Wiki Selling TSLA Options - Be the House

[vikings123]

Could it be an effort to force margin calls on bullish sellers of puts? Or by exercising they assume the put writer will immediately sell, and this provides downward pressure on the stock as they make a trade reversal and are buying up shares? The mild increase in volume doesn't lend this much credence though..

The simple explanation could be that this a risk off environment and people are moving to cash. Also, not many are so heavily concentrated in TSLA so we can only guess that their portfolios must be hurting bad especially with 75-80% drawdown in some growth stocks.

 

[MikeC]

Theory on all the assigned puts:

That’s how market makers close out their positions. They can’t sell-to-close like we can if they’re the MM, right? So once there’s no time value left in the contract and it’s looking like things will reverse, why would they want to keep holding long puts if they could get out of them?

Just a thought, I could be totally wrong on the mechanics.

 

[saniflash]

They can’t sell-to-close like we can if they’re the MM, right?

yes they can, to other MMs. MMs can buy and sell options to hedge their positions else they wouldn't be able to properly gamma hedge their positions.

Also (this is not a strong argument given the supposed naked shorting, spoofing and other stuff going on in the market), MMs are supposed to hedge so they wouldn't need to close out positions because they're delta neutral.

 

[OrthoSurg]

Not advice.

I've been following this guy's technical analysis, and he's been spot on the past 2 months. Just wish I had followed him sooner.

TSLA can of course run contrary to macros, but as long as we are running in lockstep with macros, this analysis could be beneficial.

Again, not advice, do your own research.

Yes, a lot of people calling for a bullish breakout

 

[samppa]

I have single -c650 expiring today. Plan was to let it assign, these are shares that I want to sell anyway.
Otoh we're above 700 now, I could also just sell the shares at market and roll the call forward for higher strike.

If next week drops back down, I'd make a bigger profit.. but if it really rockets up I'll end up with another itm cc and may have to sell another lot at these prices.

Losses from this past year have pretty much made taxes irrelevant now..

Any not-advice?

I'm inclined to just let this call assign, since my focus is risk mitigation and income.

 

[jeewee3000]

I have single -c650 expiring today. Plan was to let it assign, these are shares that I want to sell anyway.
Otoh we're above 700 now, I could also just sell the shares at market and roll the call forward for higher strike.

If next week drops back down, I'd make a bigger profit.. but if it really rockets up I'll end up with another itm cc and may have to sell another lot at these prices.

Losses from this past year have pretty much made taxes irrelevant now..

Any not-advice?

I'm inclined to just let this call assign, since my focus is risk mitigation and income.

Depends on your expectations of the short to mid-term price action, and how you are positioned.

If you think this is only a bear rally and we'll soon revisit the $600's, you could just roll the cc to a the same or higher strike at a later date, for a credit, and let it expire worthless then.

If you think the reversal has begun and we're going to see +$800 / +$900 soon, then you might buy back the call and sell another again at a later date, when you think we've reached a local peak. (for higher strike, same or higher credit)

These strategies don't net you income. You could just let the call be exercised and sell a $650 put for income. Worst case the SP climbs furiously from here and you cannot get decent premiums on puts as low as $650. But I imagine you are bullishly positioned and then this is a only a minor headache.

Your suggestion of selling shares today and rolling the call is possible, but that's risking another 100 shares. You might be better off selling a second cc at open today (for todays expiration), with an ATM strike price $720 or so. This nets you income this week either way, with or without the shares being called/having to be sold.

 

[samppa]

Depends on your expectations of the short to mid-term price action, and how you are positioned.

If you think this is only a bear rally and we'll soon revisit the $600's, you could just roll the cc to a the same or higher strike at a later date, for a credit, and let it expire worthless then.

If you think the reversal has begun and we're going to see +$800 / +$900 soon, then you might buy back the call and sell another again at a later date, when you think we've reached a local peak. (for higher strike, same or higher credit)

These strategies don't net you income. You could just let the call be exercised and sell a $650 put for income. Worst case the SP climbs furiously from here and you cannot get decent premiums on puts as low as $650. But I imagine you are bullishly positioned and then this is a only a minor headache.

Your suggestion of selling shares today and rolling the call is possible, but that's risking another 100 shares. You might be better off selling a second cc at open today (for todays expiration), with an ATM strike price $720 or so. This nets you income this week either way, with or without the shares being called/having to be sold.

Yes, right now I need some cash and need to position myself so that I will not have margin problems in the future.

I think the least risky approach is to let the -c650 exercise, then get on with the wheel and sell puts next week. I'm still holding most of my shares and some leaps (june 2024 800 strike)

 

[jeewee3000]

Yes, right now I need some cash and need to position myself so that I will not have margin problems in the future.

I think the least risky approach is to let the -c650 exercise, then get on with the wheel and sell puts next week. I'm still holding most of my shares and some leaps (june 2024 800 strike)

Then your question becomes mainly: when to sell the put? Will you wait for a red day or sell immediately?

 

[intelligator]

Nice action yesterday and pre-market. Gamma flipped positive, MM switched back to buying? I'm not seeing 625 or 620 strike BPS at risk, will let these expire today.

Question regarding CC rolls. The 680cc as part of a 660 strike buy-write for 6/3 will need rolling if we continue up. Plan is to manage it up a strike or two next week or at first strong dip today. Is this how it's done? I could let them get assigned but feel strongly that we aren't going to trade sideways for long.

 

[BornToFly]

I have a few 750s call spreads to manage today. The excitement never ends....

 

[jeewee3000]

Does anyone have insight as to why we/futures are up pre-market?

 

[CHGolferJim]

Nice action yesterday and pre-market. Gamma flipped positive, MM switched back to buying? I'm not seeing 625 or 620 strike BPS at risk, will let these expire today.

Question regarding CC rolls. The 680cc as part of a 660 strike buy-write for 6/3 will need rolling if we continue up. Plan is to manage it up a strike or two next week or at first strong dip today. Is this how it's done? I could let them get assigned but feel strongly that we aren't going to trade sideways for long.

View attachment 809372

Not advise and stuff you probably know, so just reminders: Generally you will get a slightly better roll at a lower SP, so executing a roll on a dip is logical if you feel it likely the strike will be ITM at expiration. If OTM, the BTC cost will decline with DTE as theta decays. Once ITM, it seems to move towards the market’s expectation of SP, and each $1 change in SP results in a roughly $1 change in call price. You can roll up to the 6/10 highest strike that will yield a slight credit, or you can accept a small to significant debit for incremental $10 strike improvements. Watch out for the temptation to mentally convert your buy-write shares into “core” shares if SP takes off, and perhaps a tendency to start assuming weekly SP increases.

I’m going through the same process with 6/3 $730 and $755; I may partially roll today and Monday, although I’d like to postpone roll as long as possible on the off chance we don’t reach $730 next week (which was $102 OTM at purchase 5/24).

 

[vikings123]

Does anyone have insight as to why we/futures are up pre-market?

I don’t have the KPIs in front of me but data came out that inflation might be trending down. Core PCE came in at expected levels. Market likes it.

 

[BornToFly]

After a winter/spring drop the last two years, we climbed steadily after mid-May both years (and were making money hand-over-fist here with BPSs). Hopefully history repeats itself again this year.

 

[BornToFly]

On the 3 month chart: Mid-BB 771. The 50 and 200 day MM is at 912. Upper BB at 956. This thing has a lot of room to run.

 

[strago13]

Well, it seems like my margin call concerns have been alleviated in the near term. I now have a new problem, December 18 1100 CC.

Fun times.

 

[AquaY]

Does anyone have insight as to why we/futures are up pre-market?

Inflation numbers were as expected. As a commentator on CNBC put it this morning. meeting expectations on inflation is now considered good news since so many expect it to be worse.

 

[juanmedina]

Well, it seems like my margin call concerns have been alleviated in the near term. I now have a new problem, December 18 1100 CC.

Fun times.

I would be happy if they take my shares for $1100 in December. The covered call losses probably look bad right now but this could just be a relief rally.

 

[jeewee3000]

Sold 5/27 $780 cc's at different premiums (some $0.8, some $1.05, more sell orders waiting).

Don't think we'll get that high today and I'm thinking these will expire worthless.

EDIT: $780 = 10.21% increase from yesterday's close of $707.73. Another 5% from where we are now around $740. Seems unlikely IMO (+10% days are few and far in between, even on rallies).

 

[AquaY]

Well, it seems like my margin call concerns have been alleviated in the near term. I now have a new problem, December 18 1100 CC.

Fun times.

how are 1100 CCs in December a problem?