Unfortunately the most predictable thing about TSLA is its unpredictability
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Unfortunately the most predictable thing about TSLA is its unpredictability
ChefBoyardee
Member
Haha, yeah it's Tradingview. Just edited my post to include it
After being reminded by @samppa of the idea of 4-week CC given low 1-week premiums, I compared 1, 2 and 4-week CCs in the $975-$1075 range where I’ve been writing lately, and saw the merits of getting past the woeful short-term and locking in a decent but not overwhelming weekly amount. Possibly this will cut out some of the next few weeks’ trading gyrations and personal anxiety as the market continues to digest inflation and Ukraine concerns. Doubt either will be resolved in the next month, but hopefully the dust will settle, and I can roll as needed:
* Closed several 021822C1075 for $0.26 (+80% from Thursday), and rolled to 031822C1075 at $10.20 securing $2.50/week vs. $1.25 last week
* Sold twice as many 031822C975 for $30.80 on the $974 buy-write, and 45% of core shares
I do feel the upside risk involved in these trades, but expect to be able to roll out of the positions and possibly accept assignment on a portion since one of the buy-writes was intended as a 3-month program using spare cash and I’d like to rebuild the cash reserve given overall market risks.
* Closed several 021822C1075 for $0.26 (+80% from Thursday), and rolled to 031822C1075 at $10.20 securing $2.50/week vs. $1.25 last week
* Sold twice as many 031822C975 for $30.80 on the $974 buy-write, and 45% of core shares
I do feel the upside risk involved in these trades, but expect to be able to roll out of the positions and possibly accept assignment on a portion since one of the buy-writes was intended as a 3-month program using spare cash and I’d like to rebuild the cash reserve given overall market risks.
OK, can anyone explain to me how for instance a 950/1005bcs has a lower margin impact than a 950/980bcs? I literally get a margin impact of 1650 for the latter. What would influence these margin requirements, knowing I only have cash and a 820/870bps.
This volatility is a nightmare... pre-market $TSLA was in the $830's, now look at it! Just need Putin to fart and it all comes back down again...
With this in mind, I closed out all my puts, some for a small profit, some for a not-so-small loss, but that risk is gone for the moment, just have -c850 and -c875 in play for this week. Of course I did this not long after open, when the SP was in the upper $860's, expecting it to be a head-fake
I think one needs to move further out of the money and less time in the trade. Either sell puts on major weakness (although ho to determine that - I thought $900 was the floor last Thursday, then Friday happened) or wait until Wednesday and then see what can be had
If anyone has brighter ideas, I'm listening...
With this in mind, I closed out all my puts, some for a small profit, some for a not-so-small loss, but that risk is gone for the moment, just have -c850 and -c875 in play for this week. Of course I did this not long after open, when the SP was in the upper $860's, expecting it to be a head-fake
I think one needs to move further out of the money and less time in the trade. Either sell puts on major weakness (although ho to determine that - I thought $900 was the floor last Thursday, then Friday happened) or wait until Wednesday and then see what can be had
If anyone has brighter ideas, I'm listening...
chiller
Member
How hard is it to keep rolling sold calls if we get a big movement against us? I know people got wiped out with their BCS on the hertz deal, but how about those not using spreads; Were you able to roll it out and up sufficiently to get out of trouble?
I'm assuming you're on Portfolio Margin with IB? For me I generally have a negative margin impact for BCS and for those particular BCS the 950/1105 is about -530, while the 950/980 is around -408. However things can get weird depending on the state of your account and how the IB margin algo views it. For much of this year my account has been stressed to the point that BCS were getting assigned as much positive margin as a BPS (counter-intuitive and makes it hard to trade out of a hole). So it's probably just another quirk of IB's bizarre algo margin calculator.
Hard to answer, because it depends on whether you let it get ITM before you start rolling. I had sold a CC in my son's account last fall right before the SP started to climb. It went ITM, and I just rolled for strike improvement every month. I was only able to improve the strike $5-10 dollars per month. It was painful. Finally had the shares called away around 910 when I decided to increase the cash in the account for BPS instead.
Don’t want to risk my low cost basis shares on the low strikes, so sold 3/18 1200ccs @2.65. Would be great having to roll these.
Not much premium, but better than nothing considering we keep going down and I’m not sure we gonna have that big pop soon, which would be a good opportunity to sell on strength.
Have -820, -800, -780, -750 100wide bps for this week, some of which are not that comfortable anymore.
I really don’t believe Ukraine invasion can happen, Putin will not go for a full fledged invasion with huge losses due to a good preparation on the Ukraine part and personal sanctions including freezing of assets of his cronies.
This is all about hybrid wars, blackmailing of the West, creating instability, distracting his own population from asking why things are so shitty in the country.
Inflation on the other hand and the expected interest rate hikes/QT do seem to provide a sustained pressure. This might not resolve until the effect of them is fully seen. You’d expect that to be priced in by now, but no end in sight.
Not much premium, but better than nothing considering we keep going down and I’m not sure we gonna have that big pop soon, which would be a good opportunity to sell on strength.
Have -820, -800, -780, -750 100wide bps for this week, some of which are not that comfortable anymore.
I really don’t believe Ukraine invasion can happen, Putin will not go for a full fledged invasion with huge losses due to a good preparation on the Ukraine part and personal sanctions including freezing of assets of his cronies.
This is all about hybrid wars, blackmailing of the West, creating instability, distracting his own population from asking why things are so shitty in the country.
Inflation on the other hand and the expected interest rate hikes/QT do seem to provide a sustained pressure. This might not resolve until the effect of them is fully seen. You’d expect that to be priced in by now, but no end in sight.
I had been selling 40 CC every week that had expirations about 30 days out. Originally 20% otm then started selling closer otm calls because premiums and volatility deteriorated over the year. The hertz deal morning began with a momentary (maybe 2-3 seconds) negative buying power of over $1M before the options pricing caught up with the premarket volatility. That set the tone for the morning.
Watching the price action I did not see how it would be possible to roll out the CC safely and I had to make a quick assessment: do I let these get exercised and pay enormous taxes on my gains, or take the $600k L on the covered calls? I decided to buy back the calls and take the loss, but with the price continuing to soar I ended up taking a loss closer to $1M by the time the orders went through.
I only recently began selling a few CC but less quantity and further otm than before. Bought them back Friday in hopes of selling them again when the share price shoots up, but still waiting for better premiums.
Curious how others fared with CC during that time
I believe it is reasonable to say usually possible, but if there's a big rise that makes your CC ITM, you will have to be patient to keep rolling and wait/hope for a downtrend to escape with your shares intact. A key thing I tried to keep in mind was rolling up and out isn't just about the credit or debit cost associated with the roll, you also have to factor in the recapturing of capital gains inherent in higher strikes. Patience is key, I was too bullish doubting a downtrend and accepted needless costs to close out ITM CC (similar to what @Blue horseshoe mentioned).
some of these already at 40-50% profit.. What to do
? Tuesday's are usually crappy days.
I think it's very possible to roll CCs for some time.
When TSLA hit $890s the week before Christmas, I had CCs in the$ 900s, which quickly went ITM.
My cost basis for shares is very low, so I began rolling for strike improvement (and small premiums) as the SP rose up to $1200 after the New Year, a $300, 33% move up from when I sold the CCs.
As we know, TSLA is volatile and eventually ended up back down in the $900s by Jan 20th. Took some patience, but only about 1 month to get out of trouble.
All good, but once again, I have open CCs positions in the 900s.
There sure have been a lot of down Fridays followed by Mon AM surge, followed by SP trailing off (sometimes for the full week) lately. I’ve generally been closing CC’s on Thu/Fri and writing again Mon AM. For example, some super cautious $1075 strikes sold Thu were closed this AM pocketing 80% of the premium.
FlamingPIG had a similar question that I responded to.
Wiki - Selling TSLA Options - Be the House
I wish we would bust through 900 and then get into gamma-squeeze-territory .. then i can take Profits before close & set up for a "Turnaround Tuesday" ... I need a bit more predictablity -.- Unfortunately the most predictable thing about TSLA is its unpredictability
teslamotorsclub.com
You can generally keep rolling for premiums/improved strikes if you are not using spreads.
You do need to catch up with the SP eventually (very possible with TLSA) and it can tie up your shares for some time.
This is in fact showing the same calculation as what the spotgamma service provides, that some may be familiar with. This is good analysis, but there is a huge caveat. The reason is actually called out in the article itself:
This assumption that dealers are long the calls and short the puts (i.e. retail, hedge funds, etc., are long puts and write covered calls mostly) and the dealers actively hedge against the stock moves, works pretty well at the index levels. But is somewhat flakey for individual names. It definitely was the case that the individual investors were trying to get Tesla exposure back in the day via long atm / otm calls.
As a counter point though, the stock is mostly under the influence of puts, and not calls. and I suspect that the folks long these puts are not dealers, leaving the dealers short put gamma. So this analysis is perhaps more applicable than in the past.
I am generally of the opinion that in case of Tesla, the dealers are short both puts and calls. This results in negative gamma position pretty much everywhere. The way this manifests itself is that moves in any direction are exacerbated. So despite its large market cap, Tesla is more volatile than most of its peers (in mcap terms).
There is some useful stuff though. It is worth tracking where max gamma is. generally these act as support / resistance levels due to hedging activity. and are also potential pins when options expire. Again this has to be tempered by the fact that this number changes intraday, with bought and sold options. In fact, with a high options volume name like Tesla, much is obscured by these 2 factors: Who is owning the puts and calls? and what are the intraday directional impacts from the huge options trading volume.
But despite that there is a small signal in that noise somewhere, i.e., key gamma strikes.
A few weeks ago I was looking at intraday PCR using @generalenthu put/call volume over 500 contracts with the expectation I'd find some correlation to gauge sentiment the day after or within week. It was the week that volume was through the roof , there was enough data to calculate within strike... all ended up being a flop in terms of getting a read. Nonetheless, it is interesting measure.
My simulations said usually you could roll until 2x the stock price, sometimes 3x.
Edit: See this old post
Wiki - Selling TSLA Options - Be the House
Textbook MaxPain says Friday close $650-660. If I had money or margin, selling p650 & c660 sure looks like a pretty sure bet. Unfortunately, I’m pretty much tapped out. I could sell a couple more CCs. Hmmmm. Too late today, maybe tomorrow.
teslamotorsclub.com
scubastevo80
Member
Placing orders for Jan'24 leap call spreads at 975/980 and 1030/1040. Net debit amounts per contract are extremely low $0.75-$1.00 so I'm not expecting these to fill. If they do and we close above the upper strikes in Jan 2024, they pay between 6:1 and 9:1. We're likely to play orders past the "volatility period" and will forgo the weekly trading for a bit. Too much risk given its a guessing game as to what rate hikes and political unrest is actually factored into the current macro environment.
I closed one of our BPS this morning (-775/+650 which was only up 33%), and the other one for 2/25 is still riding.
I closed one of our BPS this morning (-775/+650 which was only up 33%), and the other one for 2/25 is still riding.
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