Wiki Selling TSLA Options - Be the House

[corduroy]

has anyone tried "put backspread"?

• for anyone with a BPS that is facing max loss; it can be given the chance to recover by converting it into a "put backspread"; essentially, a BPS with +p at least 2x the -p to help limit or prevent max loss on steep drops
• for anyone thinking of a potential drop post-P&D
• for anyone thinking the uptick rule will be triggered again

Put Backspread Explained | Online Option Trading Guide

What is Put Backspread? See detailed explanations and examples on how and when to use the Put Backspread options trading strategy.

www.theoptionsguide.com

"It is an unlimited profit, limited risk options trading strategy that is taken when the options trader thinks that the underlying stock will experience significant downside movement in the near term."

Put Backspread | Back Spread Options - The Options Playbook

A put ratio backspread is a very bullish seasoned option strategy involving the sell and buying of puts, at different strike prices, that expire in the same month.

www.optionsplaybook.com

"This is a trade you might want to consider just prior to a major news event if you expect the outcome to be negative."

Put Backspread Guide [Setup, Entry, Adjustments, Exit]

Put backspreads are bearish strategies that require a significant move down in the underlying stock. Learn more with our put backspread strategy guide.

optionalpha.com

"A put backspread is a multi-leg, risk-defined, bearish strategy with unlimited profit potential. The strategy looks to take advantage of a significant move down in the underlying stock."

That makes an interesting possible profit curve. Not the best strategy if we are range bound, but a good tool if you expect a big move.

Here is an example of a -740/+2 680. With my luck, this would land smack dab on that $680

 

[JustMe]

My bold prediction this week - staying over $700.

Thank you all for keeping this a high signal to noise, drama-free zone

Good luck today

 

[jeewee3000]

My bold prediction this week - staying over $700.

Thank you all for keeping this a high signal to noise, drama-free zone

Good luck today

The real question is: will we surpass 775 or not? I'm inclined to say no.

 

[BornToFly]

Sold some 910/1010 near the open. Already +30%. Macro pulling TSLA down now.

 

[jeewee3000]

Made a managing trade:

I was holding a sold 7/22 $625cc.

All in one trade, I did the following:
BTC 7/22 $625cc @130.95
STO 3x 7/22 $750 cc @49.25 each = 147.75
sold 7/22 -$750p/+$600p BPS @49.92

The splitting the call into three calls with higher strike netted me around $17, but since this makes me heavily reliant on SP being below $750 to win I made it into a straddle and sold the BPS so if the SP stays above $750 I at least have some spare cash ($49) for income and/or rolling.

All in all the trade netted me ~ $67 and I feel more comfortable managing the $750cc's instead of the $625 cc.

If we keep climbing (let's say to ATH and beyond) then at least my August BPS'es are safe and the 750cc's are manageable IMO.

 

[Yoona]

i am feeling like Einstein... FOMO bought shares @732 last Fri for buy-write, sold today @751, waiting to rebuy

 

[BornToFly]

All trades for Friday. Nothing will be open over the weekend before P&D. Opened a few CSP at 680 to try to get shares. Also BPS -620/+520 during the dip. So far my timing has been pretty good, but it is early in the day....

 

[jeewee3000]

but it is early in the day....

and early in the week...

 

[BornToFly]

and early in the week...

Good reminder. My plan is 4X as many BCS as BPS, because I can get margin trapped on the BPSs as the SP drops. I'm waiting to do more BCS until later in the week, or a solid jump in the SP to make them worth it.

 

[Chenkers]

I've sold mostly 660/620 BPS today with a few 670/630 BPS. I missed the early pop to sell 860 CC and will wait and see if we can top around $675 today to sell them along with some BCS.

Btw: I had several $500 P+ in my main account providing margin support. With the recent price rise I was able to pay around $1 per contract to roll these up to $600 P+. This roughly doubled the margin available for trading and therefore the number of BPS I was able to sell this week. If I can close out my BPS this week I'll roll these back to $500P+ next week and decide what to do after more weekend theta decay.

 

[Yoona]

sp is sticky to PM Low?

 

[adiggs]

Buy/Write tax related question especially for folks trading on Interactive Brokers:

My understanding is that your option premium for covered calls is lumped into the P&L of your shares. So for example if I bought shares at 726 and sold ITM 725 calls for 7$ my cost basis is 726 and my P&L price for the option that got exercised is 732.

I had a couple of options that got exercised over the weekend and it does not appear to be considering the premium that I received for the covered call and hence reporting a loss which triggers wash sale rule on some additional buy/writes I made. So in the above example it is reporting my cost basis as 726 and hence a 100$ loss on the 100 shares.

Is IB different or does it just take some additional time for this to reflect the premium you received in your tax optimizer?

My experience and reading (not finance or tax person though) is that the premium of the most recent / last covered call rolls into the shares on their sale.

So buy at 726 and sell a cc for $7 - those shares have a 719 cost basis when they get sold. This matters, I think, mostly if those shares are long term instead of short term.

EDIT to add and clarify: same example but extended. buy at 726, sell an initial cc for $7 and close for a $5 profit. Sell another cc for $10 and later be assigned. Those shares at assignment have a cost basis of 716 (not 711). The cc in between is its own short term transaction with an open and close.

 

[adiggs]

Don't know what to make of this early price action. As I closed my buy-writes on Friday I've been hoping for a noticeably large down day today so I can reenter. With production report coming soon, I expect over the weekend, I am anticipating a more up than down week leading into that.

Regardless of what happens this week, I have no cc's open against shares or leaps, and plan to not open anything until Monday or Tuesday next week. If the share price takes off I want to be ready to sell into that rally. I don't expect that rally to be high enough to act though.

As for buy-writes I plan to buy shares should I get a good open (and -2 to +12 as I've seen today doesn't yet qualify). I know that can easily mean that I don't open a new buy-write position for the week.


With the close on last week buy-write position, that represented the end of a 4 week position opened at $720 per share, and closed for a little over $50 share net profit (earned cc credits minus the $20/share loss from selling the shares). That is a -great- month long position for me. Sustained over a full year (its not sustainable over a full year ) that'd be about 50% gain on the account while using <50% of the account to back the position.

 

[ice]

BTC 1x6/24 750c $10.25 > 0.7 (stock around $732), opened replacement position 7/1 770c $10.30.
BTC 1x6/24 750c $9.1 > 0.78 (stock around $733), going to wait and see before I open a replacement position in this account

still have 2x9/16 700c.

STO 7/1 -750c $20.30 (stock around $741) to replace the 6/24 -750c, didn't wake up early enough, this call was as high as $30. Ok with assignment , or might roll to get a better assignment price for weeks or months. The reasoning about wanting assignment is I still have shares that's bought with margin, at the time the margin interest was 4.5%, with the rate hikes from the fed as well as the bank itself ,it's now 6.25%, I'm expecting more rate hikes to come so this can easily get to the 8-10% range, while I can still sell CC to overcome that, and I expect Tesla to grow at 50% YoY, with the interest, taxes, it's getting to the point the risk-reward is less and less attractive, and I'm risking a significant drop if Q2 misses and I have stranded shares/margin balance. I'm ok with hodling cash shares but it's not as appealing to be paying for underwater shares at 8-10% interest... For this batch I plan on milking as much premium as I can by selling aggressive CCs, rolling if necessary but will be ok to let them go as well, as I'm also not really that strapped for cash or risk margin call anymore, so I can still sleep at night.

The other off topic thing i'm thinking about is I have a model Y LR on order (since Nov 2021) , at the time of order the interest rate was 2.15%, with the delivery dates pushed back multiple times, now it's getting to 5.45%, with no option to lock the rates over 60 days, at this rate I might end up paying 7 or 8% for the car (which would be more than what an MYP will cost in payments had I just switched to MYP instead of sticking with the MY LR, but that's another topic), mulling over using proceeds from shares sales to pay cash for a portion or all of it rather than getting a loan, which is also a factor in these aggressive CC sales.

 

[Yoona]

the nasdaq PM summary is not correct

https://www.nasdaq.com/market-activity/stocks/tsla/pre-market

sp was ~750 at 8am

PM Low should be 739.22

 

[Yoona]

 

[ReddyLeaf]

Probably because of month-end DCA buying in 401(k)s. Nothing savers can do, the buys are with every paycheck, typically the last day of the month. People paid monthly are typically salaried and save more into their 401(k) than people paid weekly or biweekly (hourly). You can see it in the SP profile that rises continuously without the typical MMD or other push downs. The MMs know that the mutual funds are buyin* all day because of the incoming moneys. This is probably a good week to buy calls during a big MMD (not advice since I always seem to get it wrong).

 

[Max Plaid]

Hello you lot...

I'm thinking about straddles again... yes, I know... my current idea is an ATM 4 weeks out, so right now -p735/-c735

Such a trade would net $12k, meaning break-even if the SP is approx >610 <850 by end July

My motivation for considering this is that I have absolutely no idea where the stock market is heading, everything is being pushed around by the indexes, individual stocks are getting lost in the noise

The worst-case outcomes is a purchase of some shares with a net price in the low 600's or the selling with a net around 850 - is that such a bad thing right now??

First I need too acquire some shares though

 

[jeewee3000]

Hello you lot...

I'm thinking about straddles again... yes, I know... my current idea is an ATM 4 weeks out, so right now -p735/-c735

Such a trade would net $12k, meaning break-even if the SP is approx >610 <850 by end July

My motivation for considering this is that I have absolutely no idea where the stock market is heading, everything is being pushed around by the indexes, individual stocks are getting lost in the noise

The worst-case outcomes is a purchase of some shares with a net price in the low 600's or the selling with a net around 850 - is that such a bad thing right now??

First I need too acquire some shares though

That was (part of) my thinking with my 22/7 -750cc// -750p/+600p. (straddle with one BPS leg to decrease margin exposure)

Decent pay a month out. Every day we ping pong between 730/770 I gain overall because of theta decay. The P&D report is the thing that will impact SP most though. If I had to guess I'd think we'll see a rally after that. (which could be shot down within the week though)

A pure straddle (no bps, just csp put leg) is even safer and the worst case of picking up shares at a cost basis of 610 is indeed perfectly fine.

 

[Yoona]

Hello you lot...

I'm thinking about straddles again... yes, I know... my current idea is an ATM 4 weeks out, so right now -p735/-c735

Such a trade would net $12k, meaning break-even if the SP is approx >610 <850 by end July

My motivation for considering this is that I have absolutely no idea where the stock market is heading, everything is being pushed around by the indexes, individual stocks are getting lost in the noise

The worst-case outcomes is a purchase of some shares with a net price in the low 600's or the selling with a net around 850 - is that such a bad thing right now??

First I need too acquire some shares though

oh, i like this... and it passes my "will i lose capital?" smell test

there's also 3 ways to fix it in case one side is DITM: roll / adjust a leg / buy a long leg (as hedge)

Short Straddle Option Strategy Guide & Example

A short straddle option incorporates selling a call option & a put option with matching strike price & expiration.

optionalpha.com