Pretty low-volume selling today, i.e. shorting, quite possibly another bear-trap. Tomorrow will be interesting...
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Anyone Selling weekly covered calls on TSLA.. I have few hundred shares I want to start selling calls on it after the split to generate little income but do not want my shares to execute. Any resources or anyone doing it ?????
I have to warn you guys. In my honest opinion, TSLA is done for this run. Mid-term top is in at 940. The market coming down hard plays a major role in my analysis. We will test 800-780 next week before rebounding around the split to the 860 area. After that, anything can happen. However, judging by my belief of SPY making new lows, TSLA will be dragged down along with it.
It's not all doom and gloom, however.
On 3/18, SPY was 445, TSLA was 900
This week SPY was 420 and TSLA was 900
Strong fundamentals allow TSLA to gradually gain on the broader market and absorb some of the macro downturn. Just be careful with BPS. We don't know when China is going to pull a Putin on Taiwan.
It's not all doom and gloom, however.
On 3/18, SPY was 445, TSLA was 900
This week SPY was 420 and TSLA was 900
Strong fundamentals allow TSLA to gradually gain on the broader market and absorb some of the macro downturn. Just be careful with BPS. We don't know when China is going to pull a Putin on Taiwan.
If anyone's interested in my wave counts:
940 is the top of wave 3 (blue)
In order for TSLA to make new high, it has to break out of the downward trendline. So far, every attempt has been futile. The key here is the market does not allow it. Even when SPY went from 411 to 425, TSLA was not allowed to break out of this channel. That's exhaustion. Some may call it shorting but for every short to succeed, there's potential long who refuses to fight back. Supply vs demand is the name of the game.
Since we cannot break out, the next most logical move is a 50% retracement of the entire rally from 620-940. The ideal target is 780 (mid way point). The 3 wave structure from 940 also supports this thesis.
940 - 840 = 100
50% retracement to 890
890 - 100 = 790. Close enough to 780
This move should finish by next Friday
Let's see if I'm right
940 is the top of wave 3 (blue)
In order for TSLA to make new high, it has to break out of the downward trendline. So far, every attempt has been futile. The key here is the market does not allow it. Even when SPY went from 411 to 425, TSLA was not allowed to break out of this channel. That's exhaustion. Some may call it shorting but for every short to succeed, there's potential long who refuses to fight back. Supply vs demand is the name of the game.
Since we cannot break out, the next most logical move is a 50% retracement of the entire rally from 620-940. The ideal target is 780 (mid way point). The 3 wave structure from 940 also supports this thesis.
940 - 840 = 100
50% retracement to 890
890 - 100 = 790. Close enough to 780
This move should finish by next Friday
Let's see if I'm right
dl003 - I hope you're wrong, but I do think 780 is potentially in play (hence 700/650 BPS for next week instead of something more aggressive). If I had listened to a few people that had a bearish view of the stock back in January, I wouldn't be in the mess I'm in now with my Dec. BPSs....
I, too, hope I'm wrong, but I just know in my gut that I'm probably not. My wave count is validated by the flow of TSLA options I observe everyday. I sell quite a bit of calls and puts - for every $4 I hold in TSLA shares, I have about $1 in naked short calls & puts open at all time. As such, I have an acute sense of what the real flow is in TSLA. Once a flow has been identified, it will run its course and that can take 1-2 weeks.
From 7/20 - 8/3: massive call inflow. TSLA was an unstoppable beast. Even when the stock was pulling back, call premiums still ramped up.
8/4: calls stopped coming in. The stock made a high of 940. Quite pathetic compared to previous runs. That speaks volume to the overall weakness in the market.
8/5 - 8/11: consistent call outflow. Even on Monday when TSLA popped $50, there was no bullishness in the option flow.
The current trend is down. There's no other way around it.
I don't see this happening, but we still have a window for a breakout as long as TSLA doesn't lose 860. Once we have lost 860, I expect selling pressure to accelerate. Why 860? Because we are still in pullback territory with regard to the bounce from 838 to 890. Once it's become apparent that there's no hope of breaking out, 860 will give and the correction will run full speed.
On a side note, I don't like being thought of as bearish on TSLA. Even when I think it's going down, sometimes a lot, I'm still bullish on the stock. Just trying to use charts and flows to manage my risks and make sure I'll be around when Tesla becomes a $10T company.
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Chicken and egg, though. Call inflow will increase with jumps in SP, and then continue a bit longer, as you observed. In this case, we definitely know Elon selling killed the SP momentum starting on 8/4. But that's over now, so what effect should that have on SP movement going forward? Seems like a gambler's fallacy kind of thing.
I don't see us dropping back into the 700s while we have the split coming up. Regardless of what ends up happening after the split, I think most people will want exposure to the event in case we do get a big rally, so I see that supporting us through the next week, at least. I also think the Fed not meeting again until next month gives the market a little room to breathe.
Positions:
8/12 -c900 CCs still open, closed -c960 and -c1000
8/19 +c900-c1000
Closed 8/12 -p800/700s, opened 8/19 -p800/700s
It's maybe chicken and egg in other stocks, but with TSLA it's always options driving the stock price, especially during near vertical rallies like the one we just had.
Just want to remind everybody that I said this on July 30th.
Yes, Elon's selling created extra volatility which pushed us down to 856 on Friday but guess what? Even after we rallied $50 off 865 on Monday, somehow we still found our way back down to 840 before rebounding to 885-890 on Wednesday. Elon's selling may have accelerated the selling but it would have happened anyway. The flow reversed last Thursday before Elon started selling. We were flat that day but I could feel the wind was changing.
Elon's selling deleted $70 off TSLA on Friday but somehow the same number of shares sold on both Monday and Tuesday couldn't take out 840. Isn't that weird?
Elon didn't sell any share today, so why did we underperform the market by a wide margin? Why did we underperform our beta yesterday even though the market was in full bull mode? Why is it so darn difficult to take out 890 at SPY 425 even though we were trading above 900 last week at SPY 415? Must be the shorts, right? No, the answer is TSLA is not allowed to continue running due to SPY getting close to a major top. All I can say is the market is a great and obsessive mathematician.
I've since lowered my target for the correction from 800 to 780 after having more time to map it out. It's better to be prepared for the worst when it comes to TSLA.
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Assuming identical stop losses so risk would be the same? Interested to follow and see what you think because you're making more with the stock but leave out the potential profit on vol contraction.
Writing out that last part just to help think through it for myself. As much as I try not to be a "day trader" I actually made some decent profits yesterday and today some long QQQ AUG19 puts that I was "revenge" trading after I lost some money on a some unrelated stuff.
We never know all the transactions that occurred to end up at a given share price, so it's easy to get lost in the noise - but the signal we do have is Elon sold a lot of shares and that's when the stock dropped. We also know that calls are expected to increase leading up to a shareholder meeting, and then a sell the news on Friday was no big surprise.
I agree that options are a big part of the rallies, but I conceptualize them as reinforcing a positive feedback loop - once we get some bullish action, then momos/FOMOs/algos start buying up calls, leading to more bullish action, leading to more calls, etc.
Now we have the split in a couple weeks so I'm hoping to see one of those positive feedback loops starting up soon. Of course, we never know. You could certainly be right, but I hope not!
the stop loss is trailing, so the closing is automatic on both ends
for ex, open 1000 with trailing stop loss 1%... the daytrade will close itself if
- sp falls 1% to 990 (loss=10)
- sp rises to 1200 and then falls 1% to 1188 (profit=188)
1% is just an example (it's too low for TSLA)
NEVER use fibs alone, but add others as confirmation (SMA, VWAP, MACD, RSI, volume, pivot points, maxpain, walls, pre-market H/L, previous day O/C/H/L, etc)
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I dont do much day trading. I prefer selling FOTM calls and puts in quantities. Once I have determined the trading range for the next week, month, 3-6 months, I will sell calls and puts that fall outside of that range. Once something has decayed by 90% I will look to replace it with something else. Thats why Im not specialized in intraday levels and execution - day job and all - but in mid term trends and price targets.
Since I continuously replace old positions with new, piecemeal everyday, I dont have to call tops and bottoms although I have been pretty accurate so far. There are general guidelines that I follow religiously such as cutting down short dated calls once call buying has started. Always have an exit strategy for every position in my portfolio. Of course exit strategies are effective only for as long as the stock doesnt behave erratically and black swans stay dormant. What I aim for is a steady stream of theta (0.25% of my account on a daily basis) and positions that are less sensitive to delta both way.
a sample portfolio would be:
975C’s 8/19
1200C’s 9/16
1300C’s 10/20
all the way out to March 2023
The weeklies are the main money makers but I dont overly rely on them because their relatively high delta would make my portfolio more sensitive to the stock movement. The monthlies are there as an income supplement. They dont make me money as quickly as the weeklies but I can let them run with minimal management even as the stock ran from 740 to 940 in 2 weeks. I had to manage and take some early losses on the weeklies but the monthlies were mostly left untouched. I would sell them heavily till August and then stop 2 months before Q3 P&D. I have never had a call or put go ITM having to be rolled out for an extended period of time. Since I replace my old positions with new ones a little at a time, I also take small losses early once I have sensed a new trend.
I was able to predict TSLA would go on and make new highs after Q3 ER last year but the ensuing madness, if it happens again, would be devastating to my account.
In an uptrend, take more risks on naked short puts & go ez on the calls and vice versa.
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I agree that a downtrend is looking more likely. In terms of levels I believe 850 needs to break first and then like you said 838 is the key level.
If 838 breaks there is definitely a good chance we visit the high 700s. So 838 is the line in sand as I look at the hourly and daily charts.
The more bearish things I read the more bullish I get...
Because the stock market wants to inflict as much Pais as possible. So it will rip up hard when everyone is in position for another leg down.
Haha, just to be clear I'm not making any predictions. I prefer to look at the charts and wait for price action to confirm.
If you notice I said it's more likely. I also look at levels because bots/institutions trade based on these levels. So if the 838 level(which held twice) breaks then yes we could see a further dip. In any case I'd be very surprised we don't retest 838 again. How TSLA reacts to the retest will tell you everything you need to know.
There is no reason to guess.
TheTalkingMule
Distributed Energy Enthusiast
I don't know that anyone can claim they "nailed it" when there's $6B of unaccounted for outflows right in the middle. Pretty clear we'd be far higher without all that unforseen selling.
But you are right. Better safe than sorry.
Added the following order:
Will do the same for my 8/26 BPS
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