Wiki Selling TSLA Options - Be the House

[jeewee3000]

closed my 5/27 -p570/+p470 at the peak, +73% in 2 hrs
waiting for dip to retry

Yes, my play was also a "play the peak" play. As I mentioned in an earlier post: my margin is mostly tied up by BPS and CSP so my only 'option' (no pun intended) for some additional income generation is covered calls now.

If they were to execute, this would likely mean the bottom has been reached and I'll be smiling either way.

 

[corduroy]

Sold some 5/27 $750cc's @$1.00 each.

I did the same, and have an order in to close at .50

I rolled my -680ps to -675ps next week for a small credit. All my puts/BPS are now pushed out to 6/3 and 6/17.

Something else on the radar:
NVDA earnings are today after the bell. They have beat the last 10 quarters, so another good result might help raise tech/growth. Of course, if they have a rare miss or guide lower, we might have another SNAP like effect.

 

[jschwefel]

I had a $910 put I sold for next week exercised this morning.

Bummer… I guess, assuming you didn’t want to be assigned shares at $910. I too had some DITM short puts, but to avoid assignment I rolled them to next year to maintain a fair amount of time value. I didn’t want to take any chances and currently have around $30 in time value, but I’ve heard you typically won’t be assigned as long as you have at least $1 in time value. These times aren’t typical though.

 

[Max Plaid]

Aside $NVDA ER after the bell, don't forget FOMC minutes at 14:00EST today, might move things around a bit...

 

[dl003]

Aside $NVDA ER after the bell, don't forget FOMC minutes at 14:00EST today, might move things around a bit...

The minutes are THE big bad today, anticipated to move the market in a major way. Chances are we drop huge before rebounding huge.

 

[intelligator]

When Ask-Bid difference is $6 and the midpoint passes through my limit, sometimes by .50 or more and trade doesn't fill, do I replace lowering my bid by .50 or more? The trade is the roll approach @TheTalkingMule has taken with similar DITM spreads. Mine will keep the same short strike, widening for credit.

 

[scubastevo80]

Opened a 5/27 BCS -710/+760 for $3.25 shortly after 11am when the highs started seeing resistance. I now effectively have an IC for Friday between 550-710, but the put side will likely be closed shortly since its up 89% (call side up 12% as I write this).

 

[adiggs]

Hard to decide today - two more trading days after today in the week and I've got 635 strike puts. Close now and take a $5-6 loss over the 2 weeks of this position. That is very manageable and would even set me up to sell additional puts tomorrow or later today on a share price drop. Heck - the next puts might even pay for this loss.

Or wait and see what develops. The big wildcard for me are the FOMC minutes at 11am pacific / 2pm eastern. Recent minutes are associated with the stock selling off. This one could be different.

As long as the sell off isn't too large those 635s will either finish OTM, or at least be close enough to roll another week and another credit.


Its interesting to me how frequently I write something like this out, and find that the answer is in the question. In this case my goal is dividend like income, and watching / hoping for a move in a particular direction and magnitude is not dividend like income. I've closed the 635 puts with this week expiration for a roughly $5 loss ($6 in cumulative credits, $11 close).

My rationale includes closing puts on an up move, and I don't want to be beholden to the market reacting in a particular way to the FOMC minutes. This leaves me with no puts or calls open, but ready to open either on the news.

This is also the size of loss that I want to manage for - I've already collected $2 gain on the call side for this week, and I expect next week sales to pay this off or even leave me ahead for the 3 week period.

 

[adiggs]

Talk me out of something, please


With share price so low, I've had an idea for how to take advantage as an alternative to selling cash secured puts. Use that cash as a buy-write.

Thinking about the buy-write I'll go with actual shares rather than a DITM / max DTE option as the backing. The reason for that is to ensure that the delta on the DITM position is always higher than the delta on the short call (I don't want the delta to go upside down, and start losing money faster on the short call than I'm gaining on the purchased calls). Shares don't have time decay and IV. Shares also minimizes (eliminates) any temptation to leverage I might otherwise have - the results look like they can be plenty good without using max dte calls as the backing.

Something like buy shares at 660 and sell the 680 strike call for next week. If the share price goes up then I close for the credit plus the $20 strike to strike gain - an amazingly good result relative to selling $6-12 credit puts.

If the share price goes down then I've got an effective purchase price of 640 - continue selling the really aggressive calls. As long as the call strike stays in rolling range of 660 then the strike to strike will be flat (to up), and the credits will be large. If the share price rallies from here at a measured pace (I consider this to be highly unlikely) then I can continue rolling the short calls week to week for large credits and a steadily improving strike (bigger and bigger strike to strike gain that tends to overwhelm the short call sale credits).

For small gains in the share price, this position works the same as short puts. For large gains this will get 1 or 2 weeks of great results, and then return to cash for further put sales. And if we keep going down into the 500s then this will look bad in the short term, but the call credits will be large and the share price can't go a lot lower (my belief). At the very least the large credits plus rolling range back to 660 makes this look like safe, and larger than normal, income.


This is a position I'd be looking to close pretty quickly as I'll want that cash back. Not that there is a timer on the position, but rather I don't like being nearly 10% cash as this would do. I don't see any way I retain these shares above a $800 share price give or take as I'll want to be back in cash for meaningful put sales.

 

[adiggs]

Talk me out of something, please


With share price so low, I've had an idea for how to take advantage as an alternative to selling cash secured puts. Use that cash as a buy-write.

Thinking about the buy-write I'll go with actual shares rather than a DITM / max DTE option as the backing. The reason for that is to ensure that the delta on the DITM position is always higher than the delta on the short call (I don't want the delta to go upside down, and start losing money faster on the short call than I'm gaining on the purchased calls). Shares don't have time decay and IV. Shares also minimizes (eliminates) any temptation to leverage I might otherwise have - the results look like they can be plenty good without using max dte calls as the backing.

Something like buy shares at 660 and sell the 680 strike call for next week. If the share price goes up then I close for the credit plus the $20 strike to strike gain - an amazingly good result relative to selling $6-12 credit puts.

If the share price goes down then I've got an effective purchase price of 640 - continue selling the really aggressive calls. As long as the call strike stays in rolling range of 660 then the strike to strike will be flat (to up), and the credits will be large. If the share price rallies from here at a measured pace (I consider this to be highly unlikely) then I can continue rolling the short calls week to week for large credits and a steadily improving strike (bigger and bigger strike to strike gain that tends to overwhelm the short call sale credits).

For small gains in the share price, this position works the same as short puts. For large gains this will get 1 or 2 weeks of great results, and then return to cash for further put sales. And if we keep going down into the 500s then this will look bad in the short term, but the call credits will be large and the share price can't go a lot lower (my belief). At the very least the large credits plus rolling range back to 660 makes this look like safe, and larger than normal, income.


This is a position I'd be looking to close pretty quickly as I'll want that cash back. Not that there is a timer on the position, but rather I don't like being nearly 10% cash as this would do. I don't see any way I retain these shares above a $800 share price give or take as I'll want to be back in cash for meaningful put sales.

Y'all had your chance!

NOT-ADVICE
Opened a buy-write today around the 661 share price. Buy shares at that price, sell next week 680 strike cc.

Hoping for a close next week for the $19 strike to strike plus the $21 cc credit.

If shares are down then I'll continue selling aggressive cc with the intent that I'll be able to roll up with the share price (if necessary) to at least 660.


The ideal outcome will be a share price around 660-700 next Friday. Any price in the vicinity of 660 where I can continue selling very aggressive / high credit cc while maintaining a break even or better strike price on the cc. I'll keep this going for as long as I'm getting a noticeably bigger credit out of this position than I would using reasonably aggressive csp.

Now I need to decide if I should do more of these...


The motivation for this trade is my belief that we're reasonably close to some kind of bottom. I feel like this trade can work well even with a $500 share price, and if we spend the summer in the 600s then this is going to be magnificent. By some kind of bottom, I mean that the distance from 660 to 500 is not that far, compared to 1200 to 500 . There's just some kind of bottom end of the range and we're too close (MHO - not-advice).

 

[TheTalkingMule]

Call me a sissy if you like! Just closed my BPS $550/450 for this week.

Even bailed on my single $750c purchased for fun Monday when all that call activity was noticed at $800. In for $1.22 out for $.80.....disgraceful.

 

[UltradoomY]

Y'all had your chance!

NOT-ADVICE
Opened a buy-write today around the 661 share price. Buy shares at that price, sell next week 680 strike cc.

Hoping for a close next week for the $19 strike to strike plus the $21 cc credit.

If shares are down then I'll continue selling aggressive cc with the intent that I'll be able to roll up with the share price (if necessary) to at least 660.


The ideal outcome will be a share price around 660-700 next Friday. Any price in the vicinity of 660 where I can continue selling very aggressive / high credit cc while maintaining a break even or better strike price on the cc. I'll keep this going for as long as I'm getting a noticeably bigger credit out of this position than I would using reasonably aggressive csp.

Now I need to decide if I should do more of these...


The motivation for this trade is my belief that we're reasonably close to some kind of bottom. I feel like this trade can work well even with a $500 share price, and if we spend the summer in the 600s then this is going to be magnificent. By some kind of bottom, I mean that the distance from 660 to 500 is not that far, compared to 1200 to 500 . There's just some kind of bottom end of the range and we're too close (MHO - not-advice).

A couple of us (@CHGolferJim ) have been doing these for a while. Really good premium because you want the shares called away... but sometimes when the momentum is going up, makes you want to HODL. It has been one of the more fun and profitable strategies I have used.

 

[adiggs]

Y'all had your chance!

NOT-ADVICE
Opened a buy-write today around the 661 share price. Buy shares at that price, sell next week 680 strike cc.

Hoping for a close next week for the $19 strike to strike plus the $21 cc credit.

If shares are down then I'll continue selling aggressive cc with the intent that I'll be able to roll up with the share price (if necessary) to at least 660.


The ideal outcome will be a share price around 660-700 next Friday. Any price in the vicinity of 660 where I can continue selling very aggressive / high credit cc while maintaining a break even or better strike price on the cc. I'll keep this going for as long as I'm getting a noticeably bigger credit out of this position than I would using reasonably aggressive csp.

Now I need to decide if I should do more of these...


The motivation for this trade is my belief that we're reasonably close to some kind of bottom. I feel like this trade can work well even with a $500 share price, and if we spend the summer in the 600s then this is going to be magnificent. By some kind of bottom, I mean that the distance from 660 to 500 is not that far, compared to 1200 to 500 . There's just some kind of bottom end of the range and we're too close (MHO - not-advice).

While I was at it, and this being such a nice up day, added in 750 strike cc for next week at $4. These are my routine cc I've been selling - these will have a fast trigger on a big strike roll, as I don't want to 'take assignment' (get stuck with no strike improvement rolls) short of $850 share price.

 

[adiggs]

A couple of us (@CHGolferJim ) have been doing these for a while. Really good premium because you want the shares called away... but sometimes when the momentum is going up, makes you want to HODL. It has been one of the more fun and profitable strategies I have used.

I'm going to discover just how disciplined I am with this (newish) strategy, whenever we get a move upwards. If its a slowish / steady rise (hah!) then I'll just keep rolling along.

I think that my primary trigger / decision making criteria will be the size of the credit I can collect each week for a flat or better strike. As long as that credit is larger than what I'd be doing using csp then I'll probably just keep rolling along. At least until $950 share price as that's what I see as the current midpoint of the trading range. At that point I'll want the cash so I can be better balanced between selling puts and selling calls.

The discipline side of the trading strategy is the most important education I can get out of this position. Its big enough that it has my attention, and the larger trading strategy I'm evolving to requires selling shares on a semi-regular basis. Will I be able to do that? I haven't historically been able to do that - so we'll see.


I kind of hope for flat to down share price so I get several weeks of these really large cc credits. This is something else I've been wanting to try - trade very close to the money, hopefully for weeks and weeks on end, and get a feel for how that works for me. I won't always be able to arrange setups like this, but I want to be able to recognize them and take advantage.

 

[corduroy]

Y'all had your chance!

NOT-ADVICE
Opened a buy-write today around the 661 share price. Buy shares at that price, sell next week 680 strike cc.

Hoping for a close next week for the $19 strike to strike plus the $21 cc credit.

If shares are down then I'll continue selling aggressive cc with the intent that I'll be able to roll up with the share price (if necessary) to at least 660.


The ideal outcome will be a share price around 660-700 next Friday. Any price in the vicinity of 660 where I can continue selling very aggressive / high credit cc while maintaining a break even or better strike price on the cc. I'll keep this going for as long as I'm getting a noticeably bigger credit out of this position than I would using reasonably aggressive csp.

Now I need to decide if I should do more of these...


The motivation for this trade is my belief that we're reasonably close to some kind of bottom. I feel like this trade can work well even with a $500 share price, and if we spend the summer in the 600s then this is going to be magnificent. By some kind of bottom, I mean that the distance from 660 to 500 is not that far, compared to 1200 to 500 . There's just some kind of bottom end of the range and we're too close (MHO - not-advice).

A couple of us (@CHGolferJim ) have been doing these for a while. Really good premium because you want the shares called away... but sometimes when the momentum is going up, makes you want to HODL. It has been one of the more fun and profitable strategies I have used.

Very interesting, I am wondering when the best timing would be to enter a trade like this. On an up day the CC would be worth more, but the shares are more expensive and the opposite on a down day. It might be tempting to try to leg into this, buy the shares on a dip and wait for a pop to sell the CC - but that might be risky.

 

[adiggs]

Very interesting, I am wondering when the best timing would be to enter a trade like this. On an up day the CC would be worth more, but the shares are more expensive and the opposite on a down day. It might be tempting to try to leg into this, buy the shares on a dip and wait for a pop to sell the CC - but that might be risky.

I was thinking about this as well. The same issues you thought of - if its a good time to buy shares then its probably not a good time to sell calls (and vice versa).

I decided on optimizing for the short call sale. I figure that provides a lower % chance of finishing ITM and closing the position, while increasing the likelihood of selling high $ credit calls for weeks on end. At the end of the day I make choices based on income, and a nearly guaranteed high income position - the main question I'm pondering is just how much of this I want.

Heck - a strong move down tomorrow and I'll get an early close opportunity, and probably another open opportunity for this same expiration. But now that I have this large short call position we'll move up strongly tomorrow. Y'all are welcome

 

[UltradoomY]

Very interesting, I am wondering when the best timing would be to enter a trade like this. On an up day the CC would be worth more, but the shares are more expensive and the opposite on a down day. It might be tempting to try to leg into this, buy the shares on a dip and wait for a pop to sell the CC - but that might be risky.

Ideally you need to try this out cash backed.
That way the only emotions are premium and share price changes. I did it a couple of times on margin and it isn't awesome.
You can also do this and sell leaps on big up days ie. buy 100 shares at $660 - sell a January 23' $700 leap for $133 now and pocket the premium and decide what to do closer to expiration on your cost basis of $527 shares.
If executed in January you make $17,300

 

[Yoona]

 

[adiggs]

I decided on optimizing for the short call sale. I figure that provides a lower % chance of finishing ITM and closing the position, while increasing the likelihood of selling high $ credit calls for weeks on end. At the end of the day I make choices based on income, and a nearly guaranteed high income position - the main question I'm pondering is just how much of this I want.

Meant to include - optimizing for the share purchase price is probably the safest choice. So enter the buy-write on a down day. The likelihood of a regression that pushes above your short strike is that much higher, and you get an in and out / big $$ credit 1 week position.

 

[adiggs]

Ideally you need to try this out cash backed.
That way the only emotions are premium and share price changes. I did it a couple of times on margin and it isn't awesome.
You can also do this and sell leaps on big up days ie. buy 100 shares at $660 - sell a January 23' $700 leap for $133 now and pocket the premium and decide what to do closer to expiration on your cost basis of $527 shares.
If executed in January you make $17,300

I find myself increasingly enamored with fully cash backed positions. Thus these buy-writes (no margin) or the csp that these replaced.

Something to ponder - do I lean on these buy-writes as a csp replacement at lower share prices? H'mm... Or even high share prices as well? I'll need to ponder that, a lot.

EDIT: not-advice; csp at high share prices. That puts me into a high % cash position (that I want), and if the puts stay ahead of the share price, then a big strike to strike improvement from where I sell the shares, to where I rebuy those shares. Most importantly it means that my account value can miss out on a big chunk of value loss on a move down. Generally speaking the strike to strike changes will overwhelm the weekly credits, so optimizing for strike to strike gains is the lower risk thing to do.