Wiki Selling TSLA Options - Be the House

[vikings123]

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 . . .

Everything you said above is correct except your max loss for the 950/910 BPS is 4X40$-premiums you received.

Are you rolling forward 4X BPS to 1X BPS? If you are rolling to equal number of contracts then you obviously increase your max loss to 4X120$-premiums. Everything needs to looked at relative to your account size and margin availability.

If my account can stomach the max loss I would probably let it ride with the current positions. Others might disagree but it is tough to rescue ITM narrow spreads.

 

[UnknownSoldier]

LMAO I have BPS +800/-750 for Friday, I thought they were safe, then the Zuck had to take the biggest dump I have ever seen in a megacap's history.

Now I'm sweating a little bit here. I don't have a lot of wiggle room, so I might actually roll down tomorrow if we hit the low 800's. I don't want to risk a really stupid loss on what were perfectly safe spreads until 1:05 pm Pacific today.

 

[GeoX750]

Yes, you are all correct. I have the margin, but if it all went to max loss, it would be too painful.

I wasn’t considering it could drop that much by Friday. Can’t take the risk.

Taking loses, when you still have tools, is the hardest part of this.

 

[TheTalkingMule]

Talk about PE compression! Anyone know what the overall QQQ PE goes to if FB actually closes down 23% Thursday?

 

[samppa]

I'm seriously considering selling aggressive weekly covered calls on all my shares.. then keep rolling those as long as there's good profit.. eventually let them be assigned and move to all cash / buy some leaps.

Would be way less stressful in this market..

 

[samppa]

Recheck your broker? I'm seeing out through Jan `24.

Something weird with IBKR mobile, on desktop version optiontrader shows them all.

 

[OrthoSurg]

I'm seriously considering selling aggressive weekly covered calls on all my shares.. then keep rolling those as long as there's good profit.. eventually let them be assigned and move to all cash / buy some leaps.

Would be way less stressful in this market..

Is it in a taxable account? That’s the think I don’t feel like having a big tax hit if the shares get called away. Depends on your shares basis cost too I guess.

This morning I feel like closing all my underwater puts for a loss and start selling back weekly 30% OTM puts regularly however I would be realizing around 20% total portfolio loss. I thought a bear market was avoided with the great earnings from MSFT, TSLA, AAPL, GOOG but for every good news and green day, we get double punishment and 2 red days. I don’t know if that’s just the fear making its work and we should get greedy when other are fearful but some -20% on a mega cap making 200B evaporate AH in couple of minutes is savage. I don’t know what there is to come to save qqq.

 

[samppa]

Is it in a taxable account? That’s the think I don’t feel like having a big tax hit if the shares get called away. Depends on your shares basis cost too I guess.

This morning I feel like closing all my underwater puts for a loss and start selling back weekly 30% OTM puts regularly however I would be realizing around 20% total portfolio loss. I thought a bear market was avoided with the great earnings from MSFT, TSLA, AAPL, GOOG but for every good news and green day, we get double punishment and 2 red days. I don’t know if that’s just the fear making its work and we should get greedy when other are fearful but some -20% on a mega cap making 200B evaporate AH in couple of minutes is savage. I don’t know what there is to come to save qqq.

Taxable account, I'll have to pay 30% tax on gains.
Cost basis is low, so it would be a big tax to pay.
Otoh taxes have to be paid eventually anyway..

 

[mongo]

Taxable account, I'll have to pay 30% tax on gains.
Cost basis is low, so it would be a big tax to pay.
Otoh taxes have to be paid eventually anyway..

Yeah, but the more times you pay taxes on gains, the less you ultimately net.

 

[Drezil]

If pre-market looks bad again tomorrow, do you think Bear PS for Friday would still be good to try at the open?

Not at open. I open them at close to minimize the crushing Theta attrition.
I close them mostly at 9:45 in the MMD.

When betting on downturn I use only puts. I use spreads here because they are more volatile to small movements and just insure a small drop and not a prolonged dipping of the SP

 

[Zhelko Dimic]

Yes, you are all correct. I have the margin, but if it all went to max loss, it would be too painful.

I wasn’t considering it could drop that much by Friday. Can’t take the risk.

Taking loses, when you still have tools, is the hardest part of this.

You could roll it way out in the future, to greener pastures. I personally wouldn't do anything earlier than September, but would feel more comfortable with Dec, or Jan '23
Of course, this freezes your margin/capital until strike dates...

 

[UltradoomY]

lol - they are trying hard to shake out the weak hands for sure!
Overnight they early assigned my -P $1120's
These were not for tomorrow but for 02/11 and still had $5 of time value left in them.

Definitely some shenanigans going on to force the market down - margin call as many as possible and what I am guessing is - get them back to work by making their gains evaporate.

I had these 90% backed by cash and only 30% of margin used for other things so now I just have more shares.
Was planning on selling CC's against them next week for $2k in 2024 but now I think I will just hold tight.
Feels like there will be good news on the horizon - only so many hits the market can take before money on the sidelines starts to find good deals.

Stay safe out there!
Cheers

 

[Zhelko Dimic]

I'm seriously considering selling aggressive weekly covered calls on all my shares.. then keep rolling those as long as there's good profit.. eventually let them be assigned and move to all cash / buy some leaps.

Would be way less stressful in this market..

The most vicious rallies are in the bear market...

 

[GeoX750]

You could roll it way out in the future, to greener pastures. I personally wouldn't do anything earlier than September, but would feel more comfortable with Dec, or Jan '23
Of course, this freezes your margin/capital until strike dates...

Thanks, going far out would take away some stress and still have margin to work with for the rest of the year.

Another question, is if the -950/+910 is rolled out to 18 FEB for a -$1 debit, I could make an Iron Condor with a matching credit spread -1040c/+1080c for +$3.47 to to pay the cost of the roll (and then some) for no added risk (margin).

Is it fair to factor this IC strategy (with no added margin) as helping the break even of the BPS ?

Sorry to clutter the thread with all the noob questions.

 

[traxila]

Fellow TMCers,

It is hard to imagine the sentiment changing without a bad washout capitulation across the market. The bears are firmly in charge and the frowning 'adults' in the room cannot stop talking about interest rates, PE compression, consumer balance sheet exhaustion (working people ie 98% of population) and inflation, god forbid another variant attack...

Of course in particular it is open season on TSLA and all things Tesla. It is obvious to all that even the current administration is sour on Tesla and looking to level the playing field for its paying 'customers'. Like TSLAQ is not enough....

Why do I say all this? Please be defensive. Look to FB for ridiculous moves that are possible. Ask yourself when further interest rate hikes are off the table. 2024? And remind yourself that the first rate hike has not even occurred, market pricing aside. This is not something that will resolve in a couple of weeks. Large parts of the market believe that the Fed has blown it and there will be a recession. Market is forward looking and will snap back when you least expect it, but it can also go down far beyond what you feel is reasonable (and I do mean FAR beyond), especially for stocks like TSLA. Traders need to expect and be prepared for huge swings and trade accordingly.

Personally I will stick to voting with my wallet. TSLA and all stocks renewable get my investment cash, and if I go down with the ship so be it. I have some small margin in my accounts that I look to pay down with option selling on the fringes. I have a family, so I do keep cash reserves and have little to no debt overall. 'Reasonable' people are investing in fossils now, pounding the table over their cash flows and energy demand. I find them to be most unreasonable.

Above all, the clarion call for a bear market is in the air. That would be a minimum of 20% overall. That would put the QQQs in the mid 320s. SPY in the low 380s. It is hard to see how the QQQs and market can base and march to new highs without these levels at least being visited in the face of rising interest rates. And of course, the market overshoots in both directions. Always... One year ago the QQQs were at 300 and two years ago (pre COVID) were at 200.

All the best and this too shall pass.

 

[FS_FRA]

What does everyone think about next week?

If we get beat down massively today thanks to Meta, I'm considering rolling my 2/11 -900/+700 out to greener pastures for a credit now, or wait until next week?

Also, I have that +820P that expires tomorrow - I was thinking about exercising it if we were >900 and then immediately selling the shares to pocket the difference. Any other creative ideas based on the current situation?

 

[strago13]

At open, I am going to roll my 980 2/25 puts out to August or September and down as far as possible. I do think we are headed towards a not fun environment and better safe than sorry.

EDIT: Rolled everything to August 19th 850 Puts for enough of a credit to pay my tax bill. This will also let me sleep better at night and it will give me the freedom to roll forward should we get closer to ATH. I largely wanted to avoid getting my ITM puts exercised in the middle of the night.

 

[bkp_duke]

What does everyone think about next week?

If we get beat down massively today thanks to Meta, I'm considering rolling my 2/11 -900/+700 out to greener pastures for a credit now, or wait until next week?

Also, I have that +820P that expires tomorrow - I was thinking about exercising it if we were >900 and then immediately selling the shares to pocket the difference. Any other creative ideas based on the current situation?

I hate to be the one to be doom and gloom, but I'm not optimistic right now. I'm trying to exit as many positions as I can or roll very long with those that I cannot.

If you would have asked me on Jan 3, I would have said no way we would be in the 800s on Feb 3, but here we are. The market is irrational and is chopping everyone for anyone's sins. TSLA I firmly believe is primed to jump massively when the dust settles, but there is so much fear in the market right now, I want to see some improvement before deploying what capital is left.

Sorry to be doom and gloom, I literally didn't sleep much after I saw what Facebook did to the market after hours with their miss (which should not have been a surprise, but somehow was).

 

[samppa]

for LEAPs as share replacement.. what would the not-advice here be about safe strikes?

 

[scubastevo80]

Today's potential moves:
Parents account (1) closing BCS for 2/11 at the open if we're down 2% (this will likely be up 80%), may write a BPS 20% OTM for 2/4 or 2/11 depending on premiums. (2) Considering buying a bull call spread at +1000/-1200 for July for $5k with a max profit $15k. This gives macro market some more time to react and potentially run up given the Fed speak this week (consistent use of language that seems to want to avoid further market disruption). It also gives us 2 more earnings reports, inclusion of production/delivery from Texas and Germany, 4680 update, potential Cybertruck timeline update, etc. Risks are obviously macro headwinds and a prolonged holdback of Tesla's stock price.

Personal account, I'm trimming some utility and consumer staple exposure that has outperformed and starting a small GOOGL position and adding to some beaten down growth stock holdings. No options trading here unfortunately, although I do have a PLTR LEAP from Dec that's getting crushed.

Edit: strike the potential BPS option. We're not doing anything until I see AMZN's earnings, and depending on how things get today, may roll our 2/11 -840/790s down and out if we can still get credit and strike improvement.