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Wiki Selling TSLA Options - Be the House

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No one can time the markets…..but I’ve been blown way by ES for the couple months I’ve been following him. Mute Squawk and follow ES. :)
Never followed Squawk. That guy is manic depressive. Blaming everyone when stock goes down. Kept calling himself investor while closing his positions every 10 minutes. I don’t get why Elon responds to him, prob due to the followers count.
 
Panic rolled my 5/13 BPS $650/550 to 6/10 $600/500.

At least I got $11.50 for my trouble and some nice strike improvement. Probably wouldn't have made more on that cash margin if I'd traded weekly anyway.

Let's see how this $700 battle unfolds....
Lucky you - I'm trying to figure out what to do with my 5/13 825/725. May pay to roll it out, but this looks like the end of my option trading days either way. Taking too much of a hit on the volatility over the last 4 months.
 
Does portfolio margin increases maintenance excess a good amount? I am under 6 figures of excess and I am not liking it.
Yes it does. However, don't let that fool you. For TDAmeritrade, they constantly evaluate your portfolio about every 15 minutes. If you utilize too much margin, especially buying options, and aren't hedged properly, you can go from high six figure maintenance excess to negative in a second. I experienced this last year and had to buy puts to better hedge my portfolio and bring myself out of margin call.
 
This morning I too panic rolled my 6/17 690 CSPs to 7/15 500 CSPs, 5 contracts.

I need to get more savvy at sitting. Since I have not been exercised yet, I do not know how the process works. And it seems that there is an EXTREMELY low chance I would have gotten exercised with still 36 days to expiration.

Can anyone shed more light on this process.

The example is, I had cash secured puts at 690, 36 days to expiration. Tesla stock today briefly touched 690 and even went down to 680. My friend told me these 690 CSPs were not really in jeopardy of being exercised because nobody would hold a long option ITM like that (this part I don't understand). He did say if the stock went to 300 or 400 then yes, maybe.

But any insight you guys can provide would be helpful, thanks so much.
 
This morning I too panic rolled my 6/17 690 CSPs to 7/15 500 CSPs, 5 contracts.

I need to get more savvy at sitting. Since I have not been exercised yet, I do not know how the process works. And it seems that there is an EXTREMELY low chance I would have gotten exercised with still 36 days to expiration.

Can anyone shed more light on this process.

The example is, I had cash secured puts at 690, 36 days to expiration. Tesla stock today briefly touched 690 and even went down to 680. My friend told me these 690 CSPs were not really in jeopardy of being exercised because nobody would hold a long option ITM like that (this part I don't understand). He did say if the stock went to 300 or 400 then yes, maybe.

But any insight you guys can provide would be helpful, thanks so much.
I haven't been assigned but the initial and simplistic analysis is to keep an eye on the extrinsic value in the option. My guess is that those 690 strike puts were virtually all time / extrinsic value.

The reason you watch the extrinsic value is that if you get assigned, that means the other side is exercising. If you were able to instantly sell the assigned shares, then the net result is that you've just been given all of the time value in the position. So if you have 690 strike puts, with share price at 690, and time value of $20 ($20 option price in my made up example) and you were assigned, then the other side just paid $20 for the privilege of buying shares at 690 that then can buy on the open market for 690.

Only when that time value approaches 0, or in rare / extreme cases where shares are simply unavailable (call assignment) or there are no buyers (put assignment), is early exercise a good choice.

The really low extrinsic value for ITM options only arises when really, really DITM; or when DTE is low (Thu or Fri of expiration). But the really important detail to keep an eye on is the extrinsic value.
 
This morning I too panic rolled my 6/17 690 CSPs to 7/15 500 CSPs, 5 contracts.

I need to get more savvy at sitting. Since I have not been exercised yet, I do not know how the process works. And it seems that there is an EXTREMELY low chance I would have gotten exercised with still 36 days to expiration.

Can anyone shed more light on this process.

The example is, I had cash secured puts at 690, 36 days to expiration. Tesla stock today briefly touched 690 and even went down to 680. My friend told me these 690 CSPs were not really in jeopardy of being exercised because nobody would hold a long option ITM like that (this part I don't understand). He did say if the stock went to 300 or 400 then yes, maybe.

But any insight you guys can provide would be helpful, thanks so much.
Not really much to do with how much time.... it has to do with time value.
With more than a month - there is still time value in them which if exercised would be a net loss for the person on the other side,
Simple math -
$690P --> stock price $680 difference $10 but the contract value is $35 - so exercising would give you cost them the $25 difference.

Now when that time value goes below $1 is where it gets dicey but wouldn't be there on something over 30 days out.

(I made these numbers up for illustrative purposes)

Dang - @adiggs beat me to it! and also with a better example!
 
Yes it does. However, don't let that fool you. For TDAmeritrade, they constantly evaluate your portfolio about every 15 minutes. If you utilize too much margin, especially buying options, and aren't hedged properly, you can go from high six figure maintenance excess to negative in a second. I experienced this last year and had to buy puts to better hedge my portfolio and bring myself out of margin call.

If I go to portfolio margin I will stay put and only sell covered calls; I just want to survive this down trend without closing the position that I have. Thanks.
 
Lucky you - I'm trying to figure out what to do with my 5/13 825/725. May pay to roll it out, but this looks like the end of my option trading days either way. Taking too much of a hit on the volatility over the last 4 months.
Touching 765-775 tomorrow morning, giving you the ability to roll for credit, is not out of yhe question.

Listening to all the idiot traders on CNBC today, they're predicting quit a rip up from here now that we're seeing Apple actual take a big hit to it's share price.

Think of a roll you'd be happy with, throw in the trade and see how it evolves. At the very least be ready for something good to happen in case it does. I've missed many windows to act and save a position just because I was too busy worrying about it!

Not advice.
 
Similar position. I have a 905p expiring tomorrow, but I think I'm going to try to roll it 1-2 weeks, but not till tomorrow. See if I can get some strike improvement.

Not advice.
When I get DITM positions I like to straddle them with the opposite trade, so if it's a put, I'll sell a call on the same strike and expiry, and if it's a call, will sell a put for the same strike and expiry

This gives extra low-risk premium allowing for a better roll and one of the trades will win

Not advice, of course, but works for me most of the time as the extra position is as far OTM as the other ITM, so most of the time it's free money

Does that make sense...?
 
When I get DITM positions I like to straddle them with the opposite trade, so if it's a put, I'll sell a call on the same strike and expiry, and if it's a call, will sell a put for the same strike and expiry

This gives extra low-risk premium allowing for a better roll and one of the trades will win

Not advice, of course, but works for me most of the time as the extra position is as far OTM as the other ITM, so most of the time it's free money

Does that make sense...?
I... don't know? What if both end up ITM? Well, then you can roll them easier, since they're both quite centered. If one is deep ITM, the other must be OTM.

So, suppose one is a DITM bps... Set up a OTM bcs.... Suppose the stock recovers until they're both ITM, you can roll. Suppose the stock recovers so well that the bps ends up OTM (=profit) and the bcs goes ITM...

🤔
 
When I get DITM positions I like to straddle them with the opposite trade, so if it's a put, I'll sell a call on the same strike and expiry, and if it's a call, will sell a put for the same strike and expiry

This gives extra low-risk premium allowing for a better roll and one of the trades will win

Not advice, of course, but works for me most of the time as the extra position is as far OTM as the other ITM, so most of the time it's free money

Does that make sense...?
Yes - so if you have an 825/725 put spread, and stock is trading at 700 (-25 vs lower strike), you'd sell a call spread at something like 725/825 or would you sell at the lower strike +25 (750/850). Or do I have this all wrong.
 
This morning I too panic rolled my 6/17 690 CSPs to 7/15 500 CSPs, 5 contracts.

I need to get more savvy at sitting. Since I have not been exercised yet, I do not know how the process works. And it seems that there is an EXTREMELY low chance I would have gotten exercised with still 36 days to expiration.

Can anyone shed more light on this process.

The example is, I had cash secured puts at 690, 36 days to expiration. Tesla stock today briefly touched 690 and even went down to 680. My friend told me these 690 CSPs were not really in jeopardy of being exercised because nobody would hold a long option ITM like that (this part I don't understand). He did say if the stock went to 300 or 400 then yes, maybe.

But any insight you guys can provide would be helpful, thanks so much.
You have gotten a few good replies, but I thought I would follow up with it more illustrated, since I also have some puts expiring on that date.
1652378718087.png

As you can see, my 1000 puts have a time value (or extrinsic value) of 4.75, giving me no cause for worry, since the owner would gift me 4.75 USD per share needlessly by exercising.

If you look a bit further down, 1175 on the other hand, is at 0. That gives a bigger cause for consern, and if I had those, I would roll them.

Your puts, at the money, would be worth somewhere around 70-75 USD in time value, and would be of no risk of being exercised.
 
I... don't know? What if both end up ITM? Well, then you can roll them easier, since they're both quite centered. If one is deep ITM, the other must be OTM.

So, suppose one is a DITM bps... Set up a OTM bcs.... Suppose the stock recovers until they're both ITM, you can roll. Suppose the stock recovers so well that the bps ends up OTM (=profit) and the bcs goes ITM...

🤔
I'm not talking about spreads here, naked puts and/or covered calls - although you can obviously that the short legs of a spread as CSP/CC's

But if both are on the same strike and expiry then the only way they can both be ITM is if the price gets pinned to the strike, and then you don't care because both would be worth pennies at expiry and you'd buy them out anyway...

Here's a real-life example, today I free-rolled BTC 7x TSLA 5/13 -p830 -> STO 5/20 5x -c800 + 6x -p800. OK, I admit I also took advantage of the SP dropping to make the delayed put sell more favourable, that allowed me to not only roll down $30, but to reduce the number of puts from 7x to 6x

You can be quite creative with these constructions, mix-and-match ratios, diagonals, etc.
 
Was today the bottom?
I hope so, it's been a bit painful lately..

With you on both counts, I feel it is. Apologies for the plastering the charts. "I" use these to help me spot the short side I want to open.

Based on the past week, options traded were put heavy and lower strike. Today's data seem to imply a subtle shift back to calls , strikes slightly higher as well, overall range clustered between 700 and 800. I should have hit 690 Tuesday but felt 720 was relatively safe. I didn't close the -720/+670 today... riding the wire looking for a spike and opportunity to close at any sight of green.

The yellow line tracks daily billions traded short or long. Summing the values from today back in time, interestingly enough, April 1st is where the sum is positive, which is also the last near term *highest* close. 3/15 trough 4/1 was mostly call heavy. I have a lot to learn but am beginning to see how the options market and MM drive price.

*** don't use this insight to trade ***

TSLA-TotalGamma-12May2022.png
TSLA-TotalGamma-11May2022.png


TSLA-TotalGamma-10May2022.png
TSLA-TotalGamma-10May2022.png

Screen Shot 2022-05-12 at 7.42.41 PM.png
 
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With you on both counts, I feel it is. Apologies for the plastering the charts. "I" use these to help me spot the short side I want to open.

Based on the past week, options traded were put heavy and lower strike. Today's data seem to imply a subtle shift back to calls , strikes slightly higher as well, overall range clustered between 700 and 800. I should have hit 690 Tuesday but felt 720 was relatively safe. I didn't close the -720/+670 today... riding the wire looking for a spike and opportunity to close at any sight of green.

The yellow line tracks daily billions traded short or long. Summing the values from today back in time, interestingly enough, April 1st is where the sum is positive, which is also the last near term *highest* close. 3/15 trough 4/1 was mostly call heavy. I have a lot to learn but am beginning to see how the options market and MM drive price.

*** don't use this insight to trade ***

View attachment 803475 View attachment 803476

View attachment 803477
TSLA-TotalGamma-09May2022.png

View attachment 803480

EDIT: There were two charts for the 10th, forgot the 9th which I used to decide on the -720 short side of the spread I opened Tuesday...