Wiki Selling TSLA Options - Be the House

[Knightshade]

Mentioned in other thread but seemed relevant here so quoting it here to see if folks have any thoughts

That's a fugly ratio for those dabbling in options. What happens to the 500 or 1000 strike options? In case of a split like 1:5, they can slice the strike price by 5 and increase the count by 5 and it works out.

Now it's not so clean. If they create a basket, like what they did with SCTY options, that will be even worse. In these cases, they will create a TSLA1 basket comprised of 3 post split TSLA shares and your old options will be on TSLA1 which then become pretty illiquid.

Sucking out liquidity like this is not generally great. And the market makers make out like bandits when making market in these illiquid chains.

There is still a big inventory of leaps going out to June '24.

Ugh..

 

[Oil4AsphaultOnly]

Didn't notice this myself, but read it in the comments of a teslarati.com article ... TSLA closed today at $696.69.

 

[mongo]

Mentioned in other thread but seemed relevant here so quoting it here to see if folks have any thoughts

Posted over there, but SCTY was 0.11:1 so contracts turned into 11 share units.
This will triple the # of contracts at 1/3 the strike. So 600s becone 200s, and 500s become 166.66 (plus some cash compensation) still representing 100 shares.
Same thing occurred with the 5:1, but those aren't as obvious since it divided cleanly.

 

[M3Rider]

How long will this bear market last? Unfortunately, it looks like it will be awhile

I’m assuming at least till EOY

Sold 30 2024 1600 calls for $105 when we hit $760 and was expecting us to go higher and to keep selling more, but with this CPI it’s a 2nd blow after Elon’s email.

Bears got it wrong this time, they expected green today…Still I see Wifey insisting the rally will continue. Then crash will follow. I’m just hoping to do a bit more hedging if we go up before we fall more. Macros suck big time and for TSLA until Q3 ER there’s plenty of time to fall. After that I’m not sure what happens, I think the rest of the market will stay in bear, but for TSLA we may stop falling maybe? I will try to prepare for 500.

I see ChickenGenius freaked out too the day of Elon’s email and turned bear

https://twitter.com/x/status/1532772127434149888

 

[Max Plaid]

Mentioned in other thread but seemed relevant here so quoting it here to see if folks have any thoughts

In 2020 I rolled my LEAPS to split-friendly strikes to avoid any such liquidity issues

I'm holding Jan c700's, which will come out ugly, so I'll look to offload those before the split, in any case, will wait a bit as they're negative right now and I don't want to be realising any losses on trades for the moment

I was hoping to be buying $TSLA at $500, looks like that wish will come true, but not exactly what I was looking for... at least this not-a-split-announcement should now provide some price-support, macro-pressure aside, I'd expect a slow melt-up from here, which will be very facilitative for put selling. I'm thinking to buy some more LEAPS on Monday, June 24 c600's seem a nice strike

 

[jeewee3000]

In 2020 I rolled my LEAPS to split-friendly strikes to avoid any such liquidity issues

I'm holding Jan c700's, which will come out ugly, so I'll look to offload those before the split, in any case, will wait a bit as they're negative right now and I don't want to be realising any losses on trades for the moment

I was hoping to be buying $TSLA at $500, looks like that wish will come true, but not exactly what I was looking for... at least this not-a-split-announcement should now provide some price-support, macro-pressure aside, I'd expect a slow melt-up from here, which will be very facilitative for put selling. I'm thinking to buy some more LEAPS on Monday, June 24 c600's seem a nice strike

Isn't the liquidity issue overblown a little? People holding for example 800 leaps are plenty (strike with decent volume right now), so the 266.666 strike replacing it later will see volume either way, no? (Or the strike they create, if a cash bonus is awarded)

In other words, no need to convert pre-split. You could just do it afterwards as well. Or am I wrong on this?

 

[BornToFly]

You (and @Yoona before you) have pointed to RSI and MACD recently.

Twitter account "DeafDayTrader" (here) used these indicators as well to day trade. Years ago I signed up with him for a brief while and got access to his trades (live) and his "book" (a pdf of around 7 pages) with his day trading technique. It was very poorly written and I couldn't get a grip on how he used these indicators properly.

I did some research on my own, but still I can't seem to understand exactly how RSI+MACD (+volume) is used as signal for entering/exiting trades.

Can anyone ELI5 ? Or maybe point to a good source to learn besides basic explanations of what RSI and MACD is?

Thanks in advance. Everything explained is of course 'not advice' and I am responsable for my own trades etc.

EDIT: DeafDayTrader is no longer active.

Someone had posted a link to video 1-2 weeks ago made by a female asian trader talking about VWAP. She spends some time talking about RSI and MACD. I have not found VWAP to be very helpful. But when RSI is very low or high it is pretty reliable for at least a short reversal. On the MACD, I do look for a crossing of the lines, but the size of the red/green candles are more important. You won't get the very bottom or top of a reversal, but you want to catch a solid trend that has started. Spend a few days and hours watching them as the day progresses and do a bunch of mental trades to see how well you would have done.

 

[Oil4AsphaultOnly]

Isn't the liquidity issue overblown a little? People holding for example 800 leaps are plenty (strike with decent volume right now), so the 266.666 strike replacing it later will see volume either way, no? (Or the strike they create, if a cash bonus is awarded)

In other words, no need to convert pre-split. You could just do it afterwards as well. Or am I wrong on this?

The price of OTM leaps are all extrinsic value. If they're not liquid (due to low demand), then their bid-ask spread will be pretty wide, so you'll lose some value selling them versus some of the more "normal" leaps. ITM leaps will be affected the same way, but at least they'll have their intrinsic value to support the bid price.

Edit: Example:
The bid-ask spread of 01/2024 800c is 193.20 / 200.00

post-split, it'll turn into 01/2024 266c. Ideally (assuming no impact), the bid-ask spread would be: 64.40 / 66.67

But I'm thinking it'll degrade to: 50.00 / 70.00 (it's extreme, but illustrates the point)

 

[juanmedina]

I’m assuming at least till EOY

Sold 30 2024 1600 calls for $105 when we hit $760 and was expecting us to go higher and to keep selling more, but with this CPI it’s a 2nd blow after Elon’s email.

Bears got it wrong this time, they expected green today…Still I see Wifey insisting the rally will continue. Then crash will follow. I’m just hoping to do a bit more hedging if we go up before we fall more. Macros suck big time and for TSLA until Q3 ER there’s plenty of time to fall. After that I’m not sure what happens, I think the rest of the market will stay in bear, but for TSLA we may stop falling maybe? I will try to prepare for 500.

I see ChickenGenius freaked out too the day of Elon’s email and turned bear

https://twitter.com/x/status/1532772127434149888

I am actually worry about the Q2 P&D report; if we dropped 9% over Elon wanting to layoff 10% of their employees can you imagine how much we will drop if we have a P&D miss? I am at point that I may start buying puts for the first time ever to protect my portfolio. I might have to join you and sell some of those 1600cc because I really don't like to sell weeklies at this prices; hopefully we get a tiny rally on Monday with the news about stock split.

https://twitter.com/x/status/1535639144495566848

This is accurate. We have seen it from our own @TheTalkingMule . I assume because of this option premiums might tank?

 

[bkp_duke]

I think a substantial decrease in P&D is already priced in, with expectations probably ~250k. Anything over that, and we could have a nice catalyst upward.

 

[Drezil]

Someone had posted a link to video 1-2 weeks ago made by a female asian trader talking about VWAP. She spends some time talking about RSI and MACD. I have not found VWAP to be very helpful. But when RSI is very low or high it is pretty reliable for at least a short reversal. On the MACD, I do look for a crossing of the lines, but the size of the red/green candles are more important. You won't get the very bottom or top of a reversal, but you want to catch a solid trend that has started. Spend a few days and hours watching them as the day progresses and do a bunch of mental trades to see how well you would have done.

what I found very helpful are the daily Fibonacci-Pivot-Points.

Think of: last day VWAP = Base, last day variance = width.

yesterdays chart:

gray was VWAP from yesterday.
went to S1 in Premarket, dropped to S2 after CPS. Low of day near S3.
S2 was resistance into close, S1 the peak of the AH spike on split news.

It does not always look this perfect, but man are these things usually magnets/turning points..

Edit:
Also the SAR (purple squares above/below) is a predictor of mood-changes (similar to MACD) more often than not.

 

[juanmedina]

I think a substantial decrease in P&D is already priced in, with expectations probably ~250k. Anything over that, and we could have a nice catalyst upward.

Isn't the analyst consensus at 280k? The media is going to be merciless.

 

[Chenkers]

Isn't the analyst consensus at 280k? The media is going to be merciless.

Still lots of dumb/lazy analysts who haven't re-evaluated estimates yet. The consensus estimate should move down closer to the end of the month but may still lag a realistic estimate as not all analysts are competent/genuine.

 

[bkp_duke]

Isn't the analyst consensus at 280k? The media is going to be merciless.

I thought analyst consensus was recently (last week) dropping to the ~250k range.

Couple examples:

Barclays cuts Tesla (TSLA) Q2 estimate to 251k from 315k over China challenges

To state that Tesla’s second quarter this year has been challenging would be an understatement. With Giga Shanghai being shut down for several weeks, the company’s overall vehicle production and delivery figures for Q2 2022 would likely be adversely affected. It appears that Wall Street is...

www.teslarati.com

Credit Suisse adjusts Tesla’s Q2 deliveries guidance to 240-250k units from 295k

Written by Cláudio Afonso | [email protected] | LinkedIn | Twitter Credit Suisse analyst Dan Levy reiterated on Friday the firm’s Outperform rating and $1,125 price target on Tesla shar…

eletric-vehicles.com

 

[juanmedina]

I thought analyst consensus was recently (last week) dropping to the ~250k range.

Couple examples:

Barclays cuts Tesla (TSLA) Q2 estimate to 251k from 315k over China challenges

To state that Tesla’s second quarter this year has been challenging would be an understatement. With Giga Shanghai being shut down for several weeks, the company’s overall vehicle production and delivery figures for Q2 2022 would likely be adversely affected. It appears that Wall Street is...

www.teslarati.com

Credit Suisse adjusts Tesla’s Q2 deliveries guidance to 240-250k units from 295k

Written by Cláudio Afonso | [email protected] | LinkedIn | Twitter Credit Suisse analyst Dan Levy reiterated on Friday the firm’s Outperform rating and $1,125 price target on Tesla shar…

eletric-vehicles.com

As of two day ago Troy had the consensus at 280k. I hope it drops to something realistic that we can beat.

 

[Yoona]

I am trying to understand the effect, if any, of triple-witching OpEx on TSLA 2 weeks before the actual date since "For the last 15 years, the S&P 500 has had 59 witching events. Analysis of the chart shows that the index rallies around the 6th day before to the day before the witching."

Will TSLA also rally? The good news is that TSLA is 32 out of the last 47 3w-opex.

The bad news is that nothing is normal nowadays .

For ex,

• 2022-03-04 Fri Close is 828.29 (2 weeks before 3w-OpEx)
• 2022-03-18 Fri Close is 905.39 (3w-OpEx week)
• 2-wk growth heading into 3w-opex is 8%
• maybe -16% to +23% OTM 14 DTE is safe?
• Covid month -40% OTM 14 DTE

View attachment 813004

(do not use data or interpretation for trading)

In the last 4 quarters, TSLA is one week after triple-witching OpEx.

For ex,

• TSLA is +8% from 2022-03-04 (2 weeks before) to 2022-03-18 OpEx
• TSLA is +11.62% from 2022-03-18 OpEx to 2022-03-25 (1 week later)

Historically, it's -13% to +21% OTM 7 DTE after OpEx.

 

[BornToFly]

NASDAQ futures down almost 2% right now. I put in a quick order on Friday for 620 naked Puts to get more shares at 620, but brain farted and did 10X too many. I'm hoping I can close them without a loss tomorrow.

 

[Yoona]

NASDAQ futures down almost 2% right now. I put in a quick order on Friday for 620 naked Puts to get more shares at 620, but brain farted and did 10X too many. I'm hoping I can close them without a loss tomorrow.

my plan for this week is

• STO -p590 and CC 860, just need to time it
• no daytrading (exceptional macros, extreme risk)

fearless forecast is June monthend compared to today

 

[TheTalkingMule]

I'll take a 4% Monday dive! None of my aggressive BPS orders filled Friday.

Should be yet another relatively easy week for you folks playing both sides.

 

[ZsoZso]

I had a 700C covered call that I sold on Friday, got assigned by IBKR Saturday morning, which surprised me, since the closing price was $696.69, but I guess due to after-hours higher price it was exercised. Funny thing is, now the SP is down into the 660s, so I could buy it back for cheaper, LOL.

But instead, I'm gonna by some LEAPs. BTW, it is in Tax Free Savings account (TFSA), so I do not have to pay tax on the profits.