Wiki Selling TSLA Options - Be the House

[saniflash]

As far as I am aware the MM's cannot manipulate IV, there are too many factors in play including the demand of the very contracts they sell.

IV (implied volatility) is the volatility figure that results from putting all variables into the options price formula (e.g. Black-Scholes) and solve for volatility.

This means that IV is deduced from the prices the market pays. And these are driven by supply and demand -- and this is where my knowledge ends wrt if this can be manipulated by MMs or not (in theory concerted efforts could be used to increase the Ask prices on the options they sell -- i.e. like a cartel on the supply side).

Good info. You're gonna love the IV crush tomorrow. If you get a chance let us know how that goes for you as well.

Thanks. I rolled the 1350s into 4/22 1210 calls one hour before the close because the premium was so juicy and I hope (believe) that MMs will defend the 2-3 call walls between here and 1210.

 

[UltradoomY]

To those who bought $1150 calls for next week, what is the plan?

My plan - as always - is to roll them out and up.
Right now I have 25 of them - so I will roll them out a week and up to $1200 and take the profit (which should cover all the cost) and let them ride a day or two and do it again, but the second time - condense from 25 contracts down to 10 at a lower strike and farther out.
Probably May or June $1100's - that I would then condense and roll out to October or December - eventually ending with 1 or 2 "free" leaps for next year in the $1200 range.

I have done this a LOT and it has significantly added to my long terms TSLA position.

 

[Zhelko Dimic]

For anyone wanting to sell CC, or shares, remember the 8 week rule.
I've posted this once before:

trading

Looks like a double top, with a possible island reversal (if it gaps down tomorrow). But, I still think there is a greater than 50% chance we hit 350 or higher soon, as there is a gap fill around 345, and the pickup news is adding momentum. Macros are the wild card. At some point I think it...

teslamotorsclub.com

 

[phantasms]

If the day continues as well as it looks like it will I presume we'll get some short covering on Monday and Tuesday, no? So maybe the best day to sell calls is late in the day Tuesday.

this is of course ignoring the macro hellscape.

 

[OrthoSurg]

No sell the news event, like we all expected. I was expecting the reverse of what we expected. Starting to understand how this goes

 

[intelligator]

My plan - as always - is to roll them out and up.
Right now I have 25 of them - so I will roll them out a week and up to $1200 and take the profit (which should cover all the cost) and let them ride a day or two and do it again, but the second time - condense from 25 contracts down to 10 at a lower strike and farther out.
Probably May or June $1100's - that I would then condense and roll out to October or December - eventually ending with 1 or 2 "free" leaps for next year in the $1200 range.

I have done this a LOT and it has significantly added to my long terms TSLA position.

Thanks for sharing what has worked well. You might have mentioned this before, why aren't you considering Jul, Aug, Sep, Nov? The insight may help me manage CC I have expiring September.

 

[Knightshade]

I've got some -1000/+750s and some -1000/+700s for Friday

Ideal world there's a run up into Wednesday afternoon before earnings and I close em 2 days early for a lot less than they're currently worth, but might be wishful thinking.

If I can't close em safely late Wed for not a ton then they're wide enough I'm not super worried about needing to roll em- probably just out to 4/29 with the thinking that even on a Thursday sell-the-news the #s would prompt various upgrades in the coming days that'd get us back over 1k by then... (though I suppose I might see about rolling down 5-15 bucks under 1k on the short leg- looked like that was about an even or tiny credit roll to 4/29 today at various times)

FWIW with IV being insane yesterday I just held for earnings.... and now just closed all of the above for about $2/sh debit.... probably did so "too early" but yesterday they were nearly $50/sh.... and at one point one batch (before rolling out/wider a few weeks ago) were at max loss in January.... so pretty happy to be out of these and still have turned a decent net profit on em.

Running the math looks like net profit was about 15% of cap at risk over a period of 15 weeks, or 1% a week... I can live with that, esp given how bad these looked a couple months ago.

 

[phantasms]

Ugh. I feel like I should be selling calls here with the stock up ~11% but feels risky somehow.

 

[ninpb]

Ugh. I feel like I should be selling calls here with the stock up ~11% but feels risky somehow.

A surprise news of Shanghai fully opening within days of the blowout earnings is what preventing me from selling CCs.

 

[phantasms]

A surprise news of Shanghai fully opening within days of the blowout earnings is what preventing me from selling CCs.

Yes that too. As I had mentioned earlier my fear is we get a short cover/squeeze up early next week. I've been burned enough times this year that I may finally be learning. lol

 

[TheTalkingMule]

No sell the news event, like we all expected. I was expecting the reverse of what we expected. Starting to understand how this goes

Exactly. We all knew earnings would be great(didn't know this great), yet nearly everyone was pessimistic on SP outlook.

If you're out there holding all these contracts, which direction screws over more people?

 

[juanmedina]

I wonder if will go all the way to all time high in the following weeks.

 

[vwman111]

You would be turning a position that tied up $10k of margin (per contract) into a position that ties up $100k of margin (per contract). Also, if TSLA drops, your available margin would drop as well, and that drop affects $100k put positions more directly than $10k BPS positions. On the other hand, although you won't be able to carry as many naked puts as BPS, you can turn a naked put into a BPS as needed (by throwing money at the problem and buying long puts).

Although you'll be tying up a lot of margin to do this, it's definitely safer than having 10x as many BPS.

Edit: Note that you don't need to buy long puts that expire at the same time as your short puts. You can simply buy enough to cover you until whenever you think TSLA would recover enough to restore your available margin.

that is very interesting. So i could roll the long leg of the BPS, Jan 24 1000P, up to Jan 23 1050P. The would reduce the margin requirement and likely provide me with a credit on the roll. Then step 2 would be to manage that position once we get close to Jan 23 which could mean managing shorter term long puts. Or purchase a Jan 24 put that ideally won't put me in a worse position than my original Jan 24 1000P. Better off if stock has taken off by then, worse off if we are sitting around the ATM mark.

Any other downside to this other than the stock price not cooperating at the Jan 23 and Jan 24 dates.

 

[vikings123]

I wonder if will go all the way to all time high in the following weeks.

One of the more prominent technical analysts thinks we have a chance. We got rejected hard at 1090 so let's see how this plays out.

https://twitter.com/x/status/1517140866678198275

 

[elasalle]

If the day continues as well as it looks like it will I presume we'll get some short covering on Monday and Tuesday, no? So maybe the best day to sell calls is late in the day Tuesday.

this is of course ignoring the macro hellscape.

Sells calls when you fear a Melt UP
Sell puts when you Fear a melt DOWN cheers!!

 

[Oil4AsphaultOnly]

that is very interesting. So i could roll the long leg of the BPS, Jan 24 1000P, up to Jan 23 1050P. The would reduce the margin requirement and likely provide me with a credit on the roll. Then step 2 would be to manage that position once we get close to Jan 23 which could mean managing shorter term long puts. Or purchase a Jan 24 put that ideally won't put me in a worse position than my original Jan 24 1000P. Better off if stock has taken off by then, worse off if we are sitting around the ATM mark.

Any other downside to this other than the stock price not cooperating at the Jan 23 and Jan 24 dates.

Oh, yes. IV could be high at the times you want to roll the long puts, in which case you'll actually spend more on the two consecutive puts, than a single 2-year leap.

My original suggestion was NOT to start off with a calender put spread. It was that if you're going to switch to naked puts (because you have enough margin), that it is safe to do so. And IF you run out of margin (because your stock holdings drops in value or your cash pile depletes), that you can actually make it a bull put spread when you encounter that need for additional margin. I view the long leg of a spread as sacrificial, so I tend to minimize it as much as possible (balancing it against the need for margin to open more positions).

 

[TheTalkingMule]

Sells calls when you fear a Melt UP
Sell puts when you Fear a melt DOWN cheers!!

I just took a peek at 4/29 call premiums.

Who wants $6 of premium and then have to roll/sell at $1150 next week? No tanks!

I like your advice, just remove the "melt" part. Nothing wrong with somewhat sitting things out when there such potential to get steamrolled. What's a losing a week or two in premiums compared to avoiding chaos and stress?

 

[adiggs]

I just took a peek at 4/29 call premiums.

Who wants $6 of premium and then have to roll/sell at $1150 next week? No tanks!

I like your advice, just remove the "melt" part. Nothing wrong with somewhat sitting things out when there such potential to get steamrolled. What's a losing a week or two in premiums compared to avoiding chaos and stress?

Heh. My decision this morning is to do the opposite (and not-advice).

I've opened 1130 strike calls for next week; a bit more than $7 credits, under the general heading of opening covered calls into a rising share price. I missed the peak this morning by a fair bit (1045ish share price vs. 1065ish available earlier); sometimes waiting to trade until after the morning shower pays well - today it cost me some. The time for additional thought though is always valuable to me.


I've also got a couple of share positions that I want (but don't need) to liquidate as that account is (for me) too heavy in shares; those are now covered with 1100 strike calls for next week. The 'worst' case on those (for me) is that I just sold those for $1100, collected $13 for the privilege, when I'd like to sell them for $1100. These were the same shares I wanted to sell at 1133 a couple of weeks ago, but missed and netted a $43 credit when the shares dropped.

Most likely on these shares is that I'll have a good early close, or that as we approach expiration next week I'll find that I have a credit roll with strike improvement (or not) that I like better than proceeding with the sale.


I've already seen the FUD beginning around earnings. Reads like concern trolling: Tesla's lush profit margin raises sustainability doubts in Wall Street

The idea being - margins are too high to be sustainable.

To be clear I'm of the belief that margins will continue to be flat to up, though I think they will peak much lower than some of the prognostications I've seen, if for no other reason Elon will lower prices to keep them from becoming too high. But in the very short term, wall street is concerned for me and my investment, as those amazing margins (2x the competition!) just aren't sustainable. Thanks for your concern guys and gals

 

[adiggs]

Nothing wrong with somewhat sitting things out when there such potential to get steamrolled. What's a losing a week or two in premiums compared to avoiding chaos and stress?

I completely agree with this sentiment. Giving myself permission to be out of the market for days has been a boon. Yesterday was a good put opening day and I'd closed puts the previous day; I chose to stay out though as I didn't want to be in front of a drop in the share price today (I wanted to be ready to buy shares / calls in case of a drop today). That's 2 whole days now with no puts open, with a non-zero chance I'll miss out on a good open for puts this whole week.

Still a great choice for me as an alternative to opening short puts when I don't yet see how the post - earnings reaction will settle out.

 

[Yoona]

Predictions for Friday, April 22nd 2022

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