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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Yes at one point these were worth $1.67 (back in April) I sold them because it just looked ridiculous so why not?
TheTalkingMule
Distributed Energy Enthusiast
I'm on beach beach with my only position to watch being BPS 6/24 $500/$400. This SP action is most welcome!
Probably close these out Thurs morning and check out for the week.
Is this Act 1 of the great 2Q22 "we're gonna have a bad quarter" CC steamroll? Good luck to all. Text me when we're at $1050.
Probably close these out Thurs morning and check out for the week.
Is this Act 1 of the great 2Q22 "we're gonna have a bad quarter" CC steamroll? Good luck to all. Text me when we're at $1050.
I was waiting for the MMD that never came to open 560/600 BPS, so will do without those this week. I did sell some 800CC for $1.25 (a little early) but timed the 800/840 BCS a little better @ $2. I'm expecting these will be safe with plenty of time for MM's to do their late week walkdowns plus the odd down day with Fed members speaking.
I like to roll before it gets ITM. So in your case if I see it break 700 and stay above that I might just roll them to next week. In general I think folks in this thread like to wait until Thursday or Friday to roll. Given how oversold we are, you just have to be wary of another March like run where the stock market seemingly ran out of sellers
Today is why, though I still have an overall bearish view on the market and share price between now and say September (or at least late August), I have also been primarily worried about and managing the risk of a big move -UP-. There is a LOT more room above than below; a big move up is a good way for bcs to get overrun, as well as less aggressive cc against shares and/or leaps that I want to hold onto.All weekend I was having heart burn over the fear that we would drop to 600 today. Now I'm having heart burn that we go over 800 by Friday. I need to stop doing this and go back to work....
In my case I've got shares and leaps purchased when the shares were low 800s and low 900s. I would like to sell some of those when the share price is more like 1000 (by way of selling cc). Recently though the reasonable cc's that were available were more like 800 or maybe 850. So I haven't been selling cc at all. I probably start selling those cc again if we see a share price of 800 (900 strike cc's)
Those are different than the buy-write cc's I've been selling. I've been using the cash I've been holding and previously using to sell cash secured puts to instead buy shares and sell aggressive cc's against. If today's price action holds to end of week (shares 720ish or higher) then my current buy-write, using 700 strike cc's, will close for a $20 loss on the shares (buy 720, sell 700) and a $70-80 gain on the cc credits (4 earned credits over the last 4 weeks adding up to $70-80).
The hard thing for me to remember and do, and I can already see it coming on, is to sell the shares with the buy-write calls if they're ITM. I find that my instinct is to try to 'rescue' those cc when the position was designed from the beginning for those to go ITM. I would like to see them close for >720 but that is completely unnecessary for the overall position to work out.
Yeah - the FOMO in both directions is a thing
Its a lot easier for me to keep a significant level of cash (or shares in buy-writes looking to sell back into cash) as that looks like a critical risk management component of my larger retirement income plan. Namely - damp out the swings, up and down, while maintaining the ability to make income going up or down. Today is a great day - I can see just how brilliant I am in the account balances
( I can also still see how stupid / greedy / FOMO I was at the beginning of the year; I have a long ways to go for the former to offset the latter).But the real key, at least for me, is to construct a situation where I can earn that income whether the shares are 500 or 1500 or 5000. Its easy to make money at any given share price level - the problem is that its easy to lose money on a big move in the wrong direction. Thus I also try hard to not be overly reliant on my results depending on being right about direction. And with the share price so low, I consider a big move up to be dramatically more likely than down.
NOT-ADVICE!!
My market read on the shares, in the short to medium term, is unchanged even with a 10%+ move up today. For this week and next I expect the upcoming production report to dominate the share price. For the first time in a few months, I expect the Tesla Story to be more important to the share price than the Macro Story.
The Macro Story is so bad though that I don't expect the Tesla Story to remain dominant for long. Last quarter it didn't even wait for earnings, and I expect similar this time. Once production is out the number crunchers will turn that into an expected EPS, will be approximately correct (plenty accurate for short term traders), and the next interest rate increase.
I believe that the current target rate is 1.5 - 1.75 (its always been a .25 range that I've seen). The thing to realize about this interest rate level is that it represents a STIMULATIVE interest rate level. Yes its up a lot in a short time. That's just a measure of how strongly stimulative we've been for more than a year. With high inflation the US central bank is STILL stimulative. You can see why the .75 increase just happened and why we might see another, and another .50 increase. That would get us to 2.75, and that -finally- will be a neutral interest rate. THEN we'll need to go higher to actually do something about inflation.
So either mid-July, or maybe as late as early August we'll be back to dismal economic news with dismal TSLA share price results.
I don't have numbers to put on where I expect the share price to be. I do semi-expect an opportunity to buy more shares or leaps in the low 600s later in the summer.
So very short term - shares flat to up (TSLA story). Medium term (2 weeks out to 2 months) - bearish with a revisit of low 600s (Macro Story).
Big things I can see that would change this:
1) News that this production report isn't -nearly- as affected by the Shanghai shutdown as expected. This would manifest as a BIG production beat.
2) Ukraine war suddenly shows sign of resolution. This would be a massive Russian withdrawal to at least the borders when this started, and better - a withdrawal from Crimea as well.
3) I don't really see anything Fed related having a big impact through the summer.
4) But a dramatic and unexpected drop in inflation - that might be something.
The big news is all upwards biased. The downwards bias comes from the steady drip drip / drumbeat of steadily worsening economic conditions.
Ok, legged into my 715 strangle for this week. The put was rolled awhile back for $54.xx, got below $20. CC sold for $19.20 this AM, though a bit early. Also, sold those 7/8 c800s for $14.20 (bought Friday at $5-6, so decent profit). I still expect MaxPain to control the close to below $700 on Friday, but will be pleased if this 720-725 holds.
However, looking at the big W pattern, it still looks like another $40 rise could happen tomorrow and we might push up against $775 (we can hope). I know the macros look bad, but if the P&D numbers beat Q1 (highly unlikely I know) and there’s amazing guidance, then this is the reversal that we’ve been waiting for. I promised myself that I would wait until Wednesday to sell additional CCs. Probably the wrong decision, but I’m waiting another day.
However, looking at the big W pattern, it still looks like another $40 rise could happen tomorrow and we might push up against $775 (we can hope). I know the macros look bad, but if the P&D numbers beat Q1 (highly unlikely I know) and there’s amazing guidance, then this is the reversal that we’ve been waiting for. I promised myself that I would wait until Wednesday to sell additional CCs. Probably the wrong decision, but I’m waiting another day.
I like to roll before it gets ITM. So in your case if I see it break 700 and stay above that I might just roll them to next week. In general I think folks in this thread like to wait until Thursday or Friday to roll. Given how oversold we are, you just have to be wary of another March like run where the stock market seemingly ran out of sellers
Thanks. I did roll them to next week $725 strike at $0.25 credit, but it looks like that will not be enough.
However, I will wait a few days to see if we get some red days before rolling them again.
Just saw my first mention of "quality" as the dominant investment thread as the recession arrives. As the "quality" idea gains traction I expect Tesla to outperform. It will probably take the Q3 production report (October) for Tesla results to clearly put Tesla into the "quality" camp, as (like others) I expect the Q2 production results to be FUD fodder.
Last time it happened to me during the last run up I rolled as soon as the SP reached my strike price. I did not ask myself any questions and rolled without hesitation for a small credit. I managed to emerge and had to wait 3 months before closing them when the SP retraced and lost 3 months of profits with CCs and it seems the same story will start all over again!
corduroy
Active Member
I did the exact same, 830s for $1. Not worried about these at all.
those with CCs shouldn't panic yet - THAT'S ME
today we will probably be on the Top 20 TSLA Daily Rise, but there is a 60% probability of a reverse tomorrow
View attachment 819181
View attachment 819182
Top 50 rises have 62% chance of reverse next day
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Top 100 rises have 58% chance of reverse next day
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What strike covered calls you sold for Friday?
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Yep, it’s hard to project which is more “costly”, losing x months of premiums or buying-to-close.
-800c
to limit loss, today is first time i am experimenting with a 20% Trailing Stop Loss based on premium (instead of stock price)
"MARK%. The trailing stop price will be calculated as the mark price plus the offset specified as a percentage value."
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Some updates on my situation…
Two Friday ago I submitted my “retirement” resignation email to my boss. The night before, out of nowhere my wife agreed I should/can step back and focus on our young children while trading options to supplement our income. Obviously I couldn’t sleep that night and almost turn on the computer so I can submit the notice before my wife took it back! I’ve been talking about my goal of retirement once TSLA hits $5000 (pre split) by 2025. I’m glad it’s now VS when we were $1100+ Since the recent drop may have me second guess the decision. If I can handle it now then I can handle it without a full time job is my thinking.
Basically this is all possible due to my good fortune of being all in on TSLA and wife with a great job and benefits package. I’ve been doing boring 18-20% OTM BPS for nearly 1 year now and nearing 2 years on other strategies: CCs + CSP. Can we get any more black swan events in the last year?? Scary stuff but great experiences for me as this helps my retirement planning and selling strategy/experience.
If my calculations are correct I won’t be missing out much of income of a full time job + part time options trading vs full time options trading. Many weeks I couldn’t trade or missed out on opening options on bigger moves due to my full time job.
Thank you to everyone here that that unselfishly shared their experiences, knowledge and opinions. LOVE YOU all like family!
On topic:
Only position i’m managing is 920p that got assigned in one of the trading accounts. I’ll be selling aggressive calls if we get into high 700s. If not I keep the shares.
Two Friday ago I submitted my “retirement” resignation email to my boss. The night before, out of nowhere my wife agreed I should/can step back and focus on our young children while trading options to supplement our income. Obviously I couldn’t sleep that night and almost turn on the computer so I can submit the notice before my wife took it back! I’ve been talking about my goal of retirement once TSLA hits $5000 (pre split) by 2025. I’m glad it’s now VS when we were $1100+ Since the recent drop may have me second guess the decision. If I can handle it now then I can handle it without a full time job is my thinking.
Basically this is all possible due to my good fortune of being all in on TSLA and wife with a great job and benefits package. I’ve been doing boring 18-20% OTM BPS for nearly 1 year now and nearing 2 years on other strategies: CCs + CSP. Can we get any more black swan events in the last year?? Scary stuff but great experiences for me as this helps my retirement planning and selling strategy/experience.
If my calculations are correct I won’t be missing out much of income of a full time job + part time options trading vs full time options trading. Many weeks I couldn’t trade or missed out on opening options on bigger moves due to my full time job.
Thank you to everyone here that that unselfishly shared their experiences, knowledge and opinions. LOVE YOU all like family!
On topic:
Only position i’m managing is 920p that got assigned in one of the trading accounts. I’ll be selling aggressive calls if we get into high 700s. If not I keep the shares.
Congratulations.
I know you're thinking about stuff like this, but my not-advice advice to be thinking about:
- in retirement, at least for me, option sales / trading is about generating a dividend-like income. I'm doing a better job, today, about NOT entering positions designed to produce something other than dividend-like income. I've failed on this one badly at the start of the year (and at other times). Maybe this time I've learned the lesson
- how many positions (rather than value) do you need for generating your target level of income. I track positions as the account value of share backed cc's doubles as shares go from 600 to 1200. Same number of cc's, but in one of those, the account value looks a lot better
. For me I'm looking for 12 positions to generate $2/week; about $2500/week and $10k/month. I boost that with a bit of leverage, a bit more risk, and/or more money to support more positions. I'd really rather be at $40k/month. If I consistently find myself in positions designed to beat $40k/month then it'll be time for a leverage and risk review (as in - I need less of both).- figure out, and know, what constitutes "enough" (both income and value of assets-under-management). I lost track of this at the end of last year and started taking on too much risk and leverage. In my case, "more" = "more to give away while we're alive" rather than a change in lifestyle or what we can leave to our family (no children). Why would I take on extra risk and leverage in order to increase the pile to give away, especially if I risk staying retired? Answer of course - I wouldn't. I forgot this at start of this year.
- watch the leverage. If you feel FOMO coming on, and you need to take on more leverage to really take advantage -- these are the situations where the black swan can send you back into the workforce.
- dividend-like income is as much, MHO, about financial results as it is how you get there. How much effort / energy goes into opening and closing a position? How much stomach acid do positions generate? How closely to you need to follow the share price throughout the day? If you're doing something resembling a job day trading then you've got a much wider range of things you can do. I don't day trade and I need positions to be much more fire-and-forget.
Or in short - I find that being retired on options income is a LOT more about planning for the risks / costs / downsides of any positions, and a lot less about just how big the position can go.
I carry a lot more cash now than I did while working. Like 1/3rd to 1/2 account value in cash (which I use for CSP and buy-writes, but not for very high leverage BPS). Two big reasons - I want 1/2 to 2 years of living expenses in cash (NOT AUM) so I have a lot of flexibility about when to take withdrawals from the investment accounts. EDIT: This is held in my bank account, not in the brokerage.
The other is that I want ups and downs in the share price to have a lesser impact on the account value. I wanted the big swings before I retired - not so much now.
Simplest of all - if you can stand parting with shares as needed, then simple continue buy-n-hold with the plan to sell shares to raise living expenses. This is likely the best overall result over a big enough timeframe. The problem for me is the willingness to sell along with the worry that I'd be selling at a bad time because I needed to.
(And in case it isn't clear - there's a good chance I won't have a tax bill this year; I've had some expensive and valuable lessons)
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Like you $2500/wk would do the trick and would be what I aiming as a salary replacement. I’ll need about half this for our mortgage and utilities that I promised to be responsible for with or without a job. I’m a saver my nature and get most enjoyment buying stuff for the kids. Any expensive trips my wife covers so hopefully chasing premiums is a thing of the past.Congratulations.
I know you're thinking about stuff like this, but my not-advice advice to be thinking about:
- in retirement, at least for me, option sales / trading is about generating a dividend-like income. I'm doing a better job, today, about NOT entering positions designed to produce something other than dividend-like income. I've failed on this one badly at the start of the year (and at other times). Maybe this time I've learned the lesson
- how many positions (rather than value) do you need for generating your target level of income. I track positions as the account value of share backed cc's doubles as shares go from 600 to 1200. Same number of cc's, but in one of those, the account value looks a lot better
- figure out, and know, what constitutes "enough" (both income and value of assets-under-management). I lost track of this at the end of last year and started taking on too much risk and leverage. In my case, "more" = "more to give away while we're alive" rather than a change in lifestyle or what we can leave to our family (no children). Why would I take on extra risk and leverage in order to increase the pile to give away, especially if I risk staying retired? Answer of course - I wouldn't. I forgot this at start of this year.
- watch the leverage. If you feel FOMO coming on, and you need to take on more leverage to really take advantage -- these are the situations where the black swan can send you back into the workforce.
- dividend-like income is as much, MHO, about financial results as it is how you get there. How much effort / energy goes into opening and closing a position? How much stomach acid do positions generate? How closely to you need to follow the share price throughout the day? If you're doing something resembling a job day trading then you've got a much wider range of things you can do. I don't day trade and I need positions to be much more fire-and-forget.
Or in short - I find that being retired on options income is a LOT more about planning for the risks / costs / downsides of any positions, and a lot less about just how big the position can go.
I carry a lot more cash now than I did while working. Like 1/3rd to 1/2 account value in cash (which I use for CSP and buy-writes, but not for very high leverage BPS). Two big reasons - I want 1/2 to 2 years of living expenses in cash (NOT AUM) so I have a lot of flexibility about when to take withdrawals from the investment accounts. EDIT: This is held in my bank account, not in the brokerage.
The other is that I want ups and downs in the share price to have a lesser impact on the account value. I wanted the big swings before I retired - not so much now.
Simplest of all - if you can stand parting with shares as needed, then simple continue buy-n-hold with the plan to sell shares to raise living expenses. This is likely the best overall result over a big enough timeframe. The problem for me is the willingness to sell along with the worry that I'd be selling at a bad time because I needed to.
(And in case it isn't clear - there's a good chance I won't have a tax bill this year; I've had some expensive and valuable lessons)
Early in the year I have been keeping profits in cash rather than buying new shares. Recently I did buy more shares as 600-700 share prices are too tempting not to. Once I no longer have a job I’ll be more cautious and keep more cash around. I believe doing spreads one should be doing it with cash rather than margin. Risk of margin call at the worse possible time is begging to go back into the workforce. This is my goal for 2nd half of the year where all profits will be kept as cash for expenses, taxes, and new sets of BPS.
Slow, steady, and boring is the way to go if I learn anything the last ~2 years of selling options.
A little volatility play: Short Butterfly Spread, all options expire jun 24th, this friday.
- Sell to open -c705 x1
- Buy to open +c715 x2 (sp was 715 when i opened this)
- Sell to open -c725 x1
Credit 0.70.
Breakeven points are 705,70 and 724,70. So to retain the credit, I need sp to move outside that range, to either direction. That's about 1.3% move.
Max loss is $930 if sp finishes exactly at 715.
Just a small play to try this out. I came to a realisatiom that for the last few months, volatility has been wayy off the charts. So it might be worth to look into options strategies that have been designed to profit from high volatility and have positive theta.
- Sell to open -c705 x1
- Buy to open +c715 x2 (sp was 715 when i opened this)
- Sell to open -c725 x1
Credit 0.70.
Breakeven points are 705,70 and 724,70. So to retain the credit, I need sp to move outside that range, to either direction. That's about 1.3% move.
Max loss is $930 if sp finishes exactly at 715.
Just a small play to try this out. I came to a realisatiom that for the last few months, volatility has been wayy off the charts. So it might be worth to look into options strategies that have been designed to profit from high volatility and have positive theta.
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