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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Out of the money
in the money
Ratio of options (number of contracts?) that would pay out at the moment.
assuming Blue is ITM?
i am puzzled how he derived the ratio if OI is not realtime
It may be based on current stock price and that day's 7am open interest. So dynamic, but slightly stale.
Ok, the bastards shook me out this AM. Didn’t want to do it, but got scared because I really didn’t expect anything over $750. Once again sold CCs too early in the week.
So, rolled my c740s-c755s CCs up (760-780s) and out to next week for $1cr. The good news, at least, is that my 735/740 straddle printed nicely anyway (STO ~$54, BTC ~$35, mostly profit on the put side). Rolled to 6/17 and widened to 735/760 @ $61. Will see how that decays.
PS, sure seems like @Yoona has a long lunch and lots of breaks.
So, rolled my c740s-c755s CCs up (760-780s) and out to next week for $1cr. The good news, at least, is that my 735/740 straddle printed nicely anyway (STO ~$54, BTC ~$35, mostly profit on the put side). Rolled to 6/17 and widened to 735/760 @ $61. Will see how that decays.PS, sure seems like @Yoona has a long lunch and lots of breaks.
Patience is a virtue!! Just wanted to share that I finally rolled backwards the remaining 10 Jan 2023 1500ccs!
I had rolled them forward back in Nov/Dec, because the only way to generate enough cash to close out the underwater BPS (after the Hertz deal gutted my BCS) was to sell LEAP ccs. Thanks to macro economics, they finally lost enough value (90%) that I could roll them forward into this week's 750cc's this morning (for a $2 credit each!). It initially seemed to be a risky move, but what's the worse that would happen? that I roll them a week at a time in a bear market?
I now have access to all my shares to sell weekly covered calls again! Now I just need to nurse along my DITM puts - have one giant Jan '23 1700p and a few smaller ones to work through.
Sorry for the off-topic post, but I felt that I had to share this lesson. 1) BEWARE of spreads! They might seem like a great way to earn income, until it all goes to pot! 2) You can recover with selling cc/csp! Just stay away from spreads!
Edit: TL;DR - slow and steady wins the race.
I had rolled them forward back in Nov/Dec, because the only way to generate enough cash to close out the underwater BPS (after the Hertz deal gutted my BCS) was to sell LEAP ccs. Thanks to macro economics, they finally lost enough value (90%) that I could roll them forward into this week's 750cc's this morning (for a $2 credit each!). It initially seemed to be a risky move, but what's the worse that would happen? that I roll them a week at a time in a bear market?
I now have access to all my shares to sell weekly covered calls again! Now I just need to nurse along my DITM puts - have one giant Jan '23 1700p and a few smaller ones to work through.
Sorry for the off-topic post, but I felt that I had to share this lesson. 1) BEWARE of spreads! They might seem like a great way to earn income, until it all goes to pot! 2) You can recover with selling cc/csp! Just stay away from spreads!
Edit: TL;DR - slow and steady wins the race.
not-advice
I've got some buy-writes open right now (purchased shares ~720, sold 700 strike cc for this week expiration; about $16 profit if held to expiration and share price >700 - anywhere above 700).
What I've been finding interesting, and this might be due to using an ITM short call, is that this is probably the position I've had the least worry about in like forever. It takes little energy, if I don't see the share price for hours on end I don't fret. It just doesn't matter. I am noting this as I've previously and intentionally turned the wheel and found that I really didn't like the emotions from doing so. In particular I didn't like turning the shares into cash (call assignment), as I was fretting constantly about whether I'd get the cash back into shares (put assignment) at a positive strike to strike change.
I'm down to around $4 worth of time value remaining. That will all drain away tomorrow and with today's share price in the 730s I probably wait for most of that to go away.
Or alternatively I close this position (btc the short call, stc the shares), and open a new buy-write with a purchase price in the 730s. This time I probably go slightly OTM - say 750 or 760 - for the big credit plus the possibility of strike to strike gains as the shares work their way higher.
A bit of background - I'm using cash that would otherwise be backing cash secured puts for these positions. I am managing them more like csp but much closer to the money as I actively want these to go ITM and stay there, with any level of ITM working for me. This is cash that I mostly or completely don't want to use to buy and hold shares or leaps as I already have all of those that I want (or nearly all that I want).
At these very low share prices, where I see little room for further movement downward, I find I like these buy-writes a lot over csp (which I also like). There's just no way I am selling puts that are within $20 of the share price when I open them. But these buy-writes - its easy for me on these.
At higher share prices or after a big move up I won't be opening these - same logic as why I wouldn't open csp in that situation. I use the same logic for opening these buy-writes as I do for csp (open on a down day, take early profits when available). One big difference - on the buy-write I can get an early close on either a down day (short call goes far OTM) OR on an up day (short call goes deeply enough ITM that the time value drops significantly).
As there is no such thing as a free lunch or free money, should the share price drop far and fast enough, then I'll get the big realized gain from the short call, but then I'll also be far enough away from my purchase price that I won't be able to be as aggressive on the second (and later) round of the call sales. If it goes far enough then I might get "stuck" with relatively expensive shares where I'm waiting for the share price to come back before the big credit short call sales can restart.
At this moment (shares 734), the short call is trading at $39 and was originally opened for $38. If I were to BTC the short call and STC the long shares, then the short call will break even while the shares will gain $15 ($734 - $719). The max theoretical gain for this position was / is $18 with the remaining $3 in the time value left to decay.
If I decided that this was the relatively low point of the share price over the next week (I kind of do), then I close this current position for the $15 gain, and sell new shares at $734. I could go ITM with the 700 strike call for a net $17 time value ($51 contract price minus the $34 ITM). Or I could go for something more like the 750 strike call with a $23 contract price and the possibility of the shares going to >750 and achieving the max gain of $39.
The first position maxes out at $17 at any share price above 700; the second position maxes out at $39 at any strike above 750. The second position breaks even or makes money at 717 and above; the first position is break even or better at 683 and above (assuming full resolution next week - ignores rolling / managing the short call week to week).
Upon further review I like realizing the $15 gain I have in hand and opening a new position for next week with the $17 theoretical max gain (700 strike short call). Time to enter some trades
EDIT: or not - share price going down (and extrinsic value going up) - I'll keep waiting until closer to end of day
2nd EDIT: One downside I'm seeing with buy-writes, that I find very acceptable over these short DTE, is that it looks like they will be held close to expiration. Much like spreads - when the short option is close to the money (and at my aggression level they will be), then the time value doesn't really decay until close to the end. This is valuable to me as it makes it easier to fire and forget until late in the week, but bad for turning over positions for good gains more frequently.
I've got some buy-writes open right now (purchased shares ~720, sold 700 strike cc for this week expiration; about $16 profit if held to expiration and share price >700 - anywhere above 700).
What I've been finding interesting, and this might be due to using an ITM short call, is that this is probably the position I've had the least worry about in like forever. It takes little energy, if I don't see the share price for hours on end I don't fret. It just doesn't matter. I am noting this as I've previously and intentionally turned the wheel and found that I really didn't like the emotions from doing so. In particular I didn't like turning the shares into cash (call assignment), as I was fretting constantly about whether I'd get the cash back into shares (put assignment) at a positive strike to strike change.
I'm down to around $4 worth of time value remaining. That will all drain away tomorrow and with today's share price in the 730s I probably wait for most of that to go away.
Or alternatively I close this position (btc the short call, stc the shares), and open a new buy-write with a purchase price in the 730s. This time I probably go slightly OTM - say 750 or 760 - for the big credit plus the possibility of strike to strike gains as the shares work their way higher.
A bit of background - I'm using cash that would otherwise be backing cash secured puts for these positions. I am managing them more like csp but much closer to the money as I actively want these to go ITM and stay there, with any level of ITM working for me. This is cash that I mostly or completely don't want to use to buy and hold shares or leaps as I already have all of those that I want (or nearly all that I want).
At these very low share prices, where I see little room for further movement downward, I find I like these buy-writes a lot over csp (which I also like). There's just no way I am selling puts that are within $20 of the share price when I open them. But these buy-writes - its easy for me on these.
At higher share prices or after a big move up I won't be opening these - same logic as why I wouldn't open csp in that situation. I use the same logic for opening these buy-writes as I do for csp (open on a down day, take early profits when available). One big difference - on the buy-write I can get an early close on either a down day (short call goes far OTM) OR on an up day (short call goes deeply enough ITM that the time value drops significantly).
As there is no such thing as a free lunch or free money, should the share price drop far and fast enough, then I'll get the big realized gain from the short call, but then I'll also be far enough away from my purchase price that I won't be able to be as aggressive on the second (and later) round of the call sales. If it goes far enough then I might get "stuck" with relatively expensive shares where I'm waiting for the share price to come back before the big credit short call sales can restart.
At this moment (shares 734), the short call is trading at $39 and was originally opened for $38. If I were to BTC the short call and STC the long shares, then the short call will break even while the shares will gain $15 ($734 - $719). The max theoretical gain for this position was / is $18 with the remaining $3 in the time value left to decay.
If I decided that this was the relatively low point of the share price over the next week (I kind of do), then I close this current position for the $15 gain, and sell new shares at $734. I could go ITM with the 700 strike call for a net $17 time value ($51 contract price minus the $34 ITM). Or I could go for something more like the 750 strike call with a $23 contract price and the possibility of the shares going to >750 and achieving the max gain of $39.
The first position maxes out at $17 at any share price above 700; the second position maxes out at $39 at any strike above 750. The second position breaks even or makes money at 717 and above; the first position is break even or better at 683 and above (assuming full resolution next week - ignores rolling / managing the short call week to week).
Upon further review I like realizing the $15 gain I have in hand and opening a new position for next week with the $17 theoretical max gain (700 strike short call). Time to enter some trades
EDIT: or not - share price going down (and extrinsic value going up) - I'll keep waiting until closer to end of day
2nd EDIT: One downside I'm seeing with buy-writes, that I find very acceptable over these short DTE, is that it looks like they will be held close to expiration. Much like spreads - when the short option is close to the money (and at my aggression level they will be), then the time value doesn't really decay until close to the end. This is valuable to me as it makes it easier to fire and forget until late in the week, but bad for turning over positions for good gains more frequently.
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For interest - I see IV going down on the June '24 options; at least the 500 strikes that I actually own some of. Shares up $1.50 right now, those options are down $10.50. That sounds like about a 2 point drop in the IV; not a lot, but its also a start on those leaps becoming more affordable.
I've got some shares I'm thinking about exchanging roughly 2 for 1 into these June '24 500 strike calls. I'd be realizing a reasonably hefty loss (buy $920, sell $730), but positioning for a larger gain on the voyage back to $920ish
I've got some shares I'm thinking about exchanging roughly 2 for 1 into these June '24 500 strike calls. I'd be realizing a reasonably hefty loss (buy $920, sell $730), but positioning for a larger gain on the voyage back to $920ish
An additional observation about the buy-writes; its easy to keep track of the time value remaining in the position, especially when you have strikes such as the 700 I have right now. Take the share price, subtract the call strike (700 right now), and anything over and above this amount is time value.
An example - shares are $724.60. The first 24.60 of the call is the intrinsic - everything over 24.60 is time value. Short call at 30.15 - I have 5.50ish time value remaining out of the original $18 max gain.
The share price going down right now is reducing my realizable gain, but is also enabling a lower entry for next week's buy-write and therefore shifting some of this week's possible profitability into next week, either in the form or more profitability or in the form of a lower risk position.
An example - shares are $724.60. The first 24.60 of the call is the intrinsic - everything over 24.60 is time value. Short call at 30.15 - I have 5.50ish time value remaining out of the original $18 max gain.
The share price going down right now is reducing my realizable gain, but is also enabling a lower entry for next week's buy-write and therefore shifting some of this week's possible profitability into next week, either in the form or more profitability or in the form of a lower risk position.
jeewee3000
Active Member
There. Closed all cc's for this week at 75 % profit or more. No position open for this week anymore, to await CPI.At least it's not as bad as @BornToFly
I'm not too worried. Will very likely be able to close these out today at a profit when TSLA's rise is capped. The other thread will complain, I will gain.
TheTalkingMule
Distributed Energy Enthusiast
We nearly got this all in a single trading day. Risk off makes sense with CPI looming.
Call selling cajones update: still none
Sold about 1/3 of my weekly BPS for next week just now in case CPI causes a mega-spike in the morning. Of course my optimistic SP outlook is nearly always wrong, but we'll see!
bkp_duke
Well-Known Member
Getting really tempted to sell all shares and buy Jun 24 600 or 700 LEAPS. Someone talk me out of it . . .
I'm no help
I wouldn't turn all of my shares into leaps, and if/when I do it'll be Jun 24 500s. I'd choose the further leap so that even if we keep going down and see 600, then they will still be ITM. Then again I also use these to sell calls and being ATM or OTM is bad for that.
I am also thinking about making that shift with a decent sized pile of my shares. I will probably need to see a share price under 700, though the IV decrease I saw today helps with acting sooner.
With shares down around 720 I acted on the buy-write positions I had open for this week. I did a simple roll of the cc component to next week and retained the 700 strike.
That realized about $8 or $9 on the position expiring tomorrow out of $18, and set me up with a $23 max gain on next week's position (share price >700). I considered increasing the call strike and decided that the low strike is my better (low) risk choice, even if that will leave a lot of money on the table should the shares be up next week.
I also held back a few of these and am treating them more like aggressive cc's than buy-writes. I did a BTC to realize the $8-9, but am holding off to open the replacement calls until tomorrow, hopefully on an upwards move in the morning.
There's a bigger idea here that my brain is still wrapping itself around. With the buy-write positions I want to apply exactly the same logic as I apply to csp. Namely open them on a down move, and close them on an up move (or expiration). That means that today (down $6) was a good day to close the current buy-write AND open the replacement buy-write. I use the same resources for these positions as I do for a cash secured put, and open/close them using the same logic.
That is different from the call sales that I am also doing, where I want to open covered calls on an up day and close them on a down day (or expiration).
But both involve covered calls, just with different logic. Both are aimed at generating income.
I think the hardest part is going to be ok with the shares taking off - all those shares that aren't participating in the move up! But if the cash that bought those shares had instead been used to back csp then they wouldn't be particpating in the big move up anyway - I've been needing to repeat that to myself a few times
That realized about $8 or $9 on the position expiring tomorrow out of $18, and set me up with a $23 max gain on next week's position (share price >700). I considered increasing the call strike and decided that the low strike is my better (low) risk choice, even if that will leave a lot of money on the table should the shares be up next week.
I also held back a few of these and am treating them more like aggressive cc's than buy-writes. I did a BTC to realize the $8-9, but am holding off to open the replacement calls until tomorrow, hopefully on an upwards move in the morning.
There's a bigger idea here that my brain is still wrapping itself around. With the buy-write positions I want to apply exactly the same logic as I apply to csp. Namely open them on a down move, and close them on an up move (or expiration). That means that today (down $6) was a good day to close the current buy-write AND open the replacement buy-write. I use the same resources for these positions as I do for a cash secured put, and open/close them using the same logic.
That is different from the call sales that I am also doing, where I want to open covered calls on an up day and close them on a down day (or expiration).
But both involve covered calls, just with different logic. Both are aimed at generating income.
I think the hardest part is going to be ok with the shares taking off - all those shares that aren't participating in the move up! But if the cash that bought those shares had instead been used to back csp then they wouldn't be particpating in the big move up anyway - I've been needing to repeat that to myself a few times
What I've been doing lately is a variation of adigg's "sell on strength":
- on down days where I think the SP will recover, I split the put into a vertical roll + a weekly near-the-money put for a small net credit.
- on up days where I think the SP will stagnate down, I split the put into a vertical roll + a weekly near-the-money call for a small credit.
This way if I'm wrong with either direction, I'll just have to roll it one week at a time until I can close it for a debit that's less than the profit I collected from the split. I learned from you that it's better to close early for a profit than to wait for the option to expire! Rinse and repeat until other ways of dealing with the DITM option shows up.
And I do this independent of the regular selling of covered calls for income to minimize how many things I need to track.
Devil's advocate - inflation is stickier than expected due to convergent geopolitical / non-monetary policy factors and despite persistent rate increases from central banks. Policy responses lead to a moderate recession that lasts two years, crushing EPS growth, therefore lowing the denominator in P/E ratios and dragging market valuations down with them.
TSLA, despite consistent growth, is constrained within the overall macro environment and trades in a 300-600 range for the duration. Company moonshots like FSD and Optimus don't pan out in this time frame, leaving the company's valuation solely dependent on its more mainstream segments, such as auto and energy.
It's kind of a worst case scenario, but it seems plausible to me. /shrug
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