance the 900p. Barely beer money.
mickificki
Member
Something to keep in mind for tomorrow and Friday. FB already down 22%, PYPL down 25% earlier, dragging everything down.
God if Amazon misses after Facebook it's going to kill the whole stock market.
I feel like someone came along and ate the breadcrumbs I was trying to follow to get out of this forest...
With 5 DTE or less why not just buy naked puts? Or sell aggressive calls? Im just wondering if we are complicating things by buying bear put spreads.
I haven't done the math yet, but I think the spread decreases the risk/$? I guess I could try a few both ways and see....
Can anyone help with this question.
I have 4x BPS 11 FEB -950p/+910p, that looks like can be rolled FORWARD to 4 FEB 22 and widen to -920p/+800p for $1 credit (with the SP at $905).
(A) If the SP finishes OTM above $920 at expiration 4 FEB (Friday), all good.
(B) If the SP is the same at expiration ($905) on 4 FEB, lose $15 on the short position (and the long $800 OTM is $0) for a loss of $15 + the $1 credit, -$14.
This seems like a much smaller loss than the $40 max loss of the -950p/+910p for 11 FEB.
(C) Of course, if TSLA tanks, the downside is a much larger loss. (Now, this actually looks possible given FB miss, so probably a non-starter.)
Is this all correct ? I have never seen rolling the position in to a closer expiration (and widening), wondering if this actually is a viable strategy.
Again, this is all probably academic with TSLA AH today and given what Friday looks like . . .
I have 4x BPS 11 FEB -950p/+910p, that looks like can be rolled FORWARD to 4 FEB 22 and widen to -920p/+800p for $1 credit (with the SP at $905).
(A) If the SP finishes OTM above $920 at expiration 4 FEB (Friday), all good.
(B) If the SP is the same at expiration ($905) on 4 FEB, lose $15 on the short position (and the long $800 OTM is $0) for a loss of $15 + the $1 credit, -$14.
This seems like a much smaller loss than the $40 max loss of the -950p/+910p for 11 FEB.
(C) Of course, if TSLA tanks, the downside is a much larger loss. (Now, this actually looks possible given FB miss, so probably a non-starter.)
Is this all correct ? I have never seen rolling the position in to a closer expiration (and widening), wondering if this actually is a viable strategy.
Again, this is all probably academic with TSLA AH today and given what Friday looks like . . .
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These -25% one day PYPL, -20% NFLX, -22% FB don’t create reassuring graphs. I know the best stocks like AAPL and MSFT survived and thrived after the dotcom bubble burst however the market is punishing some stocks severely right now. Bullish one day with GOOG, bearish the day after with FB. Then we have AMZN and NVDA to decide if we enter a bear market or rebound to ATHs… Selling options around earnings might become classified as an extreme sport.
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Advice/Not-Advice.
Rolling forward options is NOT a good idea. I've done it before and realized AFTER the fact that it runs counter to the purpose of selling options to harvest theta. When rolling forward, you're giving up time value. Also, from a risk standpoint, it seems other strategies might be more profitable for less risk - like buying a 940c?
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