Wiki Selling TSLA Options - Be the House

[adiggs]

@adiggs or others: just found this thread and now going through all 790+ pages1 Wondering if advice for being stuck in a covered call that's deep ITM. $900 with a May expiry. My plan was to roll each & every week, but getting harder to roll flat. My other thought was to just bite the bullet and roll to a 2024 leap at a price where I'd be comfortable to exit the stock (which of course would be v. painful!)

Several others with ideas.

One question that you didn't indicate - do you have any sort of a schedule for the position? I.e. is there a point in time where the call will resolve, either by assignment or by you paying up and closing it out? I have some shares / calls, for instance, that I'll close early in April to pay some taxes. Hopefully some more soon for a down payment on a house. The point here is that with a schedule, that limits the available choices.

I don't know I have a lot more to add to the observations others have. I've done the far roll to get far OTM. That worked and I figured selling shares at 840 would be fine by me - shares were around 300 at the time. And then we've shot up and suddenly that 840 strike cc wasn't so fine anymore. That's the big problem with a really far roll.

If you do start looking at a long DTE roll for big strike improvement, be sure and include 6 month and 1 year options in your planning. I've done both 1 year and 2 year options, and I found the 1 year to be seriously better. Just because it wasn't so far out, and the resources weren't locked up for so long.

 

[Max Plaid]

Rolling a single ITM call gives few options. One possibility is to go far up and out, then rebuy when the underlying dips - in fact you can trade in and out of this as the underlying changes

If you've multiple ITM calls (as I do), then there are many possibilities:
- keep rolling the same strike for small premiums until the SP drops
- split roll, keep some at the same strike, roll others up ATM
- keep same strike, but use the weekly premium to reduce number of contracts
- straddle with puts at the same strike if not too ATM -> one side of the trade will win

As I have 15x 4/1 -c900 I'm looking at all of the above, thinking of (for 4/8):

- O5x -p/-c900 + 5x -p/-c950 + 5x -p/-c1000
- O-c900 roll 15x to 13x
- 15x -p/-c950 strangle

Seems painful not to be taking realised gains on such rolls, but the way I see it is every $5 strike improvement for 15x contracts is $7500 potential profits, so if I can get a $50 strike roll that's $75k, of course not really visible until realised, but on paper it's a much better situation

Of course foreign straddles always bring the risk of a load of ITM puts if the stock dumps, a real possibility given the crazy run we had the last two weeks...

 

[jeewee3000]

Stock split incoming.

Time to flip all cc's to puts.

 

[Max Plaid]

Stock split incoming.

Time to flip all cc's to puts.

Yes, time for a change of strategy... I was wary of writing puts, but surely this news will keep the SP up, at least for a while, so one can be a little more aggressive

Worth nothing, though, that both GOOGL and AMZN stocks cooled-off quite quickly after their respective split announcements...

 

[InTheShadows]

Need to make sure I keep telling myself today “Don’t follow this thing up with your bps rolls”. I do not need a repeat of January.

GL today everyone.

 

[OrthoSurg]

Stock split incoming.

Time to flip all cc's to puts.

I was wondering what this +5% premarket move was about. Now I understand.

When the stock was 760, I sold 900 CCs, rolled them to 990, then to 1035. Last week when it reached 1040 I decided to roll them to 1500 in August for a $10 credit. That’s a strike price I would be willing to sell during a possible recession, inflation and war. I wonder if the stock split announcement will have the same consequence as the first time.

I am hesitant to BTC my -p1050 July contracts at +50% profit and open -p1300 with the same expiration date. The SP recovery was 3 months faster than I expected :X

 

[traxila]

I bought 10 Apr 15 1030 calls at the close on Friday because of upcoming catalysts and the strength the stock showed overall which impressed me. Hoped to close this week with a 20K profit. FOMO was definitely at play, I mean why not do short term calls at 800, right?…. This was the target anyway.

Then came the new stupid unrealized capital gains tax announcement. Figured this could hit the stock a bit on Monday.

Then came Biden’s dopey comments about regime change. Definitely not good, but in the end the market has been taking existential issues in stride since there is no point in discounting extinction by selling stocks. Thought this should clear up by Monday.

Then came Shanghai shutdown announcement and I knew I was screwed. Oh well, least I have a bunch of CCs….

Woke up this am and checked to see how far it was down….. well OK. Never a dull moment….

 

[phantasms]

I was in a similar bad position with two covered calls. I combined them [cost wise] and rolled it to January at $1300. I figure if there's a recession or whatever maybe I can get out of it for a reasonable price. Worst case scenario the Roadster gets paid for in cash. It's not ideal and I'll cry about my first world problem if the stock is at $3k by then but there are obviously worse problems to have. Also, I can always roll further out.

So what would you guys do with this? Just BTC first thing this morning and don’t look back? It would wipe out essentially all of my options gains if not more. Do I buy a 6/2024 call to hedge. Do nothing and hope for a pullback to close?

 

[strago13]

I think I’ll be rolling back my jan2024 puts to may or June ish timeframe at 900 or 950.

Stock spilt announcement caught everyone off guard I think.

 

[samppa]

Anybody got an idea when the actual annual shareholder meeting will be? has it been announced?
2021 was in august.

Edit: I remembered wrong, it was october.

 

[MikeC]

Just bought 100 shares pre-market to cancel out one CC.

Maybe hindsight bias but felt like they wanted shares on Friday by closing above 1010 - they didn’t have to exercise any sold 1010p and they did get assigned any 1010c.

 

[CHGolferJim]

So what would you guys do with this? Just BTC first thing this morning and don’t look back? It would wipe out essentially all of my options gains if not more. Do I buy a 6/2024 call to hedge. Do nothing and hope for a pullback to close?

Some pop in SP and options prices will be reflected in the first prices available at 9:30 EDT, so an at-market BTC could be risky in terms of what it could cost. Limit orders might not be achieved. Otoh, and not at all sure of this, but seems likely the “split pop” will gather steam throughout the day, not be 100% reflected immediately, which presents the chance to BTC at a high cost early, then STO the same or similar CC at an even better price later in the day. This split enthusiasm may also bring forward some of the positive reaction to P&D and 1Q P&L, presenting the possibility of a dip or plateauing in the next few weeks. Also, seems very possible the split effect will be less this time than last time. As usual, the timing and size of each event is total guesswork.

[Edit: Dan Ives has said on CNBS this morning that the split could be a “massive catalyst”. ]

 

[jeewee3000]

Anybody got an idea when the actual annual shareholder meeting will be? has it been announced?
2021 was in august.

It was October 7th. 2021 Shareholder Meeting | Tesla

 

[traxila]

It was October 7th. 2021 Shareholder Meeting | Tesla

Had been pushed back due to COVID. Usually in the summer. June I remember.

 

[Chenkers]

These are the recent dates for shareholder meetings (credit Troy):

Jun 6, 2017
Jun 5, 2018
Jun 11, 2019
Sep 22, 2020
Oct 7, 2021

Based on this and COVID disrupting the last 2 years, I would expect a return to a June annual meeting date. This would put Proxy statements at around early May. It's at this point we could see what split ratio Tesla is proposing. eg 5:1 or 10:1 based on shareholder approval. Tesla have all but confirmed it will be another dividend split in a recent 8K. This should see the MM and hedgies scrambling to close their naked shorts ASAP providing for a nice squeeze.

 

[InTheShadows]

I think I’ll be rolling back my jan2024 puts to may or June ish timeframe at 900 or 950.

Stock spilt announcement caught everyone off guard I think.

Can you give an example of this? I’m trying to wrap my head around rolling back and down with out a debit. I have a set of September 1100/-1200 puts that I’d like to get freed up but think I am stuck unless we go to 1300+. I rolled them out the other week when we bottomed on that Tuesday because they were expiring that week. That’s what I had to do to save them.

 

[scubastevo80]

Well I'll likely be closing out my last open 4/1 BPS this morning, the question as others posed is what trade(s) do we make on the back of a two-week 29% run that's being followed by another 6% pre-market increase and this news. BCS seem to continue to be a risk, so perhaps I wait for a pullback day to open BPS?

 

[intelligator]

So what would you guys do with this? Just BTC first thing this morning and don’t look back? It would wipe out essentially all of my options gains if not more. Do I buy a 6/2024 call to hedge. Do nothing and hope for a pullback to close?

Interesting read above, thanks for all contributing. I'd rolled Mar 25th cc to Sep '22 1200 and also to Jan '24 1650 under similar conditions. I do not have enough margin or cash to cover a naked put. Using Friday's option data and one CC group to size up the move, a possible flip roll of the September 1200 CC to April 14th '22 +775/-885 BPS may reel in the CC and free the shares. My example are for slight credit/even money rolls. I'd take a debit to improve strike... it's for discussion purposes.

Could this approach work for you as well?


UPDATE: SCRATCH THAT THOUGHT - I HAD THE WRONG EXPIRATION ON THE CALL !!!!!!!!!

 

[jeewee3000]

Interesting read above, thanks for all contributing. I'd rolled Mar 25th cc to Sep '22 1200 and also to Jan '24 1650 under similar conditions. I do not have enough margin or cash to cover a naked put. Using Friday's option data and one CC group to size up the move, a possible flip roll of the September 1200 CC to April 14th '22 +775/-885 BPS may reel in the CC and free the shares. My example are for slight credit/even money rolls. I'd take a debit to improve strike... it's for discussion purposes.

Could this approach work for you as well?

My option data prices a september '22 $1200cc around $94.
A 4/14 -885p/+775p goes for about $10.

Are you suggesting to flip one 1200cc into 10x april BPS or did you make a typo somewhere?

A May 6th 2022 -1100p/+900p goes for around $100 so you could flip the september cc to that if you're bullish.

 

[corduroy]

Worth nothing, though, that both GOOGL and AMZN stocks cooled-off quite quickly after their respective split announcements...

Very true. Within a few trading days GOOG was back to the pre-announcement level then lower. If TSLA follows that pattern it would be a great time to sell CCs on this pop, but I am not going anywhere near that trade.

I would like to buy some calls before the split, but I'm going to bide my time and wait for a pullback. Of course if TSLA moons like the last time, that won't work.