Wiki Selling TSLA Options - Be the House

[juanmedina]

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?

I am in the same position and I have no idea how to handle it. Obviously my 12/16 1200-1300 CC seem to be screwed; I probably could have retired early in the year instead of December lol.

I bought 400 share just now. I am not sure if I should get some call options.

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.

This would be good because it would allow to buy back maybe half of my covered calls at relatively small loss.

 

[mrmtb]

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.

Yeah in my experience, any reactionary trade that seems obvious because of news (bullish bet in this case) is usually the wrong play. It could work but there's a better chance of it going against you rapidly vs normal times so like you, I just stay away.

edit: when I say trade/bet, I'm talking short term.

 

[BornToFly]

I bought back my 1200 short legs at the open for a loss. Hopefully I can sell the 1350 legs for a nice profit and limit the damage. Still have 1250/1400s...

 

[jeewee3000]

Yeah in my experience, any reactionary trade that seems obvious because of news (bullish bet in this case) is usually the wrong play. It could work but there's a better chance of it going against you rapidly vs normal times so like you, I just stay away.

Mid term the "obvious" bullishness will come through IMO, in the sense that Tesla's market cap post-split will be higher than its current market cap.

Short term anything can happen. We've seen this too many times. Today will obviously be a good day, but the gains of today could be gone by this friday.

I'm getting out of cc's one at a time similar to how I'm getting out of BPS one at a time: I pit them against each other.

I flipped a 4/8 $995 cc to a 5/20 $1050 put, but I also have a 5/20 $1100 cc. One of these is in trouble, one of these will expire worthless.
Rinse and repeat. The key is to have enough cash (or margin if you like to live dangerously) at all times in case of emergencies.

EDIT:

I had some JAN2023 -830p/+720p BPS open. I rolled them forward 3:1 to june 2022 -1150p/+850p. (So three JAN2023 BPS became one JUN2022 BPS).

And rolling come cc's to JUN2022 to a strike above 1150 so I get rid of one or the other.

 

[BornToFly]

I just saw that the stock split is for two years from now?... Is that correct?!? This rally will probably be short lived if that's the case.

 

[Knightshade]

I just saw that the stock split is for two years from now?... Is that correct?!? This rally will probably be short lived if that's the case.

Where did you see that?

All I've seen is they intend to have a shareholder vote to authorize more shares, in order to be able to do a future split with no details given.

 

[BornToFly]

Where did you see that?

All I've seen is they intend to have a shareholder vote to authorize more shares, in order to be able to do a future split with no details given.

Bloomberg. So probably incorrect....

"(Bloomberg) -- Tesla Inc. said it’s planning a second stock split in roughly two years, giving a lift to shares that had been trading lower on news Covid-19 is again disrupting operations."

 

[brianhn1]

Bloomberg. So probably incorrect....

"(Bloomberg) -- Tesla Inc. said it’s planning a second stock split in roughly two years, giving a lift to shares that had been trading lower on news Covid-19 is again disrupting operations."

Reading that now, I think it means 2 years after the last 5:1 split.

 

[scubastevo80]

Bloomberg. So probably incorrect....

"(Bloomberg) -- Tesla Inc. said it’s planning a second stock split in roughly two years, giving a lift to shares that had been trading lower on news Covid-19 is again disrupting operations."

I'm reading that as their second stock split in 2 years (1 this year, 1 in Aug 2020), not that this one will be two years out. I think August timing makes sense and would be happy to have more shares. Doesn't help my options game though...

 

[adiggs]

Stock split incoming.

Time to flip all cc's to puts.

Thanks for the heads up. Somehow that news didn't make it into my Fidelity feed.

I just saw that the stock split is for two years from now?... Is that correct?!? This rally will probably be short lived if that's the case.

Linky / source please? My guess is that at worst the vote will happen as part of the regular shareholder vote on stuff this year. The dividend itself can happen very soon after depending on whether the board wants to announce those details or not.

EDIT: I see other responses about the source. Thanks!


I've thought previously, though had no particular reason to post, that even the announcement of a vote to increase authorized shares, or intent to split after a vote, would be enough to trigger another short squeeze as short sellers that have been manufacturing shares need to buy those manufactured shares back.

I've been expecting this week to be up - I hadn't expected this incremental bit of good news. Good stuff indeed

 

[TheTalkingMule]

I think we were talking Friday about being careful selling CC's this week, obviously now even moreso. But I think the same gameplan should be utilized. Look for the poppiest pop maybe early Wednesday into early Thursday.

Patience with selling intraweek CC's has been rewarded and I think this week will follow that pattern. You can already see MM's trying to keep things at 5% today if possible. SP should continue to ratchet higher a couple days.

 

[Yoona]

at some point in time, maybe sp will come back to 1010 (to fill the missing 1010-1064 gap from last Fri's close)

 

[UltradoomY]

STO 04/01 $1100 CC's for $25 each - using the proceeds to purchase the brand spanking new June 2024 $800's for roughly $50k each.
Did both at the same time, so I am kinda counting my chickens before they hatch.
Have done extremely well the past few weeks with bought calls (mentioned upthread) and had the extra cash.
Just wish I didn't need a bunch of it for taxes coming up soon.....
Cheers!

 

[jeewee3000]

With all the excitement this morning regarding the stock split I've been managing some "saved" positions (see earlier post).

I had an epiphany in my personal options selling journey (i.e. many of you know this, I just wanted to share).

If you have (more than) enough cash for 100x shares and you have an ATM CC (or not too much ITM), you could - instead of pitting a put and the cc against each other as I'm doing now - swing trade this position to get out of it.

Example: you're stuck with a 4/8 $1000 cc but you are bullish in the short term -> flip it over to a (cash secured) put.

If you are correct and the stock rises, you can flip that put back to a covered call when you believe a local top is reached. If correct and there is another dip or stagnant SP you can flip back to a put etcetera.

Again, nothing new for our more advanced members but since I've only recently started dabbling in fully cash secured puts (as opposed to BPS) I didn't realize this fully until now.

In other words: if you have enough cash available you can get out of any cc position. It just takes time, effort and a little luck ( = your sold option is not excersided early).

 

[strago13]

Having some trouble rolling some puts backward. Can anyone offer any insight into what might be happening?

Lets say I had (these are made up) 5 Jan 2024 900 puts. I wanted to roll 1 of them back to 5 Jun 2022 930 puts. I enter that trade and it has been rejected 4 times. First time was for: Market Reject, Market Reject, Too Late to Cancel, Too Late to cancel.

What is happening here? Are the MM's telling me to pound sand? Kind of bullshit IMO

 

[BornToFly]

Having some trouble rolling some puts backward. Can anyone offer any insight into what might be happening?

Lets say I had (these are made up) 5 Jan 2024 900 puts. I wanted to roll 1 of them back to 5 Jun 2022 930 puts. I enter that trade and it has been rejected 4 times. First time was for: Market Reject, Market Reject, Too Late to Cancel, Too Late to cancel.

What is happening here? Are the MM's telling me to pound sand? Kind of bullshit IMO

You need 5X the cash or margin to turn 1X Jan 2024 to 5X Jun 2022. Could that be the problem?

 

[strago13]

You need 5X the cash or margin to turn 1X Jan 2024 to 5X Jun 2022. Could that be the problem?

I have plenty of margin/cash, I thought the same thing. I dont know what else I am dong wrong here.

EDIT: eTrade would not let me do this in one leg, it required me to execute the BTC then the STO in separate transactions

 

[WattsHappening]

I guess several of us are in the same situation: short covered calls that are ITM now (or in my case, DITM).

When I sell covered calls, I sell them at a date and strike price with which I would be happy to have them get exercised. That's the case here. Kicking myself for this particular trade, but thrilled with the SP increase for my entire portfolio.

As I don't have the cash available to swap these for puts and the rolling options are not very appealing, I may just let these get exercised. Then decide whether to just buy back as many shares as I can with the proceeds, or start to play the wheel. I'm kinda thinking the wheel, if for no other reason than for the experience/learning.

This is fair warning to you all. With my timing, as soon as my CCs get exercised and I write cash covered puts, you can be sure the SP will drop precipitously.

 

[vwman111]

I rolled my BPS in February out to leaps to buy some time and reduce stress. Is there anything i should be thinking about now with a stock split looming? I have some Jan 24 1100/980 spreads. I read earlier about someone closing the long leg? I assume that would require additional margin?

 

[Oil4AsphaultOnly]

With all the excitement this morning regarding the stock split I've been managing some "saved" positions (see earlier post).

I had an epiphany in my personal options selling journey (i.e. many of you know this, I just wanted to share).

If you have (more than) enough cash for 100x shares and you have an ATM CC (or not too much ITM), you could - instead of pitting a put and the cc against each other as I'm doing now - swing trade this position to get out of it.

Example: you're stuck with a 4/8 $1000 cc but you are bullish in the short term -> flip it over to a (cash secured) put.

If you are correct and the stock rises, you can flip that put back to a covered call when you believe a local top is reached. If correct and there is another dip or stagnant SP you can flip back to a put etcetera.

Again, nothing new for our more advanced members but since I've only recently started dabbling in fully cash secured puts (as opposed to BPS) I didn't realize this fully until now.

In other words: if you have enough cash available you can get out of any cc position. It just takes time, effort and a little luck ( = your sold option is not excersided early).

Just note that this works until it doesn't - e.g. you flip too early and the SP doesn't reverse when expected. In that case you wind up further ITM. When your option is way OTM, then there's plenty of breathing room for these timing issues to wash out.