Yes, I think you understand. I’ve only done this twice before, and with moderate success, so don’t take this as a highly profitable method, but rather for risk reduction. I’ve been run over so many times selling CCs, that I’m looking for ways to reduce my losses. My trades have been migrating closer and closer to ATM for the higher premiums so guessing wrong, especially on timing, is starting to have greater negative consequences. Furthermore, because I only trade options in IRAs, and with a crappy platform, this is a new method of day trading the SP swing. I’m still in share acquisition-mode, and have many years before removing money from the IRAs, but would still like to moderate risk. Given that the daily SP swings are typically between $30-$50, this might be a lower risk option for day trading, but again with the proviso of getting the timing right.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
TheTalkingMule
Distributed Energy Enthusiast
It's kinda nice when you have a few BPS so far ITM that you can widen them a tiny bit, get 2/3+ of the incremental margin back in credit, and basically roll them out for free.
Have my last few 5/20 BPS leftover from the post-Jan/Feb rolls. $1050/$880 and I can roll to 8/19 $1050/$850 for ~$20 credit. Gonna wait til tomorrow and see what happens. Might also just roll them out to November instead, if it starts getting real ugly.
Seems the Vegas gods will let you throw good money after bad if the hole is deep enough! Fortunately for me, I know we're headed to the moooooooooooon! (eventually)
Knowing my luck we'll pop 9% tomorrow and this deal will be gone. You're all welcome.
Have my last few 5/20 BPS leftover from the post-Jan/Feb rolls. $1050/$880 and I can roll to 8/19 $1050/$850 for ~$20 credit. Gonna wait til tomorrow and see what happens. Might also just roll them out to November instead, if it starts getting real ugly.
Seems the Vegas gods will let you throw good money after bad if the hole is deep enough! Fortunately for me, I know we're headed to the moooooooooooon! (eventually)
Knowing my luck we'll pop 9% tomorrow and this deal will be gone. You're all welcome.
honest newbie question... i am trying to understand this, as i haven't done "roll out and wider" in the past
why not $1050/$880 to $1000/$800? probability of success is higher for the same width as $1050/$850
i am assuming because of income and bullish? what am i missing...
TIA!
Later in the day, with the shares around 805ish, I decided to stop investing the energy keeping an eye on the share price in an attempt to buy more at say shares=750 or something. I've had some cash I wanted to spend going overweight (for me) shares, and used that up buying more June '24 500 strike calls at $430.
The upside - I've got my overweight position entered at a good price. The downside - I expect to see a much better entry sometime in May; something like a 730 to 750 share price. The problem that I've now resolved, is that I don't know. And I decided to take "good" over burning time and energy, hoping for "much better" and possibly getting nothing.
I now have these calls purchased for 430, 440, and 524. Corresponding roughly to shares 805, 820, and 920. All of these purchase prices are similar or noticeably better than previous share purchases that support cc sales (920s and 870s).
I'll start looking for assignment / sales of these contracts around the 1000 share price range. Probably start selling increasingly aggressive cc as we go back up.
Another "regret" that is related to this - our last brief visit over 1100, I didn't sell shares when I identified a moment in time where I wanted to sell. At one point shares were 1133, and I needed to sell 2 positions worth of shares to move that account from overweight to target weight shares to cash. Instead of just selling the shares, I sold ITM calls for those 2 (1100 strike). The good bit is I picked up a $43 realized gain on that cc sale, and another $20+ on the next weekly sale, so those 2 positions generated like 30 or 50 weeks worth of their share of income in 2 weeks.
If I had just sold them though, then I'd have been using that cash to sell puts since then, and I'd be using the cash now to buy back at $900 or $800. There was a $200+ strike to strike gain that I missed out on because I didn't just sell when I decided to sell. This wouldn't have been a complete sale - just backing down from overweight to target weight (something like 1:2 cash to shares, down to 1:1 cash to shares).
Lesson - doing this slow 'wheel' - its ok to sell aggressive cc or put when the shares are at one end or the other of the trading range. But when I decide its time to buy or sell, then just do it and don't sell an option waiting for it to assign.
I mention this previous 'regret' as it played a role in taking a good situation today (actually really good) over trying to better time a bottom that I think is still coming, but might have already arrived.
The upside - I've got my overweight position entered at a good price. The downside - I expect to see a much better entry sometime in May; something like a 730 to 750 share price. The problem that I've now resolved, is that I don't know. And I decided to take "good" over burning time and energy, hoping for "much better" and possibly getting nothing.
I now have these calls purchased for 430, 440, and 524. Corresponding roughly to shares 805, 820, and 920. All of these purchase prices are similar or noticeably better than previous share purchases that support cc sales (920s and 870s).
I'll start looking for assignment / sales of these contracts around the 1000 share price range. Probably start selling increasingly aggressive cc as we go back up.
Another "regret" that is related to this - our last brief visit over 1100, I didn't sell shares when I identified a moment in time where I wanted to sell. At one point shares were 1133, and I needed to sell 2 positions worth of shares to move that account from overweight to target weight shares to cash. Instead of just selling the shares, I sold ITM calls for those 2 (1100 strike). The good bit is I picked up a $43 realized gain on that cc sale, and another $20+ on the next weekly sale, so those 2 positions generated like 30 or 50 weeks worth of their share of income in 2 weeks.
If I had just sold them though, then I'd have been using that cash to sell puts since then, and I'd be using the cash now to buy back at $900 or $800. There was a $200+ strike to strike gain that I missed out on because I didn't just sell when I decided to sell. This wouldn't have been a complete sale - just backing down from overweight to target weight (something like 1:2 cash to shares, down to 1:1 cash to shares).
Lesson - doing this slow 'wheel' - its ok to sell aggressive cc or put when the shares are at one end or the other of the trading range. But when I decide its time to buy or sell, then just do it and don't sell an option waiting for it to assign.
I mention this previous 'regret' as it played a role in taking a good situation today (actually really good) over trying to better time a bottom that I think is still coming, but might have already arrived.
still studying LEAPS... and learning how to reduce its IV/Vega risk at the same time (don't go too far)
tradersfly.com
What Most People Don’t Know About Trading Option LEAPS! - Tradersfly
Option leaps are buying an option longer dated, and they think of it kind of working and functioning like a stock substitute. So if I was to go out and buy 100 shares of Microsoft, we can go in and just change this to a hundred shares. I can say the stock costs me 281 […]
tradersfly.com
TheTalkingMule
Distributed Energy Enthusiast
Precisely. Widening is a must in order to roll with no debit, and there happened to be no $860 or $870 strike puts out in August (yet).
Could've gone down to $1000/800, but not for much credit. I'm bullish and stubborn. Just gonna keep rolling til we move up. I had hoped to be simply rolling for credit at worst(without widening) by the time these 5/20 BPS expired, but it wasn't to be.
I'll be happy to take $21 credit on $30 more cash margin tomorrow morning if we open lower on bad macros.
$800 close on the money. This tells us ~$800 close on Friday? I haven’t been reading every post here as I’ve been limping a 920p out and down every week for the past several. Hopefully a good pop tomorrow so I can get it to 910 next week for some credit.
Happy to take the shares at 920 and sell aggressive calls.
Selling puts is so much less stressful than calls. If I was $120ITM on a call right now I’d be freaking out. lol
Happy to take the shares at 920 and sell aggressive calls.
Selling puts is so much less stressful than calls. If I was $120ITM on a call right now I’d be freaking out. lol
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Exactly, like everyone is expecting. A moment of truth tomorrow. Will be very interested to see who’s right:
Or
Something to consider when the next roll comes along - also test a 2 / 3 / 4 week roll to see how those look. I've been in situations where a 1 week roll just gave me time, but a 2 week roll got me time and a strike improvement. Or a small strike improvement for 1 week and 2x or more strike improvement for 2 week rolls.
Much appreciated! I’ve been considering exactly that. Next week may be my first week not making a grand off this one wheel. The good about pushing it far away is that on a pop I can write a call of the same strike price to that same week. Having to worry about that call would be a financially better situation so there’s little risk in doing it. My goal for this week is time and better strike price. Usually I roll by now so hopefully we’re green tomorrow and I get some better numbers to work with.
jeewee3000
Active Member
I can confirm @adiggs 's tip: when rolling it is definitely worth it to see what you get for a multiple week roll versus just one week.
Some friday expirations have way more options volume than others, and therefore inflated pricing. The triple witching days come to mind but the monthlies as well. When rolling an ITM put, I generally roll one month out each time for credit, to the next monthly expiration date, until the put expires worthless or I can buy back an a huge SP spike.
With cc's I'm a lot more nervous rolling out that far in time though, but mathematically it seems worth it.
(Note: the above should be performed in combination with the general principle of only selling/rolling puts on SP weakness and selling/rolling calls on SP strength).
(EDIT: second note: rolling a put is best performed as close to ATM as possible. Too deep ITM or OTM and you receive less bang for your buck. But I mean don't roll puts when volume has dried up and option pricing is deflated.)
Opened a 5/13 -720/+670 BPS Tuesday near what I though was the low at 790ish, missed it by a half hour. The short side feels good for a 830-840 close this week, buttoning it up until Thursday.
In my limited experience, it's worth looking at rolls already on Wednesday - yeah you give up some time-value, but what you lose on the swings, you gain on the roundabouts and the premium for the following week is correspondingly higher too... For $TSLA, any weekly roll that gives +$20-$25 is great, don't care when I do it...
Dang. Now that I think about it, the last message wasn’t clear if
CPI was expected to be higher
or
Market to drop despite a lower CPI (that would be an interesting result)
The result is as expected, the expectation is not clear.
jeewee3000
Active Member
Was looking at share into LEAP conversion the last couple of days.
On Monday I converted 100 shares (at $810) to 2x JAN2024 $800cc's @304 each + $20k spare cash to use as margin.
Now I'm looking out at JUN2024 and 100 shares (at $775) could get me 3x JUN2024 $1000cc @231.
Decided not to do this yet, since I've just made a similar trade. I figure it's best to spread trades like these out over many months just in case this is the start of a prolongued recession and my first LEAPS bleed money or barely break even.
Don't want to put all my eggs in one basket. If we still haven't seen +$1100 by September I'll convert some more shares to LEAPS I guess. Rinse and repeat every four/six months until we finally zoom upwards.
On Monday I converted 100 shares (at $810) to 2x JAN2024 $800cc's @304 each + $20k spare cash to use as margin.
Now I'm looking out at JUN2024 and 100 shares (at $775) could get me 3x JUN2024 $1000cc @231.
Decided not to do this yet, since I've just made a similar trade. I figure it's best to spread trades like these out over many months just in case this is the start of a prolongued recession and my first LEAPS bleed money or barely break even.
Don't want to put all my eggs in one basket. If we still haven't seen +$1100 by September I'll convert some more shares to LEAPS I guess. Rinse and repeat every four/six months until we finally zoom upwards.
As mentioned above, in recent months during the SP spike, I had to roll out out various CC an uncomfortable 4-5 months to rescue the shares from assignment and achieve what then looked like reasonable strike prices for the DTE. In the past month or so, I’ve been rolling down and in as SP has declined — to derisk, shorten DTE (have more weekly rolling availabilities to choose from) and to be able to sell sooner for income.
Yesterday’s trades ($800 close):
- Roth Core: BTC 0715$1000 @ $35.30 and STO 0617$900 @ $44.95; separate tranche of uncovered shares STO 0513$850 @ $15.75
- Roth Buy-Write (trading shares ITM): STO 0513$850 @ $15.75
- IRA: BTC 0819$1000 @ $56.25; STO 0617$860 @ $59.30
- Taxable (low basis): STO 0520$900 @ $14.30
- total net credit $15k
- paper gain of ~40% at close
- remaining vigilant for rolling, as usual
Yesterday’s trades ($800 close):
- Roth Core: BTC 0715$1000 @ $35.30 and STO 0617$900 @ $44.95; separate tranche of uncovered shares STO 0513$850 @ $15.75
- Roth Buy-Write (trading shares ITM): STO 0513$850 @ $15.75
- IRA: BTC 0819$1000 @ $56.25; STO 0617$860 @ $59.30
- Taxable (low basis): STO 0520$900 @ $14.30
- total net credit $15k
- paper gain of ~40% at close
- remaining vigilant for rolling, as usual
everyone, stay safe out there
i decided to reduce my contracts temporarily
reduce risk and keep more cash
extra preservation mode for now (small income just enough to pay bills is the new plan)
i decided to reduce my contracts temporarily
reduce risk and keep more cash
extra preservation mode for now (small income just enough to pay bills is the new plan)
I decided to buy back half my December 1200CC. Now if we are at 2,000 in December, I can use the uncovered shares to sell Jan24 CC at a high strike, and use the proceeds to help roll out and up the rest to the same strike.
Just an observation and not something I'm trading on, but I noticed every time the midline of the Bollinger band breaks the 200 day moving average it tends to signal upward movement.
Could have, should have, didn't make the move to sell these at 50, 60, 70% loss. Now my 5/20 C1200 are on sale ... .07 
, that was a tough one to swallow. I have to say that I've covered this loss with slow steady profit selling 3-4DTE spreads. As price continues to slip, I'll be looking for that cutoff point for a reasonable buy back of CC I rolled out to September and December, study LEAPs, get away from risking shares for a small profit opportunity.
Good luck to all.
, that was a tough one to swallow. I have to say that I've covered this loss with slow steady profit selling 3-4DTE spreads. As price continues to slip, I'll be looking for that cutoff point for a reasonable buy back of CC I rolled out to September and December, study LEAPs, get away from risking shares for a small profit opportunity. Good luck to all.
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