Wiki Selling TSLA Options - Be the House

[TheTalkingMule]

I'm looking at call spreads for 2023 and 2024 as leverage and seeing some weird pricing. I've settled on the $800c/$1100c spread as my "moderately certain" leverage that should be fully ITM.

Looks like the debit on that spread is higher for Jun2023 expiration than Jan2024. Does that happen often? I wouldn't think demand at certain strikes/expirations would warp pricing that much at one moment in time.

Guess I'll take the extra months!

 

[mongo]

I'm looking at call spreads for 2023 and 2024 as leverage and seeing some weird pricing. I've settled on the $800c/$1100c spread as my "moderately certain" leverage that should be fully ITM.

Looks like the debit on that spread is higher for Jun2023 expiration than Jan2024. Does that happen often? I wouldn't think demand at certain strikes/expirations would warp pricing that much at one moment in time.

Guess I'll take the extra months!

Huh, so theoretically you could sell Jun23 spreads and buy Jan24 ones for a net profit and no risk? (arbitrage)

 

[ZeApelido]

Bad news:

Like many I've lost a lot of money on paper in the last 7 weeks. Even a few BPS had to be rolled out.

The timing on entering my cash secured 600/800 Jan 23 BPS was not ideal, but I still like the trade, just wish I waited to net out a hundreds of thousands of dollars more.

Good news:

I'm down less than if I was held onto all my shares from laster year.

All my weird 1 year out spreads in my IRAs I closed out and opened new positions to Jan 24 spreads to take advantage of this drop. For instance in my IRA, I now have 500/700 spreads that will net me up to 100% return in 2 years. That seems like a steal.


As for people warning we can't predict what's gonna happen in the 1-2 year time frame - maybe. But then you think we could predict 1 week or 1 month out? For most people, no way! Look what happened in the last 7 weeks! Many people have lost a lot of money trading short term options aggresively. Hunting for 1% a week with weekly trades sounds like a joke right now.

Meanwhile, I just "locked in" effectively 1% a week for 2 years, as long as the stock is above $700 in 2 years. I'll take that bet and lower stress over weeklies.

 

[scubastevo80]

Huh, so theoretically you could sell Jun23 spreads and buy Jan24 ones for a net profit and no risk? (arbitrage)

I'm not seeing that. -1100 Jun23 and +800 Jan24 shows a debit of $125 to me.

 

[mongo]

I'm not seeing that. -1100 Jun23 and +800 Jan24 shows a debit of $125 to me.

Trade would be four legs: a jan24 debit spread and a jun23 credit spread. If the jan24 < jun23 pricing held.
Could be a pain to handle though.

 

[Max Plaid]

So who's writing 800cc for tomorrow? Current $5.70 at SP 765

edit: just realized I'm the fish in the water being lured by sardines in my profile pic.

I wrote cc800's, but way too early in the day and missed some juicy premium. Still, I'm confident they'll expire OTM and I'm finding these smaller, more numerous trades to be working out much better

I also took the opportunity today to add more $GOOGL Jan 24 c3000 LEAPs, have DCA'd those down to a much better entry cost now

And loaded $AAPL Jan 24 c150 LEAPS, quite a lot of them - primarily as a vehicle for selling weekly calls, but I'm sure they'll pay handsomely over time, as will the $GOOGL

 

[chiller]

I had 760/660 BPS and a naked775P for feb25 sold on Tuesday. When things started going south yesterday morning I rolled the positions down to
Mar04 710/610 and naked 730P at no cost, think this should be safe...

Then we continued to go down the whole day.

My excess liquidity was getting low last evening, and waking up to the news this morning was not helping that. Thankfully I sold a couch and managed to transfer money into IB and it got there 90 mins before option trading started.

This gave me enough of a margin room that I could stay in my positions and see if 700 would truly be breached, and at the same time pick up a 2024 JAN 700C.

The difference in stress from almost running out of margin, and having a nice buffer is staggering. Would recommend having that buffer!

 

[EVCollies]

I rolled my 3/4 BPS (mostly) down and out to 4/14 for small credits
790/590->740/540
810/610->770/570
930/630->950/650

Starting realize my 3/11 1000/800 BPS might be lost causes. I could roll forward to 4/14 for even money but 25-50 higher strikes. If I keep them at 200 spreads I don't think my max loss changes so I guess I keep rolling them till I can't?

 

[BornToFly]

I rolled my 3/4 BPS (mostly) down and out to 4/14 for small credits
790/590->740/540
810/610->770/570
930/630->950/650

Starting realize my 3/11 1000/800 BPS might be lost causes. I could roll forward to 4/14 for even money but 25-50 higher strikes. If I keep them at 200 spreads I don't think my max loss changes so I guess I keep rolling them till I can't?

Might as well wait on the 1000/800. If we can back to 850 in the next two weeks (which is just as likely as 650 IMHO), you might be able to keep better strikes. No way to predict how this war will go or the reaction of the market to it (Today was the first real attack on Kyiv and the markets were very red in premarket and now are ... green...).

 

[mickificki]

Sold some 2/25 825 CC's earlier this morning, and btc at a loss today. This reaction upward may be strong, and didn't want to risk losing my shares. Next week could easily see mid 800's to 900's temporarily.

this was posted in the other thread, and i posted it last night but was deleted by mods. I hope they keep it here, because it's so relevant to us here imo.

also, some wisdom from @tivoboy Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable.

"I would say selling covered calls at this point would be the werst choice..
A) the time to sell covered calls relatively safely with any decent premium has passed
B) too much risk of being called away UNLESS one is really just playing in the weeklies or going far OOTM and at that point the premium is currently neglible."

 

[InTheShadows]

Phew. That’s better. Now 850 and I’ll be able to escape the week with out booking a loss.

Edit: tomorrow morning.

 

[CHGolferJim]

Sold some 3/4 and 3/11 $820 covered calls at 2:50pm………you’re welcome (wow, price up 50% between 2:50 and 4:00, thought those were good premiums, lol). Looks like some gardening ahead. TSLA and the ARK funds up big today. Weird if the day the market turns is the day of the invasion by the Bismarkian in the Kremlin.

 

[Yoona]

(newbie thinking of trying out the Wheel for the first time)

can someone pls confirm? assume static prices to keep it simple, TIA!

STO 3/11 -p750, $40 credit

if sp >=750, expire worthless
else

• forced to buy shares @750, cost basis 710; if sp=650, roll the 750 early
• STO CC 3/18 -c900, $10 credit 5 DTE
• "keep getting $10 weekly" until sp >=900

if sp suddenly moons to 1000, so what? just repeat the wheel

if sp drops to 650, STO CC -c710 at the very minimum

what am i missing?

sorry for newbie questions... i think i am quite good at spreads/strangles/IC/straddles/CC, but i am a dummy about the Wheel

let me make sure i understand

if i STO 2/25 -p750 x10 (credit $1.50) and tomorrow's close is 740, then saturday i have 1000 shares on my all-cash acct

monday i STO 3/4 -c750 x10 CC $63 credit (assume prem is not changing this weekend to keep it simple)

this means next week i get $63k and i don't care if sp closes at 600 or 900 and i don't care if i lose the garbage shares

what am i missing? this is too good to be true

TIA!

 

[Zhelko Dimic]

Writing options in this market feels to me like bull-riding. I approve if you are in it for a thrill, or you are a pro...
If not, I think many will be served better by taking few weeks break. Starting in January
Bull - I mean market, is trying to throw and hurt most riders possible.

 

[Zhelko Dimic]

sorry for newbie questions... i think i am quite good at spreads/strangles/IC/straddles/CC, but i am a dummy about the Wheel

let me make sure i understand

if i STO 3/25 -p750 x10 (credit $1.50) and tomorrow's close is 740, then saturday i have 1000 shares on my all-cash acct

monday i STO 3/4 -c750 x10 CC $63 credit (assume prem is not changing this weekend to keep it simple)

this means next week i get $63k and i don't care if sp closes at 600 or 900 and i don't care if i lose the garbage shares

what am i missing? this is too good to be true

TIA!

If you did this at $1200, do u see how you may not have liked it?

 

[Yoona]

If you did this at $1200, do u see how you may not have liked it?

for some reason, everything this yr is a blur and i keep forgetting what i am doing

 

[jaspa]

sorry for newbie questions... i think i am quite good at spreads/strangles/IC/straddles/CC, but i am a dummy about the Wheel

let me make sure i understand

if i STO 2/25 -p750 x10 (credit $1.50) and tomorrow's close is 740, then saturday i have 1000 shares on my all-cash acct

monday i STO 3/4 -c750 x10 CC $63 credit (assume prem is not changing this weekend to keep it simple)

this means next week i get $63k and i don't care if sp closes at 600 or 900 and i don't care if i lose the garbage shares

what am i missing? this is too good to be true

TIA!

I think what's missing is you're looking at 3/4 - c750 CC $63 premium while current SP is $800. If you did take 1000 shares on Saturday, it would be because SP dropped to at least 750. When you open up CC on Monday, and assuming SP is still roughly in the $750 range, then your CC premium wouldn't be $63. It might be half or less (just looking at 3/4 - c800 as a proxy, which is roughly ~$30.80) if there's a MMD. Of course if SP rockets to $800 come that Monday when you STO the CC, the premium could be $63.

 

[vikings123]

sorry for newbie questions... i think i am quite good at spreads/strangles/IC/straddles/CC, but i am a dummy about the Wheel

let me make sure i understand

if i STO 2/25 -p750 x10 (credit $1.50) and tomorrow's close is 740, then saturday i have 1000 shares on my all-cash acct

monday i STO 3/4 -c750 x10 CC $63 credit (assume prem is not changing this weekend to keep it simple)

this means next week i get $63k and i don't care if sp closes at 600 or 900 and i don't care if i lose the garbage shares

what am i missing? this is too good to be true

TIA!

You will not get 63$ premium if the stock is down to 740 and you get the shares assigned. Unless you can influence a huge gap up on Monday morning to 800$.

 

[jaspa]

Found this article explaining todays intraday reversal interesting.

TLDR -

You may note that the put flow was nearly 6x larger than the call flow.

Its most likely that traders entered the day LONG these put options, and so they likely are selling puts to close.

Accordingly, its likely options dealers started the day short puts, hedged with short stock. As a result, as puts are sold/closed dealers are buying back those puts and buying back their short stock hedges.

This is why we classify today’s rally as “short covering”.

Put covering may generate rallies that are less stable, and more susceptible to mean reversion. This is because once put covering is done, the associated buying flow turns off.

 

[MrMoo]

Found this article explaining todays intraday reversal interesting.

TLDR -

You may note that the put flow was nearly 6x larger than the call flow.

Its most likely that traders entered the day LONG these put options, and so they likely are selling puts to close.

Accordingly, its likely options dealers started the day short puts, hedged with short stock. As a result, as puts are sold/closed dealers are buying back those puts and buying back their short stock hedges.

This is why we classify today’s rally as “short covering”.

Put covering may generate rallies that are less stable, and more susceptible to mean reversion. This is because once put covering is done, the associated buying flow turns off.

Yes I did think we were seeing a potential short covering day. Everything was way too low for more hedges to be put in place. However this could also mean we are getting closer to the bottom as big money is unwinding their hedges and potentially holding cash to buy in (Wait and see or slowly DCA).