I'm leaning more towards a move tomorrow and continuation on Monday. Markets have been resting for 2-3 days now but there is no fear. I'm guessing TSLA will trend to the upside as long as that 900 holds.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
It really depends on your situation and what you are looking to achieve by selling those calls. I suggest running some numbers for different scenarios and see which scenario makes sense for you.
Presumably you bought at 1088 because you see it going much higher in the future. So you probably don't want to lose 90+% of your shares. My advice is to not sell at a strike where you wouldn't mind them exercising and to start with fewer contracts.
What you don't want is for the stock to be at 1100 in October and then you buy them all back at a loss because you don't want to lose your shares. Or worse, you do lose your shares and then you wait to buy back in when the price comes back down. But the price never comes back down and all you can do is stare in frustration for the rest of your life as you watch TSLA hitting all time highs year after year.
Generally speaking, the sooner you sell those cc and the closer the share price is to the strike price (1100), the higher the premium is that you will receive. That's generally speaking as changes in implied volatility will also increase and decrease the premium received and aren't directly under our control.
You didn't mention - by posting the question we're assuming that you've read at minimum the first page of the thread, watched all of the material from the Option Alpha options education video series linked at the start of the thread, and probably also visited the associated Wiki for this thread.
Given that those things are true then you also know that the closest thing to advice we have would be to start slow. Go very far OTM at first to start learning mechanics, and to start getting a feel for what works for you and what doesn't. Don't use leverage to start (margin, spreads). In my case I started with some 200 and 175 strike puts when the share price was around $400. I learned that I was ok with selling cash secured puts. I later tried actively turning the wheel, and learned that I didn't care for when I'd taken call assignment and was looking for put assignment to get back into shares.
As you'll find when you start, you are optimizing more than just financial outcomes. What I call the "stomach acid" component of each trade is also part of what you're learning about, how much time does it take to track a trade once you're in, how much time and energy does it take to find that trade to open, and how much time and energy does it take to make the decision to close as well as execute the close. These are all things that you can read from others experiences, but ultimately have to learn for yourself from your own experience.
You'll also want to be clear, at least with yourself, what the outcome is that you're seeking. I personally am interested in income and am willing to forego some of the possible gains that comes from just owning the stock; i.e. dividend like income from something that I'll own anyway and that isn't otherwise paying a dividend.
Which isn't at all a direct answer to your question
. Good luck with your trading, I hope that you join the conversation as your own education / experience begins, and in the end -- we each make our own decisions and experience our own consequences. Thus a good rule of thumb - don't open a trade without understanding the risks (I figure you know the rewards!) and being ok with them. If you have a trade where you don't see the risk, then know that its there and that's a good time to post and see if somebody else can spot what you're missing.
I'm leaning the same way, though I think there is more hope in my thinking than yours
I put on a reasonably significant purchased call position for next Friday looking for a run into and maybe through the split. Most likely I will be closing the positions before end of trading on Wednesday. And at the moment I'm looking at a 90% loss by then (advice - don't follow me into a purchase call position
). So I still see the setup that can lead to a run going into the split, I haven't yet seen it materialize, thus I still see it being possible while steadily replacing the more objective view of things with hope. The position is at least small enough that holding isn't going to hurt badly, and I really want to be exposed to that big move that I continue to think is just over the horizon.
Generally speaking, the sooner you sell those cc and the closer the share price is to the strike price (1100), the higher the premium is that you will receive. That's generally speaking as changes in implied volatility will also increase and decrease the premium received and aren't directly under our control.
You didn't mention - by posting the question we're assuming that you've read at minimum the first page of the thread, watched all of the material from the Option Alpha options education video series linked at the start of the thread, and probably also visited the associated Wiki for this thread.
Given that those things are true then you also know that the closest thing to advice we have would be to start slow. Go very far OTM at first to start learning mechanics, and to start getting a feel for what works for you and what doesn't. Don't use leverage to start (margin, spreads). In my case I started with some 200 and 175 strike puts when the share price was around $400. I learned that I was ok with selling cash secured puts. I later tried actively turning the wheel, and learned that I didn't care for when I'd taken call assignment and was looking for put assignment to get back into shares.
As you'll find when you start, you are optimizing more than just financial outcomes. What I call the "stomach acid" component of each trade is also part of what you're learning about, how much time does it take to track a trade once you're in, how much time and energy does it take to find that trade to open, and how much time and energy does it take to make the decision to close as well as execute the close. These are all things that you can read from others experiences, but ultimately have to learn for yourself from your own experience.
You'll also want to be clear, at least with yourself, what the outcome is that you're seeking. I personally am interested in income and am willing to forego some of the possible gains that comes from just owning the stock; i.e. dividend like income from something that I'll own anyway and that isn't otherwise paying a dividend.
Which isn't at all a direct answer to your question
Thus a good rule of thumb - don't open a trade without understanding the risks (I figure you know the rewards!) and being ok with them. If you have a trade where you don't see the risk, then know that its there and that's a good time to post and see if somebody else can spot what you're missing.
Excellent points all! Thanks. Yes, I’ve read the FAQ and the trainings, etc. and getting a good feel and understanding thanks to you all(!).
So, based on what I’ve learned, I believe I’m aiming for far OTM/above resistance, 90 days out, high-vol, high-IV, 80% prob OTM . Close/roll at 50-75%. I don’t “mind” having the shares called away, but the 80% OTM should help hopefully going into the uncertain Q1-23/Q2-23 re the Macros.
Given that, does -CC 11/18 @1100 match the criteria I set (above), and is that something that makes sense or should I look at other dates/strikes?
I'm thinking quarterly option expiration tomorrow could have a moderating effect on price action, guessing maybe a 900 max pain close tomorrow.
Edit: Monthly expiration
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On Monday I did not think we would be closing under 910 today. It is so hard (for me) to predict what the market will do. More reason for me to avoid the current SP, because I know that as soon as I get inpatient and fly close to the sun, it will take off in one direction or the other and torch my account....
Can it get quieter Friday? I'm sitting on 885 CSP and 960 CC contracts for tomorrow , 900 +- 10 seems so probable.
Max Pain is 870 tomorrow.
But it is 895 post split!!! 3X gain in one week!
(Oh, wait....)
I think it's skewed lower this month because of all the puts in the 700s. If you throw out the outliers, the realistic range to me is between 800-1000 and probably more like 850-950.
But most of the puts are 900 and below and most of the calls are 900 and up, so 900 looks like a clear target to me. I even had the 900 strangle coming into this week but couldn't manage to stay on the tiger.
Edit: It occurred to me that max pain should not be charted by open interest - it should be open interest multiplied by the contract value at each strike to see the actual dollar amounts in play.
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scubastevo80
Member
Late to the disclosure party, but pulled an IC day trade today when TSLA started to recover. Wrote a 820/870 - 960/1010 IC at 11:15 for $2.25 and sold at 3:49pm for $1.10. I was actually using this as practice if things went awry to close it out at $3, take the loss and move on. As I've posted before, I've made too many mistakes waiting for a recovery that never happens. For my trades that aren't 15-20% OTM, I'm managing more aggressively and taking gains where I can. In this instance, I don't want to hold overnight in case the spring becomes uncoiled and we move aggressively in one direction or the other... hopefully up!
1088 post split will just be ~$360
Same total but looks more reachable…
I am waiting for split and evaluate options chain after that before I decide the strike.
I tend to sell leaps but have stayed away from selling $2475 Jan 24 , because I think Q3/Q4 will be good and also because 2475 post split will be ~$820 …. Again same thing but there is market psychology as well
. Cheers!!
Big pre-market effort by the Hedgies to create some panic and move prices closer to Max Pain for the monthly OPEX
Started with dumping #BTC overnight, which I believe (right now at least) is now totally under the control of Wall Street and is used to move market sentiment prior to main markets' extended trading, plus it's easy to drop it a few %age points, then slowly reload for the next time they need it
Wouldn't have believed that the -c900's I wrote for this week would be expiring worthless, but it's a distinct possibility. Will sell them again for next, thanks very much for the easy $$$'s
Started with dumping #BTC overnight, which I believe (right now at least) is now totally under the control of Wall Street and is used to move market sentiment prior to main markets' extended trading, plus it's easy to drop it a few %age points, then slowly reload for the next time they need it
Wouldn't have believed that the -c900's I wrote for this week would be expiring worthless, but it's a distinct possibility. Will sell them again for next, thanks very much for the easy $$$'s
I wanted to post an interesting video from Stockcharts. The title of the video is a little extreme imo as there is some very good analysis of the last six months of market trading.
TL;DW: Monitor XLY vs XLP, key sectors (Growth vs. Value, Small-Cap, Mid-Cap and Smal-Cap), and the 2pm to close is when to look for these patterns (buying vs selling) to identify what the big market players are doing.
Key parts of video:
05:45 - The REAL Story: Ratio of Consumer Discretionary to Consumer Staples (XLY:XLP)
10:04 - Other Ratios: Growth vs. Value, Small-Cap, Mid-Cap and Smal-Cap
18:02 - Spreadsheet of Manipulation: QQQ
IMO this is a good video to make you smarter on how the bigger players operate and how to identify macro trend changes early. I completely missed the trend change in January.
TL;DW: Monitor XLY vs XLP, key sectors (Growth vs. Value, Small-Cap, Mid-Cap and Smal-Cap), and the 2pm to close is when to look for these patterns (buying vs selling) to identify what the big market players are doing.
Key parts of video:
05:45 - The REAL Story: Ratio of Consumer Discretionary to Consumer Staples (XLY:XLP)
10:04 - Other Ratios: Growth vs. Value, Small-Cap, Mid-Cap and Smal-Cap
18:02 - Spreadsheet of Manipulation: QQQ
IMO this is a good video to make you smarter on how the bigger players operate and how to identify macro trend changes early. I completely missed the trend change in January.
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jeewee3000
Active Member
Trying out some strategies to free up cash that has been tied up for too long (due to extreme SP fluctuations and knee-jerk reactions at the time).
I've got enough cash ready now for selling csp's again, and I'm holding (amongst more furhter out BPSes that will sort themselves out, I'm sure):
-980cc's (Nov '22)
-1000p's (Jan '23)
I think the 1000 puts are quite safe. The 980cc's not so much. I thought of different strats, such as (examples, not acted upon):
Strategy 1: create a strangle or straddle by adding a put, same expiration
I just sell a Nov '22 put on the other side of the cc's. For example a -900p or a -980p. This will net me some extra income and one side will win completely. The other side can be rolled. If it's the calls that are rolled (which I expect), I can roll them to Jan '23 against the other puts I'm already holding. After that I can roll the losing side for income or for strike improvement on the cc's. (The puts will win eventually is my take).
Biggest risk: the cc's stays ITM forever and are not worth rolling. Upside still limited, which is what I want to prevent since I expect a breakout to $1200 before january 2023.
Strategy 2: create a strangle or straddle by converting a cc, closer expiration
Same as strategy 1, but instead of using my current cash to back a newly sold put I convert a Nov '22 980cc to a strangle/straddle with much closer expiration. For example 1x Nov '22 980cc could become 1x Sept '22 straddle (example -850cc/-850p) (=9/2, ie two weeks out) Every expiration I could convert the losing side into a new position, be it a strangle or straddle, or just a csp or cc, until all positions are closed.
This nets me much lower (or even no) income the coming weeks until all is done but should result in clearing all open positions without losses and without much risk.
Strategy 3: create a strangle or straddle by flipping the cc's, same expiration
One by one I could convert the Nov '22 980cc's into a put. For example a Nov '22 -900p. This is different from #1 since I don't add a position. My total # of positions / cash backing the positions decreases.
Biggest risk: this flip can only create a strangle/straddle profitably as long as the SP is below the cc strike price. Should SP be ~$1100 this November I could fix this by rolling one of the remaining calls up and out (above ~$1100 strike price) but if SP goes berserk to the upside I'm fighting an uphill battle.
I think I'll go for strategy 2 for now, since I don't need income from my investments and would really like a "clean slate" again after months of learning the ropes. If anybody has any suggestions or remarks, I'm all ears.
GLTA.
I've got enough cash ready now for selling csp's again, and I'm holding (amongst more furhter out BPSes that will sort themselves out, I'm sure):
-980cc's (Nov '22)
-1000p's (Jan '23)
I think the 1000 puts are quite safe. The 980cc's not so much. I thought of different strats, such as (examples, not acted upon):
Strategy 1: create a strangle or straddle by adding a put, same expiration
I just sell a Nov '22 put on the other side of the cc's. For example a -900p or a -980p. This will net me some extra income and one side will win completely. The other side can be rolled. If it's the calls that are rolled (which I expect), I can roll them to Jan '23 against the other puts I'm already holding. After that I can roll the losing side for income or for strike improvement on the cc's. (The puts will win eventually is my take).
Biggest risk: the cc's stays ITM forever and are not worth rolling. Upside still limited, which is what I want to prevent since I expect a breakout to $1200 before january 2023.
Strategy 2: create a strangle or straddle by converting a cc, closer expiration
Same as strategy 1, but instead of using my current cash to back a newly sold put I convert a Nov '22 980cc to a strangle/straddle with much closer expiration. For example 1x Nov '22 980cc could become 1x Sept '22 straddle (example -850cc/-850p) (=9/2, ie two weeks out) Every expiration I could convert the losing side into a new position, be it a strangle or straddle, or just a csp or cc, until all positions are closed.
This nets me much lower (or even no) income the coming weeks until all is done but should result in clearing all open positions without losses and without much risk.
Strategy 3: create a strangle or straddle by flipping the cc's, same expiration
One by one I could convert the Nov '22 980cc's into a put. For example a Nov '22 -900p. This is different from #1 since I don't add a position. My total # of positions / cash backing the positions decreases.
Biggest risk: this flip can only create a strangle/straddle profitably as long as the SP is below the cc strike price. Should SP be ~$1100 this November I could fix this by rolling one of the remaining calls up and out (above ~$1100 strike price) but if SP goes berserk to the upside I'm fighting an uphill battle.
I think I'll go for strategy 2 for now, since I don't need income from my investments and would really like a "clean slate" again after months of learning the ropes. If anybody has any suggestions or remarks, I'm all ears.
GLTA.
STO 8/26 CCP 860 @ $12 on this dip, at least I hope it is just a dip...
What I got wrong: TSLA didn't correct to 780 and SPY didn't crash big time. In fact, SPY extended its rally on the back of softer than expected CPI and PPI.
What I got right: 940 was the top and momentum reversed on 8/4. Everything that happened after 8/4 was due to Elon selling and macro related.
TSLA 960 - 1000 is still in play but 840 remains line in the sand. Once 840 breaks down we will see 780 first.
Now is not a particulrly good time to be selling long dated CC's. IV is low and the share price is at a localised low point so premiums received now (around $33) would not be as high as they could be (they were around $60 at the start of August). I prefer to focus on a selling shorter dated expiry CC's well outside the money with the strike distance based on the historical precedent of how far the share price can move in that time. With the history of moves and the catalysts coming up between now and 18Nov there is a long way that TSLA can move, particularly up. Also start with smaller numbers first until you have a good handle on how CCs work in your account. The stock split will triple the number of CC you have available so you can learn with a lower impact.
The 'what I've learned' part sounds like something more applicable to general stock and index options, rather than the way many of us trade CC with TSLA. That strategy may work OK but I expect it could be improved on by applying a more nuanced understanding of how TSLA trades. 30 day IV for Tesla at 50 is not high at the moment (IV30 percentile rank is 19%) as well.
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