Wiki Selling TSLA Options - Be the House

[CHGolferJim]

Since they went ITM today, at ~3:30pm rolled 6/3 $730 and $755 CC to 6/10 $740 and $765 for a tidy $7 credit. If needed, I’m going to try to roll +1 week +$10 from now on irrespective of the change in SP, hoping for any rises to be less dramatic than this week and that strikes will eventually catch up to SP to allow expiration. This appears to be a better return than rolling out multiple months to ATM, then having to wait and watch and forego income. I appreciate this suggestion from someone here today, but have lost track of who it was .

 

[vikings123]

Since they went ITM today, at ~3:30pm rolled 6/3 $730 and $755 CC to 6/10 $740 and $765 for a tidy $7 credit. If needed, I’m going to try to roll +1 week +$10 from now on irrespective of the change in SP, hoping for any rises to be less dramatic than this week and that strikes will eventually catch up to SP to allow expiration. This appears to be a better return than rolling out multiple months to ATM, then having to wait and watch and forego income. I appreciate this suggestion from someone here today, but have lost track of who it was .

The only risk I see is early assignment especially if the split is officially announced with an effective date and MMs potentially have to find the missing shares. Or is that not a risk in your opinion?

 

[vikings123]

Not so fortunate here. I'd sold 4X 755CC , was so fixated on the BPS that expired 125 OTM that I forgot to close out these calls and now stuck myself with a capital gains obligation that I wasn't ready to take this year. Average cost of the shares was around 250. Uhhgggg, I hope the other side doesn't decide to exercise. Silver lining, net gain overall.

Have a nice weekend all.

Call your broker and see if they can help you avoid the assignment?

 

[CHGolferJim]

The only risk I see is early assignment especially if the split is officially announced with an effective date and MMs potentially have to find the missing shares. Or is that not a risk in your opinion?

Have the impression any split will take several months to organize (annual mtg approval, etc.). When do you think it might happen? I am thinking of exiting CC by the early July P&D announcement and watching for awhile for a better indication of what the 2Q P&L suggests for the SP.

 

[adiggs]

not-advice
Been thinking more about the buy-writes.

Something I've realized - there are good reasons for an early close on a move up and there are good reasons for an early close on a move down. Let me explain:

- On a big move up, such as we had today, the time value on the short call will approach 0, taking the overall gain to the credit plus the strike to strike. So close early, realize the (large) gain, and prepare for the new position. This will fall into the same sequence as a csp sale, so by my rules: close early for the gain, and open no sooner than tomorrow (or after a big down day). Open the next position on a down day.
- On a big move down, the covered call value will head towards 0. Take the early close, though likely at a higher % gain. The reason for the higher % gain is simply that the original credit will be so large, leaving a bigger hunk of money to earn. This first trade, the opening credit was $23. I closed with $6 in time value remaining because I was also earning the maximum strike to strike gain in the position ($19).


A position with a good early close going up, and a good early close going down. I like.


Reminder - definitely not advice. The more I think about these, the more important I think it is to -only- do these with shares. DITM calls will have theta, delta, and vega effects that shares don't. All of those things in combination can turn winners into losers, and at the very least make the mental calculations along the way more difficult.

 

[WattsHappening]

Have the impression any split will take several months to organize (annual mtg approval, etc.). When do you think it might happen? I am thinking of exiting CC by the early July P&D announcement and watching for awhile for a better indication of what the 2Q P&L suggests for the SP.

I've mentioned this before, but since you are asking for opinions, I am very confident the split will be effective by August 31. The 6-month employee stock purchase plan window closes on that date. Elon will want to optimize/maximize Tesla's employees' ESPP purchases.

 

[JustMe]

Wow these past two days were awesome! Glad I bought my shares back when I did $100 ago

The share price rise really boosted my margin.

“I can write tons of spreads now and make loads of money!” <- Actual thought I had before telling that voice to shut the heck up lol … yes, de-risking is the priority

Sold 6/3 $850 CCs for $2.01. Delta of 0.07

If we reach that next week I have a little problem, but my big bps problem becomes a lot smaller

 

[BornToFly]

I closed my 750 cc with about 15 minutes left in the day when it was looking like the SP was going to hold. Just took the loss and decided not to roll to 810. $7 loss could turn to $50 real quick next week if we keep climbing. I think the market has decided that inflation in past the worst and that the fed will raise rates less. We’ll see. This could be a Covid type market rebound. 850+ could be in the cards next week just as much as <700.

 

[OrthoSurg]

I closed my 750 cc with about 15 minutes left in the day when it was looking like the SP was going to hold. Just took the loss and decided not to roll to 810. $7 loss could turn to $50 real quick next week if we keep climbing. I think the market has decided that inflation in past the worst and that the fed will raise rates less. We’ll see. This could be a Covid type market rebound. 850+ could be in the cards next week just as much as <700.

Even 20% OTM CCs 3 DTE aren’t safe anymore, what a crazy time

 

[Yoona]

today is

• 1st time in 8 weeks that Fri Close > Fri Open
• the biggest Fri Close of 2022
• only the 4th time in the last 2 years that Fri Close is >5% of Fri Open

 

[dc_h]

I'm hoping for a higher than expected close today after this reversal this week (i.e. 760+) - with the reasoning that people who sold weekly CCs that are ATM now are holding out hoping they will expire, but they may be forced to close out at end of day if we get a rise, causing a small CC-covering cascade.

Every time I have been in that position, it feels like the SP never cooperates and lets me off the hook - I am forced to roll, and then the next week I get run over when the rally continues. I think call sellers are more vulnerable now than put sellers and MM find it easier to target them now that we're going back up.

Good call on 760.

 

[OrthoSurg]

I have been lurking in this thread for a while and learnt a lot from all you experts.

Looking for not-advice. I had to sell a few CC's to raise cash a few days ago but I'm a noob so may have created a mess that I need to get out of now. at ATH I accounted for a 50% drop and basically was a hodler that don't sell options often, but now here we are a few days ago and I had to raise cash incase we are going lower. (I can't sell puts because I only have CSP privilege's , can't sell puts on margin, selling CCs was my only option)

(Margin call would have been around $640, selling those CC's improved it to $580 currently)

I've created a bit of a mess with these cc's potentially capping gains if the rally continues though. I sold at the money calls for maximum extrinsic premium and was hoping that they will decay away but then this 3 day rally happened.

Opened 1x5/27 ATM $670cc $31.94/contract free rolled to 6/10 $700cc yesterday around $45/contract
Opened 2x5/17 ATM $600cc $38.8/contract , free rolled to 9/16 $700cc yesterday as well around $111/contract
Opened 1x5/27 ATM $755cc $4.95/contract, I'm watching this today , but may just let it run its course no matter what happens

How low or high can it go?

if the 5/27 $755cc get assigned, sell 100 shares, my margin safety should go to $391/share, if not then it will still be $580/share

I may be able to raise some cash from my line of credits (outside of the brokerage account), that should reduce my margin call share price to around $400/share.

If i get assigned on the $755cc , sell 100 share and combine with the cash injection, I should safe to $129/share, lol is this going to $0? /s

Should I roll/buy back at a loss/hold and wait for my 6/10 , 9/16 $700cc's?

Thanks in advance

My not advice would be to roll out. We will reach a certain point when some people will start taking profit after the gamma squeeze and there will be another trend down. I like this graph posted by someone else 2 weeks ago about an investor who called the top and bottom on his Patreon. We might be revisiting the 600s in couple months.

I sold CCs at 770 on the way down when the Ukraine war started and my mistake was to close them right away when the stock rebound the same day. Sold them at 20 and had to buy back at 60. If I had waited 3 months I would now have to realize that loss.

 

[intelligator]

Call your broker and see if they can help you avoid the assignment?

It was my fault entirely , somehow had a block of some form to not see these in the sorted view earlier in the day. I called Fidelity immediately at 4, they said assignment is random, and that we are at the fate of the other deciding to exercise or not. I want the position back, maybe good to wait a week and buy them back for less. The tax will take a chunk of cash that I use to back trades with, unplanned for. Oh well. But thanks for the suggest.

 

[MikeC]

I have been lurking in this thread for a while and learnt a lot from all you experts.

Looking for not-advice. I had to sell a few CC's to raise cash a few days ago but I'm a noob so may have created a mess that I need to get out of now. at ATH I accounted for a 50% drop and basically was a hodler that don't sell options often, but now here we are a few days ago and I had to raise cash incase we are going lower. (I can't sell puts because I only have CSP privilege's , can't sell puts on margin, selling CCs was my only option)

(Margin call would have been around $640, selling those CC's improved it to $580 currently)

I've created a bit of a mess with these cc's potentially capping gains if the rally continues though. I sold at the money calls for maximum extrinsic premium and was hoping that they will decay away but then this 3 day rally happened.

Opened 1x5/27 ATM $670cc $31.94/contract free rolled to 6/10 $700cc yesterday around $45/contract
Opened 2x5/17 ATM $600cc $38.8/contract , free rolled to 9/16 $700cc yesterday as well around $111/contract
Opened 1x5/27 ATM $755cc $4.95/contract, I'm watching this today , but may just let it run its course no matter what happens

How low or high can it go?

if the 5/27 $755cc get assigned, sell 100 shares, my margin safety should go to $391/share, if not then it will still be $580/share

I may be able to raise some cash from my line of credits (outside of the brokerage account), that should reduce my margin call share price to around $400/share.

If i get assigned on the $755cc , sell 100 share and combine with the cash injection, I should safe to $129/share, lol is this going to $0? /s

Should I roll/buy back at a loss/hold and wait for my 6/10 , 9/16 $700cc's?

Thanks in advance

Too late now but, after a big dip and with low IV, I’ve learned to sell shares to free up cash and to also buy calls to keep upside exposure for a rebound.

We’ve seen this too many times where it goes down too far to wipe out call buyers and put sellers and then bounces too far back up to wipe out call sellers and put buyers.

You are unfortunately in the situation where you still have full downside exposure but upside is now capped. The market never seems to let me off the hook easily in that situation. I’m not saying it’s a straight shot back to 1200, but the market usually doesn’t pause to let people make an orderly exit.

It depends the amount of shares at risk and how strongly you want to keep them. I would personally close them out if there’s a good chance next week, if you definitely don’t want to lose shares.

You could also do something like combine 2 contracts into 1 at a lower strike, to risk 100 fewer shares but still have downside exposure, at the cost of the lower strike and worse roll opportunity.

 

[samppa]

not-advice
Been thinking more about the buy-writes.

Something I've realized - there are good reasons for an early close on a move up and there are good reasons for an early close on a move down. Let me explain:

- On a big move up, such as we had today, the time value on the short call will approach 0, taking the overall gain to the credit plus the strike to strike. So close early, realize the (large) gain, and prepare for the new position. This will fall into the same sequence as a csp sale, so by my rules: close early for the gain, and open no sooner than tomorrow (or after a big down day). Open the next position on a down day.
- On a big move down, the covered call value will head towards 0. Take the early close, though likely at a higher % gain. The reason for the higher % gain is simply that the original credit will be so large, leaving a bigger hunk of money to earn. This first trade, the opening credit was $23. I closed with $6 in time value remaining because I was also earning the maximum strike to strike gain in the position ($19).


A position with a good early close going up, and a good early close going down. I like.


Reminder - definitely not advice. The more I think about these, the more important I think it is to -only- do these with shares. DITM calls will have theta, delta, and vega effects that shares don't. All of those things in combination can turn winners into losers, and at the very least make the mental calculations along the way more difficult.

What will you do if stock goes to 500 and stays there? will you sell cc against the buy-write at lower strike than you bought the shares for?

 

[Xepa777]

I've mentioned this before, but since you are asking for opinions, I am very confident the split will be effective by August 31. The 6-month employee stock purchase plan window closes on that date. Elon will want to optimize/maximize Tesla's employees' ESPP purchases.

Sorry can you go into more detail? Does Elon want the SP to be as high as possible by that date?

 

[bkp_duke]

Sorry can you go into more detail? Does Elon want the SP to be as high as possible by that date?

Employees can buy Tesla stock at a moderate discount during certain periods of the year. Elon and the board would want the split to be completed before that window closes, in order for each share to be lower in price.

I.e. a line worker may not buy a single share at $1200. But they might consider 3-4 shares if they are $120 each after a split.

 

[juanmedina]

Employees can buy Tesla stock at a moderate discount during certain periods of the year. Elon and the board would want the split to be completed before that window closes, in order for each share to be lower in price.

I.e. a line worker may not buy a single share at $1200. But they might consider 3-4 shares if they are $120 each after a split.

They can buy stock at 15% discount from the lowest value in that certain period. Where I work you can purchase up to 10% of your salary per year.

 

[jaspa]

Take it for what it's worth, Spotgamma thinks that the upside area for S&P is 4300 (about another 3% from current levels) going into June options expiration. June 15th (VIX exp.) & June 17th (options exp. OPEX) are supposedly key turning point due to very large expirations and the FOMC (6/15).

Be careful out there, it's been a challenging market to navigate in.

 

[TheTalkingMule]

The next couple week's charts of TSLA options open interest show big spikes at 750 and 825. It'll be a wild ride as bulls and bears battle for momentum.

I have to think an $824 close on 6/10 is more likely than staying flat at $749. Here's hoping the algos "fall back" to the higher strikes in June!