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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
I don’t really understand what @Yoona presented, or what it means, but…. those 7/15 c775s go for $90 or about $10/wk. The 775 puts are $94, similar because almost ATM. So, IIRC, add the put & call premiums together and the options traders are pricing in a pretty good chance that there will be a +/-$180 SP move (590-950 range). I can’t remember if it’s 68% (1 std dev) or 95% (2 std dev), but it’s not a 100% chance. Otherwise, one could just sell a straddle and be guaranteed to profit. Interestingly, MaxPain shows equal deltas (+/-0.500) at 7/15 $805 strike, NOT Friday’s $770 close price, so somebody knows the SP has already risen $35 effectively (maybe overnight, futures, I haven’t checked if that’s even available). Hmmm.
So, my take is that someone bought $775 strike calls and anticipates that the SP will be more than $865 on 7/15. I’m still learning, but best profits seem to be when calls are bought before the SP rises past the strike chosen. So, for example, if we absolutely knew that the SP would jump $50 Monday AM over Friday’s close, then near maximum % profit would come from buying $50 OTM calls the Friday before, and then selling them Monday AM before additional time decay can occur. In the above whales case, they must believe that a significant SP increase will occur before 7/15. Because they don’t know exactly when, they buy longer dated calls instead of cheaper ones for next week, June, etc. However, I could be completely wrong as well.
I wouldn’t sell such a strangle today, unless forced into a bad trade because of a previous bad trade. Also, I don’t have enough confidence in the SP movement or direction that I wouldn’t buy such calls either. I’m still contemplating buying dITM LEAPS such as 2024 c400s or c500s, but that would require selling shares. Decisions.
688-952 
With the move down this morning I decided to open some additional 680 strike puts for this week ($8). That leaves me with mostly 710s, but now I also have these 680s.
As I've been using such wide spreads ($250-300) to enable me to sell 2x put spreads compared to cash secured puts, I am trying using margin to back short puts in my brokerage / margin account. Doing so enables me to skip the insurance puts and save their cost. I target 40-50% cash in that account (40% currently) so I have a lot of room for margin calls should that be necessary. In fact I've been through a series of margin calls previously -- if you start out with enough cash in the account, then each margin call is really more like sequestering some of the cash to back the position.
I realized over the weekend that although the insurance is cheap on the put spreads I've been selling, if I think of it as interest on a loan then it suddenly becomes really really expensive. Using margin to back the relatively small number of puts eliminates that 'interest' expense. And of course I can always convert the puts back to put spreads later should that need arise.
In fact the margin on the 710s works out to the equivalent of a $150 wide spread ($15k per contract). From a margin point of view, in that account, those insurance puts have been a waste of money. Its not a lot of money but $0.28 for a 450 strike put is pretty expensive interest.
As I've been using such wide spreads ($250-300) to enable me to sell 2x put spreads compared to cash secured puts, I am trying using margin to back short puts in my brokerage / margin account. Doing so enables me to skip the insurance puts and save their cost. I target 40-50% cash in that account (40% currently) so I have a lot of room for margin calls should that be necessary. In fact I've been through a series of margin calls previously -- if you start out with enough cash in the account, then each margin call is really more like sequestering some of the cash to back the position.
I realized over the weekend that although the insurance is cheap on the put spreads I've been selling, if I think of it as interest on a loan then it suddenly becomes really really expensive. Using margin to back the relatively small number of puts eliminates that 'interest' expense. And of course I can always convert the puts back to put spreads later should that need arise.
In fact the margin on the 710s works out to the equivalent of a $150 wide spread ($15k per contract). From a margin point of view, in that account, those insurance puts have been a waste of money. Its not a lot of money but $0.28 for a 450 strike put is pretty expensive interest.
Your timing >> my timing. *sigh*Hey, I sold 10x -p680 too, but for $10.1
I've got a pile of shares I'd like to sell some cc against. I sure am ready for an up day to make those sales.
TheTalkingMule
Distributed Energy Enthusiast
5/20 is a big expiration, no? I see a bunch of OI at 800c/850c/900c. Gotta think we'll be fighting over one of those strikes come Thursday morning.
Edit: I'd also like to reiterate how delightful it is to have a "pile of shares". They have no inherent premium, but in times like these it's important to value them for their intangible premiums like "island dreaming". Or better yet, and more realistically, think of the island you'll be helping buy Ken Griffin if he gets them cheap! Noooooooooo
TheTalkingMule
Distributed Energy Enthusiast
Punted my lingering 5/20 BPS $1050/$880 to 6/17 $1000/800 adding a bit more cash margin. Used the @adiggs logic and paid $.80 debit rather than taking the credit for rolling to $1050/850.
Hopefully we'll at least touch $900 in the next 3-4 weeks and I can roll out to August for credit. Otherwise I guess I'll widen a hair more a month from now. Not letting this one die!
Hopefully we'll at least touch $900 in the next 3-4 weeks and I can roll out to August for credit. Otherwise I guess I'll widen a hair more a month from now. Not letting this one die!
I’m speechless. I really thought after we climbed back over 1100 in April after being in the 700s in February and March that the danger had past. If we go much below 700 I’m going to have to sell shares to improve my Margin for the December BPSs that I had to roll earlier in the year. I’m not happy about that possibility at all. Not only will it result in a large tax bill for next year, but I will have a lot fewer shares for the next big doubling of the SP. This sucks!
That's an 'I agree!', not 'I like it!' thumbs up from me.
Load up on cheap June 24s. Hopefully you can get the same DELTA at a reasonable price. And based on what you are writing, you must have some losses to offset the gains. If not, take the equivalent losses when you book the gains.
But likely you have considered all this and found it to be not a good solution?
Prices may be headed a good bit lower. Traditionally, there are times when TSLA needs great news just to tread water, E.G. 1Q 2022 results. But 2Q will be the first 'bad' quarter for TSLA in three years, so chances are discounts will be had. We need a catalyst and gamma squeeze up to more reasonable prices. Shanghai? Twitter d/c ed? FSD solved? Optimus on display scrubbing dishes?
This DOES SUCK!
Samesies
The bronze lining for me is I’ve become good at day trading options and I’d be doing well if I could just get rid of all of these options contracts I’m saddled with. I’m trying to use day trading proceeds to work my way out but the share price is moving so much it’s hard to make headway
I have a number of 800/700 and 850/700 bps for Dec expiration. I realized too late that I should have flipped some of these to bcs when we were around $1,100. But now they are almost completely ITM.
Like you, I thought the chances of revisiting <$700 were pretty remote, especially with Austin and Berlin coming on line.
If we get over $800 I may flip a couple to free up margin even though they may become another problem to contend with when the share price recovers. .
Safety first
scubastevo80
Member
Tried writing a June'24 debit call spread +1200/-1600 for $50, but didn't execute - may try again tomorrow. At $1300, I'd double my money and I believe we'll be there or higher in two years. I'm looking to move away from the current short term volatility in favor of some longer term leverage. Falling BPS knives are impacting my sanity...
Have you considered buying LEAPS? June 2024 $400c are $440 and would double in value at around $1300 with “infinite” upside potential.
Long Call Calculator
Call option profit calculator. Visualise the projected P&L of a call option at possible stock prices over time until expiry.
www.optionsprofitcalculator.com
I haven’t done this myself but it does look appealing
Well I applied for a portfolio margin account to hopefully survive another big drop of the SP. I will not open any positions and only do covered calls. This Twitter crap is killing me and I am considering getting out of Tesla if we get above $1100 I just can't deal with this swings anymore. I am at a point in my life that I care more about my own sanity than money. I just can't imagine what people that are super levered up are going through.
scubastevo80
Member
I’ve considered it, but then realized I’m not looking to spend $42k on an options trade. I realize the upside is unlimited but I’m also trying to be realistic about a price ceiling in 24 months. This trade would net double at about $1650. The call spread would net the 7x the amount risked so long as we close at $1600 or above. The only real difference is breakeven - $850 for the LEAP and $1250 for the spread.Have you considered buying LEAPS? June 2024 $400c are $440 and would double in value at around $1300 with “infinite” upside potential.
Long Call Calculator
Call option profit calculator. Visualise the projected P&L of a call option at possible stock prices over time until expiry.
I haven’t done this myself but it does look appealing
I am also looking for trades in between - i.e. a 5x return for a lower break even and slightly higher trade cost. The +950/-1450 and +1000/-1500 seem to meet this objective (cost $8-$8.5k, 5x return at upper strike, and break even closer to $1k.
Ok. Need some Not-Advise. I’m in trouble below 690. I can sell 2000 of my shares at 700. Then I can do one of two things: 1) Buy 20X 800 strike puts for December to make spreads with 20X 1100 strike naked puts. This would cost me around $400k (plus $160k in taxes on the shares= $560k) and give me (with selling those shares) $1.5 million in margin back. Down side is I still have 1100 strike puts for December. 2) Sell the shares and Buy back 20x 1100 Puts for $900k, and have $1.6m in margin (loss offsets taxes on shares).
Option 2 costs a lot more, but may be better in December if markets are still down. I can also sell the 1100 puts again when the stock is over 900 and markets look better, and get $400k back for end cost of $500k.
Thoughts? Buy protective puts to make BPS or get rid of the puts?
Edited for some math…
Option 2 costs a lot more, but may be better in December if markets are still down. I can also sell the 1100 puts again when the stock is over 900 and markets look better, and get $400k back for end cost of $500k.
Thoughts? Buy protective puts to make BPS or get rid of the puts?
Edited for some math…
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I cannot comment on your particular situation but I can tell you what I have done for my own portfolio.
I've transferred more cash into the account (to hold as cash only, not buying anything) to give the account more buffer in case we go down further. I've also sold far OTM long dated CC's against all my shares and bought back some puts at a loss.
I've done this because while I think the macro may be starting to bottom. I'm literally stomach churning, feel like throwing up scared that Q2 earnings are going to miss and we are going to take a Netflix level hit to the share price that'll drop us to like $500 or lower. Q2 is going to suck hard and unless Elon get's his *sugar* together and starts pushing Freemont to work 30 hour days to make up for the difference in China being closed / only doing 1200 cars a day. We are going to miss by 50-100k cars this quarter. I don't blame Elon for China but I do feel his distracted.
On a personal note now that I'm ranting, it also didn't help that he got cocky and sold millions upon millions of shares to pay taxes (Just because) and a Twitter deal (which he continues to mess around with).
My thoughts are - I feel okay with where Tesla will be in December. The consensus seems to be Q2 is disappointing but Q3 and Q4 will be strong. You can at least roll those bps spreads for credit if the share price is above $950 by December. But there’s a risk of course - think about what you can do if we’re at $725 in December
I’m getting more concerned about the next month or two. Lots of doom and gloom and people talking about $500 share price before we recover. I’m close to capitulating - sell most of my shares and close out my options contracts at a significant loss.
I’m confident I could recover from a big haircut like that but gapping down to $500 would be catastrophic. There’s something to be said for living to fight another day.
I’ll see how this week plays out and decide what to do.
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