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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
No chance of that lol. It's a Friday. Electrek came out with a hit piece early morning and it was just picked up by Reuters etc..
TESLA IS LAYING OFF HOURLY WORKERS ACROSS ITS ORGANIZATION - ELECTREK
Timing the market is not my strong suit..... You're saying that when the market is going down, you are buying back the -1200/+1100 and selling shares. When it is going back up you buy shares and sell the same BPS contract again?
I hardly slept last night as I was in full panic attack mode.
As I see it, I have three options (if the SP doesn't recover soon):
1) Close my eyes and hope the SP doesn't go down to 500 (or stay sub-900 through the end of the year). If those happen, I'm probably wiped out and coming out of retirement.
2) Try to Roll the Dec. BPSs to Jan 2024 for even credit (probably by going up to 1200/900) to buy more time, and pray we are over 1200 in 18 months.
3) Liquidate everything and lose 3/4 of the wealth I had 6 months ago with no possibility of gaining it back (without risking everything by buying OTM LEAPS that could leave me with nothing if the SP stays low for two years).
I'm leaning toward number 2 if I can find a way to roll, as that has an element of hope....
As I see it, I have three options (if the SP doesn't recover soon):
1) Close my eyes and hope the SP doesn't go down to 500 (or stay sub-900 through the end of the year). If those happen, I'm probably wiped out and coming out of retirement.
2) Try to Roll the Dec. BPSs to Jan 2024 for even credit (probably by going up to 1200/900) to buy more time, and pray we are over 1200 in 18 months.
3) Liquidate everything and lose 3/4 of the wealth I had 6 months ago with no possibility of gaining it back (without risking everything by buying OTM LEAPS that could leave me with nothing if the SP stays low for two years).
I'm leaning toward number 2 if I can find a way to roll, as that has an element of hope....
oh, no! hope you are ok... if it's me, i would choose 2 to buy me time
after that, close 1 contract at a time using large cash infusion (ie HELOC, sell real estate, etc)
for ex
- buy out one contract with debit
- use new cash to STO very safe 6/24/2022 x30 credit; safe IC it to pay for HELOC interest
- it may take several weeks to reach net total 0, but nightmare of one contract is over
- repeat until all 2024 gone
- return the HELOC
i wish you all the best sincerely
corduroy
Active Member
I just rolled my -680p's out to next week -650p for a $1 credit. As much as I would have loved to finally get rid of these and reset after 8 weeks, I just don't have confidence we close above $660 today.
Originally opened as -770s when we were at $940, here are all the weekly rolls I have done in this position:
-770
-750
-730
-720
-710
-680
-650
Originally opened as -770s when we were at $940, here are all the weekly rolls I have done in this position:
-770
-750
-730
-720
-710
-680
-650
Sure! Monday's trading continued the slide from Fridays 697 close. Tuesday some of the same, OI increased slightly on put side shifting left but also hardening the 700 strike both sides. Wednesday, we got the pop consolidating between 650 and 750, what's up with 700? Thursday, we saw the slide down, 700 reduced significantly, forming a strong OI/gamma wall at 600. I closed a 720cc this morning for pennies, will let the 580 CSP ride to expire and reposition next week. 660 ish close today? GLTA, going to the beach for the day ...
alterac000
Member
Haven't posted in a long time but felt the need to commiserate. Since the ~Nov '21 peak until today I've watched my networth drop by 75% if liquidating everything. Keep telling myself 20/20 hindsight is not helpful...but why didn't I see this coming? My plans for early retirement and financial freedom have been crushed and I'm in return to full-time career mode.
I'm stuck with BPS expiring 364 and 581 days out that are now down over 100% (for real a few months ago I thought BPS 700/500 in 2023 would be safe); with the massive drop in share price my margin has dwindled to nothing. Yesterday I had to sell 650 cc's just to avoid margin call which I closed this morning. As I write this a 5 point drop in TSLA will force me reopen some pitiful CCs again and/or I must accept the fact that my portfolio is FUBARed and sell my hard earned shares at a crazy low price. Actually since completing this post that line was breached :/
If I were you I'd aim for #2 if you have any rolls possible. I'm personally inching towards #3 as each day and minute passes. Rationally I know it's the wrong thing to do, emotionally it might give me some peace sitting out the volatility and refocus my energy on being a worker bee again. With my track record maybe nothing I'm thinking makes any sense though.
Since we are venting, I was going to post this on the other thread but I decided not to but I will do it here:
I feel the opposite. Every day that we go down it is more painful and I wonder why I didn't pull the trigger when I had achieved my early retirement goal... probably greed. Watching life changing money go down the drain hurts, watching more than my annual salary go down the drain in a single day hurts. I know we have been through this before but this time feels different probably because of the amount of money and because we are in a different economic climate. It felt great when we went up more than my annual salary in a day and it was a rush but it blinded me. I feel angry at Elon in some way because of Bitcoin and Twitter because it sure didn't help. I feel like Q2 is going to be a disaster and I really hope I am wrong. Today someone said "I think Tesla's bottom will be $420" and I did the math of how that will affect my portfolio and that made me really depressed; over $2M on paper losses from the high. For me that is insane money and it really hurts. I even considered selling what I still have... maybe this a sign that we are close to the bottom? I know Tesla is doing better than ever but again Elon is not helping, the macro is not helping. I know we will go one day to AH but just thinking that it might take 3 years to go back to where we were hurts like hell.
Sorry for the rant.
I feel the opposite. Every day that we go down it is more painful and I wonder why I didn't pull the trigger when I had achieved my early retirement goal... probably greed. Watching life changing money go down the drain hurts, watching more than my annual salary go down the drain in a single day hurts. I know we have been through this before but this time feels different probably because of the amount of money and because we are in a different economic climate. It felt great when we went up more than my annual salary in a day and it was a rush but it blinded me. I feel angry at Elon in some way because of Bitcoin and Twitter because it sure didn't help. I feel like Q2 is going to be a disaster and I really hope I am wrong. Today someone said "I think Tesla's bottom will be $420" and I did the math of how that will affect my portfolio and that made me really depressed; over $2M on paper losses from the high. For me that is insane money and it really hurts. I even considered selling what I still have... maybe this a sign that we are close to the bottom? I know Tesla is doing better than ever but again Elon is not helping, the macro is not helping. I know we will go one day to AH but just thinking that it might take 3 years to go back to where we were hurts like hell.
Sorry for the rant.
That's essentially what I've been doing. As the stock price has dropped I've had to sell some shares along the way to trim the number of DITM BPS. Essentially deleveraging. Most of the time I've been doing this to retain enough margin to trade with and continue earning sufficient options premium. I was also able to calculate a terminal stock price where my account would go to zero, so I also needed to deleverage to reduce risk and provide a decent buffer.
More recently I've been viewing the leverage provided by the DITM BPS more dynamically. Accepting that I can trim on the way down but also increase leverage again on the way up. I also use a number of cheap weekly Puts that provide a lot of extra Portfolio margin to trade with and accept these as a relatively minor cost of earning premiums.
BrownOuttaSpec
Active Member
I'll join the "vent" party but would rather not give details but just wanted to let you guys know I am right there with you all. Hopefully greener times are in our very near future and we will see ATH sooner than most people think with Tesla being the true leader in innovation/production for multiple industries.
My vent
I’m not happy with EM’s choices over the past six months but I’m to blame for my current predicament.
Trying to look forward though and find a way through this current challenge intact.
Bright side - I’m ten times more skilled and successful at trading after being battle tested through all kinds of wacky and scary situations. I’m very confident I could rebuild even if my account goes to zero now, but like many others financial freedom became farther away.
I’m not happy with EM’s choices over the past six months but I’m to blame for my current predicament.
Trying to look forward though and find a way through this current challenge intact.
Bright side - I’m ten times more skilled and successful at trading after being battle tested through all kinds of wacky and scary situations. I’m very confident I could rebuild even if my account goes to zero now, but like many others financial freedom became farther away.
Please say you were an assassin as your day job.
I doubt there is anyone in this group that is not down more than 50% from ATH. Just know that there are many others who are likely in the boat. Do whatever you need to do for your family and life.
While I'm down more than 50% from ATHs I feel confident about my ability to navigate these markets. I started trading options at the beginning of this year after quitting my job so my timing could not have been worse. While I can always go back to my previous employer I have been able to de-risk and hedge appropriately despite the big losses from BPS and BCS and then BPS again because I got cute by flip rolling some of my BCS. I'm not giving up yet although I'm very close to throwing in the towel.
What's clear is we cannot make serious and consistent money by using set and forget trades. Maybe you can with the 20% OTM trades but for me the risk/reward is just not there. You have to do this with a day trader's mentality. And that means a whole lot of discipline around trade sizes, taking wins, limiting losses etc etc. That means not letting your BPS positions go deep red. That means taking losses instead of rolling if the trend/macro conditions are changing. We have a big fundamental edge as compared to other traders in the market. Once you combine that with discipline and some fairly decent understanding of TA this is doable.
While I'm down more than 50% from ATHs I feel confident about my ability to navigate these markets. I started trading options at the beginning of this year after quitting my job so my timing could not have been worse. While I can always go back to my previous employer I have been able to de-risk and hedge appropriately despite the big losses from BPS and BCS and then BPS again because I got cute by flip rolling some of my BCS. I'm not giving up yet although I'm very close to throwing in the towel.
What's clear is we cannot make serious and consistent money by using set and forget trades. Maybe you can with the 20% OTM trades but for me the risk/reward is just not there. You have to do this with a day trader's mentality. And that means a whole lot of discipline around trade sizes, taking wins, limiting losses etc etc. That means not letting your BPS positions go deep red. That means taking losses instead of rolling if the trend/macro conditions are changing. We have a big fundamental edge as compared to other traders in the market. Once you combine that with discipline and some fairly decent understanding of TA this is doable.
Is it just me, or is $650 the closing price today?
With the buy-write positions I decided to sell 700 strike cc's for next week at 7.60ish. With a break even around 660 having these close anywhere above 700 will generate over $45 over a 4 week window - a great result. I specifically chose to open these today for two reasons: 1) looks like pinning to 650 (to my no-TA eye) so sooner is better (more time value to decay), and 2) take advantage of time decay over the long weekend.
I am looking to have positions closed going into production report - I expect a "business as usual, good report" from the long term buy-n-hold perspective, and for that report to be easily spinnable into a Tesla-is-losing-its-stride type of story (i.e. miss). Either way I expect a fair bit of volatility before we settle back into world-is-ending macro and if that's at a higher share price then I'd like to either be selling higher strike calls or to sell off the buy-write shares at a good price, and then restart at a lower share price when that's available.
Even if late June/July are up from here, a little or a lot, I expect we're back here by August.
With the buy-write positions I decided to sell 700 strike cc's for next week at 7.60ish. With a break even around 660 having these close anywhere above 700 will generate over $45 over a 4 week window - a great result. I specifically chose to open these today for two reasons: 1) looks like pinning to 650 (to my no-TA eye) so sooner is better (more time value to decay), and 2) take advantage of time decay over the long weekend.
I am looking to have positions closed going into production report - I expect a "business as usual, good report" from the long term buy-n-hold perspective, and for that report to be easily spinnable into a Tesla-is-losing-its-stride type of story (i.e. miss). Either way I expect a fair bit of volatility before we settle back into world-is-ending macro and if that's at a higher share price then I'd like to either be selling higher strike calls or to sell off the buy-write shares at a good price, and then restart at a lower share price when that's available.
Even if late June/July are up from here, a little or a lot, I expect we're back here by August.
Not to pick on you, but I’m wondering if you might be questioning your CC closes yesterday vs today. I did something similar, and have now realized how much I left on the table. If we do close below $650, of course not a certainty, then there would be $9 unrealized on those c650s. In any case, there was another $4-$5 loss overnight that was unrealized. Furthermore, the premium difference between yesterday and today for next weeks c700s is only ~$0.30. Again, not a nitpick, just trying to learn something from everyone and your conservative trades and situation are more similar to mine. What I’ve learned from your trade, it’s now obvious that 2x more profit came from the lower, riskier 650CC than the 680CC. These buy-writes instead of puts are definitely something to consider. Thanks.
FWIW, there must’ve been a large IV drop after the FOMC meeting (which we should all have known was coming). All my puts and calls are down significantly. Similarly, the 7/8 +800c that I bought at a $20 lower SP is now 15% lower than what I paid (near yesterday’s low SP).
With all the cathartic posts of late, I decided to look back as well. My portfolio is down 35% since the Nov 4th ATH, which should probably be viewed as a positive. Since then TSLA is down 50% and the S&P 20%. Most of my trades have been CCs and CSPs, with a few sporadic call purchases thrown in, all within my IRAs. These are the largest paper losses that I’ve ever experienced and it does sting. However, since investing in TSLA these are also the largest paper gains I’ve ever seen. For now, I too have put off large life decisions and purchases. I have doubled down on food gardening to feed my family and neighbors so that we can all enjoy the better things in life. Peace and better times to everyone. P.S. If anyone needs fresh tomatoes this summer…….
I looked back as well and my portfolio is down over 70% from the November peak. TSLA is down 50%, the additional loss over what the SP trades is because of margin. It amplified my returns on the way up but also the losses on the way down.
When the stock was last in the 600s in late May, I had to dust off my margin call.xlsx where I model out various scenarios, and update it everyday with what SP will I get a margin call. It was a stressful time, with the bounce to the 700s I decided to deleverage and sell more shares but in the form of selling aggressive ATM cc's until assigned, although whether this actually generates a better sale is debatable (for example, i could have sold at $780s @market instead I got assigned at $700 with a $30 premium paid out so selling at an effective price of $730) What I'm thankful for is my brokerage has 30% margin maintenance requirement even though i m pretty much 100% TSLA, and I think they give me a day to sort it out if I do get a margin call.
This might be a newbie thing pros already know, but the lesson for me is with Margin , they basically give you more loans when you least need it (when the share price is high), it's easy to get drawn in thinking you have so much buying power and buy more shares to catch the rocket, but when it goes down, they will take it away from you when you need the loan the most, so I made a mental note to ignore the money they will make available to you when the next rocket phase comes, unless you do have external sources that you can draw and pay off the margin in times of needs (cash/savings/line of credits etc)
Here's a few things I did to raise cash
1.) Sell CC
2.) Sell shares
3.) Inject cash via savings, credit card balance transfer, lines of credits, these will never get margin called and can be serviced externally with income
4.) not so much cash raised but more a hedge, I have $SARK (short ARKK), then sold CC against it to lower the cost basis as SARK itself seems to erode over time like all of the leveraged/short ETFs, so this improves my odds a little bit.
While I still have a margin balance I have enough cash now to completely pay off the margin balance if I have to with 3.), that gave me my sleep back.
I m still debating whether to de-risk further, as I only have just enough cash to avoid a margin call, but not enough to buy the dip, but for me to get cash to buy the dip, I will have sell more shares, which makes me bi-polar, because what if this is the bottom, and we reverse from here? Then I would be missing more gains than I already am from the shares sold so far from May to now, and made those realized losses and lost shares thus far permanent.
positions:
6/17 -710c
6/17 -2475c
9/16 -700c
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Just got back from a three hour bike ride. Unfortunately nobody hit me to put me out of my misery....
Nice to see the SP up today. Any predictions for next week? I'm trying to decide if I sell more 800 Strike CC for Jun 2024 today (which limits future gains but gives me some margin protection).
Nice to see the SP up today. Any predictions for next week? I'm trying to decide if I sell more 800 Strike CC for Jun 2024 today (which limits future gains but gives me some margin protection).
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