I have a little hope today. I have stop loss limit orders on the 1100 Puts. Will cost more if they hit compared to closing them now, but if we stay above 720 I’ll never have to buy them back. Will then either sell 2000 shares at 700 or sell 30X 1000 strike calls for Jun 2024 for more cash. At least I have a plan...
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Heh
Yep.It's just the week, but more importantly the underlying is 100% owned. I'll be able to roll at least once, and probably many times if I really have to. And the rolls will almost immediately get me back into a price level where the underlying will be earning much more than the income from the cc.
Its also part of my evolving trading system. Day trades as you've been writing about don't work for me, if only because I won't be watching things that closely on a consistent basis. I'll try to write that up, but the essence of it is very low leverage. Zero leverage, all the way up to 2x of zero leverage, is where I'm at these days.
Note to self: Q2 P&D announcement week is one of those week I will NOT sell options. Hopefully someone will remind me it is okay to skip a week or two around this event.These mirror my own thoughts. Long term buy and hold investors don't care about disappointing production in Q2 - we know why that's so and it has no impact on the company a year from now.
But in the short term where our option sales operate it matters deeply (and thus the importance of separating out the two ways of thinking).
In addition to the above I see the Fed balance sheet draw down as being inadequately priced into the market. I think we might never know - only that it'll be a year or 3 of wet blanket action.
At some point though we'll also get the share authorization and then, maybe, details on a stock split. Or maybe we won't get a split - only the threat that the board can announce one any time
Q3 or Q4 production will be back to what we're accustomed to. They will also represent increasing profit levels that keep the EPS growing (and at a low share price, the PE multiple dropping).
My short term has been the month of May, with June/July being recovery months around production. Then back to doom and gloom in August (middle month of the quarter, vs. first and last month of quarter). With the Q2 production disappointment coming I'm starting to think doom and gloom through August with recovery in Sept/Oct around end Q2 / start Q3. Yuck.
This week I have a bunch of 600/450 BPS that’s doing well. I truly sold them 20% OTM and into strength. To recover some of the losses in my IRA I sold 610s to add a little more premiums.
Careful, I had some 5/27 1100 Puts assigned to me last night. There just isn't enough time value in them. (And not enough open interest until 6/17 to minimize your chance of being the unlucky one.)
Part of my strike selection, beyond simply 20% OTM or something similar, is to also consider where we're at within my own personal estimation of the trading range.
I think of the current trading range as roughly 800 to 1100, with roughly 950 as the mid point. Therefore with shares at 750, we're on the low side of the (my) trading range. When we're on the low end I get somewhat more aggressive with my put strikes, if for no other reason that going even lower gets harder and harder. I simultaneously get much more conservative with my call strikes. Any call strike under 950 is at risk of being overrun to a degree that put strikes aren't.
I hadn't realized this previously - that trading range dynamic is another form of selling into strength, just more of a bigger picture version than an individual trade version. More aggressive puts at low (trading range) share prices, and more aggressive calls at high (trading range) share prices.
corduroy
Active Member
Sadly, I think those 800Cs are safer than his 680Ps
I actually love to sell options when we are about to have an IV crush event specially covered calls.
If I were picking one over the other, I'd take the 800cc's as the safer as well
Something I try to be cognizant of is that while I have my own expectation of direction / magnitude / timing at any and every point in time, that doesn't make me right. I've learned that if I make my open/close choices well, then I can earn income on both sides. In fact for my own objectives and context its important that I do earn income on both sides. If nothing else that keeps me relatively direction neutral in the short term, with a larger important outcome that I can earn an income at any share price level; whether that is $500 or $5000. And I can't lose my shirt in the transition from $500 to $5000 (or more topical; the transition from 1100 to 750) - that's important too.
Agree. I have participated on every one of them. The lesson learned for me is the subsequent week where I feel overly optimistic and don’t follow my strategy. This is where I been hurt badly thinking the market is rational.
After Q1 I thought 750 would be super safe and here we are…
Something I've migrated to in my 'assets under management' - I am aiming to maintain 30-50% of the account value as cash. My target at relatively high share prices is 50% cash. At these lower share price levels I find myself moving closer to 20-30% cash (buy when the price is low).
The idea is that as the share price goes down I want to be buying, pushing the cash % lower. As the share price goes up to higher levels I want to be selling some of those extra shares in order to bring cash % back up to 50%.
In an ideal world I'll be 50% cash the next time we go sailing off into ATH land. In reality I'll probably be below 50% cash when that happens and I'll be selling hyper aggressive cc as we go up until they get so far ITM that I want the cash to be selling puts with. Below ATH I'll gyrate between that roughly 30 and 50% cash level, hopefully earning some strike to strike improvements along with the option sale credits (sounds like the Wheel, doesn't it).
The thinking and primary motivation, initially, was to get into 100% owned positions. Thus cash secured puts - not put spreads or margin backed puts. Share backed covered calls rather than max DTE, DITM, long calls. These positions are really easy to sleep with at night.
Using the 100% owned positions as the baseline I still want to be 50% cash. However I'm incorporating a light level of leverage - no more than 2x. On the share side that means buying max DTE, DITM, calls (June '24 500 strike calls when shares were low 900s). It seems like the share replacement calls are closer to 1.75x; i.e. buy 7 calls instead of 400 shares. I want the puchased calls to behave as closely to shares as possible.
On the put side that means I calculate the # of csp the cash will back, and then sell as many as 2x put spreads. The put spreads are really wide and still don't use all of the cash as backing; the rest is there to buy more shares if the opportunity arises, or to manage the put spreads. Either way, I hit my 2x leverage limit, and I don't go higher than that. I mostly go wide on the spreads in order to minimize how much I pay for the insurance side of the spread.
When I did the math on incomes for myself, I discovered that I don't really need any leverage, but the 2x leverage level is comfortable and provides incremental income that is meaningful in my family's life. I don't need to go higher, just to have a bigger pile to give away.
The idea is that as the share price goes down I want to be buying, pushing the cash % lower. As the share price goes up to higher levels I want to be selling some of those extra shares in order to bring cash % back up to 50%.
In an ideal world I'll be 50% cash the next time we go sailing off into ATH land. In reality I'll probably be below 50% cash when that happens and I'll be selling hyper aggressive cc as we go up until they get so far ITM that I want the cash to be selling puts with. Below ATH I'll gyrate between that roughly 30 and 50% cash level, hopefully earning some strike to strike improvements along with the option sale credits (sounds like the Wheel, doesn't it
).The thinking and primary motivation, initially, was to get into 100% owned positions. Thus cash secured puts - not put spreads or margin backed puts. Share backed covered calls rather than max DTE, DITM, long calls. These positions are really easy to sleep with at night.
Using the 100% owned positions as the baseline I still want to be 50% cash. However I'm incorporating a light level of leverage - no more than 2x. On the share side that means buying max DTE, DITM, calls (June '24 500 strike calls when shares were low 900s). It seems like the share replacement calls are closer to 1.75x; i.e. buy 7 calls instead of 400 shares. I want the puchased calls to behave as closely to shares as possible.
On the put side that means I calculate the # of csp the cash will back, and then sell as many as 2x put spreads. The put spreads are really wide and still don't use all of the cash as backing; the rest is there to buy more shares if the opportunity arises, or to manage the put spreads. Either way, I hit my 2x leverage limit, and I don't go higher than that
. I mostly go wide on the spreads in order to minimize how much I pay for the insurance side of the spread.When I did the math on incomes for myself, I discovered that I don't really need any leverage, but the 2x leverage level is comfortable and provides incremental income that is meaningful in my family's life. I don't need to go higher, just to have a bigger pile to give away.
AquaY
Member
20% is a lot better but still it's a 20% tax so you are still only gaining about 420k in margin.
1400k subtract 20% = 1120k - the approx. 700k the 1400k in stock gets you = approx. $420k extra margin.
If you need it you need it but it seemed you thought you'd gain $1.4MM in margin and I think you only get $420k
Update on these - the 710s had dropped enough in value to take an early close at $6. The position was a roll from last week. The overall position had a $8 net credit, so this leaves me with $2 net over these 2 weeks. That is below my target income threshold but it also gets me out of these puts in case of a drop tomorrow, when I can open their replacements (one of my trading rules - close today, open tomorrow. DON'T close today, open today).With the bump today I've added 820 (and a few 800) strike cc for this week at $3 (the 800s got me $6). I don't really expect >$800 at end of week, but I also won't be surprised. This reaches my minimal income target for the week (so I don't need to go out further or be more aggressive in strike selection).
I've legged my way into a 710 / 820 strangle (there are some 680 puts and 800 calls in there as well) for this week. Something is going to win
I had also closed the 680s so I have no puts open going into tomorrow. The 820 calls (and a few 800s) are open of course.
Now when we open red tomorrow, the calls will be immediately ready to close, and some new puts will be ready to open (maybe 650s for next week!?!)
BrownOuttaSpec
Active Member
Do you guys think anything meaningful will happen when our "52 week low" goes up on Monday? $546 -->$571
Probably not, but just wanted to bring that to everyone's attention.
Probably not, but just wanted to bring that to everyone's attention.
I happen to have sold both -p680's and -c800's for this week, not feeling concerned about either at this moment...
What a nice day
below are my options day trades for the day. All expiring this week and I opened and I closed most of these within 10-60 minutes of opening them.
Bcs
800/900 in: $7.29 -> out: $4.39
780/880 $10.46 -> $9.83
4x 800/860 ~> $5.43 - $4.32,
4x 800/860 $5.19 -> $4.50
4x 800/860 $5.21 -> $4.80
Bps 710/600 7.98-> 7.40
The 780/880 was a mistake, too close to the share price and I had to wait a long time to close them at a profit.
For day trading I find that 5-7% OTM of the short leg to be most profitable.
No losses and overall profit of $1,300. Used about $500k day trading buying power. Trading spreads eats that up pretty fast, so I keep the spreads relatively narrow.
I traded mostly bcs because I could recognize the capping and retracement fairly well and I felt $800 is going to be a point of resistance. Even if we blow past that, the higher the stock goes, the more margin I have available so I would be able to manage.
I opened one 800/900 bcs at the bell to bait the market tonight. Come at me!
below are my options day trades for the day. All expiring this week and I opened and I closed most of these within 10-60 minutes of opening them.
Bcs
800/900 in: $7.29 -> out: $4.39
780/880 $10.46 -> $9.83
4x 800/860 ~> $5.43 - $4.32,
4x 800/860 $5.19 -> $4.50
4x 800/860 $5.21 -> $4.80
Bps 710/600 7.98-> 7.40
The 780/880 was a mistake, too close to the share price and I had to wait a long time to close them at a profit.
For day trading I find that 5-7% OTM of the short leg to be most profitable.
No losses and overall profit of $1,300. Used about $500k day trading buying power. Trading spreads eats that up pretty fast, so I keep the spreads relatively narrow.
I traded mostly bcs because I could recognize the capping and retracement fairly well and I felt $800 is going to be a point of resistance. Even if we blow past that, the higher the stock goes, the more margin I have available so I would be able to manage.
I opened one 800/900 bcs at the bell to bait the market tonight. Come at me!
i've been studying/learning to incorporate MACD into my daytrading to help predict short-term sp movement
for ex: pre-market 9:23 seems to indicate opening will be up; red velocity is decreasing and changed to increasing green, and blue line crossed higher and higher than the yellow dot signal line; by 9:29 one can conclude it may be a green opening
another one is at 10:48... there is no indication where sp is going to, and it appears to be momentarily stuck flat, but MACD gave hints that it will be upward via Buy Crossover Signal; red velocity is decreasing and changed to green (STO BPS here even though it wasn't an obvious bottom yet at that moment)
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I should add to this idea - for income generation purposes this pattern (lower and lower cash levels as shares go down, higher and higher cash levels as shares go up) has a big problem from an income generation point of view.Something I've migrated to in my 'assets under management' - I am aiming to maintain 30-50% of the account value as cash. My target at relatively high share prices is 50% cash. At these lower share price levels I find myself moving closer to 20-30% cash (buy when the price is low).
The idea is that as the share price goes down I want to be buying, pushing the cash % lower. As the share price goes up to higher levels I want to be selling some of those extra shares in order to bring cash % back up to 50%.
In an ideal world I'll be 50% cash the next time we go sailing off into ATH land. In reality I'll probably be below 50% cash when that happens and I'll be selling hyper aggressive cc as we go up until they get so far ITM that I want the cash to be selling puts with. Below ATH I'll gyrate between that roughly 30 and 50% cash level, hopefully earning some strike to strike improvements along with the option sale credits (sounds like the Wheel, doesn't it
When shares are low (as they are now), for income generation purposes, short puts will be performing best as the share price starts heading back up (both sides perform well when shares are sideways).
Similarly when shares are high and I start raising the cash level (selling shares), its the calls that will perform well as the shares come back down.
I'll be heavier weight the side that is the most challenging to generate income with when the shares reverse. This is bad for income generation and riskier; good for strike to strike gains.
I am consciously choosing this relationship for a few reasons:
- I'll be more conservative on the side that is 'in the way' when the share price heads back towards the mid point.
- To earn a strike to strike profit I only need to be able to roll the 'in the way' side back to my midpoint successfully to take assignment and get that strike to strike gain (I'd like to roll further of course)
- Past experience tells me that I can walk this balance beam
- The strike to strike gains will be lumpy, and likely to overwhelm the more steady option sales
It's that strike to strike dynamic where gains or losses are likely to overwhelm the week to week income that has me designing around these first, and the income second. Even though the income is my focus. Heh - I also don't count any potential strike to strike gains that might occur - those are just gravy, even if they are likely to be the largest gravy boat at the table.
My present situation - I've been adding June '24 500 strike calls as the share price has gone down. I started adding some when shares were low 900s ($520ish purchase price). I added most of my additional calls in the mid 800s ($440 purchase price), and then a few more in the low 800s (the day before the drop to 730; *sigh*) - purchase price $430.
If any of my cc go ITM on a move against me, I should probably earn a strike to strike profit (in addition to any cc premiums) at a $950 share price. Some of those will be somewhat substantial - say $100. It'll take a lot of option sales to generate $100/share, especially when I'm aiming for $2-8/week.
Ideally of course I'll be able to sell those cc on the way up and never get trapped too DITM to keep them. Past experience tells me that the shares can move fast, but not that fast. EXCEPT when we're at the extreme edge of the trading range (like right now). Though I expect flat to down share price from here, I also believe that my biggest risk at the moment is to the upside. I'm selling calls but I need to be really conservative with them.
Translation - selling 820 strike calls for this week on Tuesday (4 DTE) when I like selling next week positions, this week. The calls will be on a really short leash (roll early and aggressively for strike gains) until I can sell the 950s; then I'll start getting more aggressive with the call strikes above that.
As the shares approach $1000 I will be actively closing some of these shares / long calls to get back closer to the 40-50% cash levels.
In the meantime, another leg down and I'll be turning even more cash into shares, even if that leaves me with very little to support put sales.
Urgent help requested.
Situation: Kept thinking, "How can TSLA stock go ANY lower than this?" So I continued to purchase shares on the way down . . . but they've kept going down from the Twitter "issue" and general market short-term insanity (and stupidity). So now I'm facing a Margin Call of about $0.5m and have to decrease my margin exposure or some of my precious TSLA shares will be sold out from under me by TD Ameritrade, likely later this morning.
Total shares in the margin account: ~12.5k, all other non-TSLA shares sold earlier to minimize the margin threat, but given the recent SP drop, it's not been enough.
Plan, as recommended by a few advisers at TD: Sell covered calls and buy puts (a collar).
Goal: Minimize the risk of having the shares sold/taken by the covered call, and minimize the total cost of the transaction.
Question: What is the best combination of puts and calls to achieve this goal? (Is there a formula for this?) I'm sort of shooting/guessing blindly and came up with this, but it's just from poking around on their Think or Swim platform and selecting a random date and strike prices for the calls and puts:
30 contracts for both, dated 15 Jul 2022:
Sell $1020 calls
Buy $575 puts
This gets me back to over 51% PNR (Point of No Return), which should put me out of the margin call (until the next drop, heaven forbid) . . . .
Any and all ideas, thoughts, comments, and suggestions for any better plan greatly appreciated.
Thanks!
Situation: Kept thinking, "How can TSLA stock go ANY lower than this?" So I continued to purchase shares on the way down . . . but they've kept going down from the Twitter "issue" and general market short-term insanity (and stupidity). So now I'm facing a Margin Call of about $0.5m and have to decrease my margin exposure or some of my precious TSLA shares will be sold out from under me by TD Ameritrade, likely later this morning.
Total shares in the margin account: ~12.5k, all other non-TSLA shares sold earlier to minimize the margin threat, but given the recent SP drop, it's not been enough.
Plan, as recommended by a few advisers at TD: Sell covered calls and buy puts (a collar).
Goal: Minimize the risk of having the shares sold/taken by the covered call, and minimize the total cost of the transaction.
Question: What is the best combination of puts and calls to achieve this goal? (Is there a formula for this?) I'm sort of shooting/guessing blindly and came up with this, but it's just from poking around on their Think or Swim platform and selecting a random date and strike prices for the calls and puts:
30 contracts for both, dated 15 Jul 2022:
Sell $1020 calls
Buy $575 puts
This gets me back to over 51% PNR (Point of No Return), which should put me out of the margin call (until the next drop, heaven forbid) . . . .
Any and all ideas, thoughts, comments, and suggestions for any better plan greatly appreciated.
Thanks!
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Consider lowering the cc strike price to raise more cash. CCs can be rolled and the outlook for the near term is not very bullish unfortunately
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