Wiki Selling TSLA Options - Be the House

[UltradoomY]

We had a week of macro gloom and doom after Powell. Inflation data comes out next week and most think it will be good. So when does macro start front-running it and allow TSLA to climb? That is my concern with CC and BCS.

I doubt they will front run - Not Advice - everyone will be waiting to front run the Fed meeting if it's good / better than expected with the CPI print.

This being a holiday week, today is probably highest volume and walk down on low volume tomorrow and Thursday with covering Friday for a flat close relative to the week +/- 1%

 

[OrthoSurg]

We had a week of macro gloom and doom after Powell. Inflation data comes out next week and most think it will be good. So when does macro start front-running it and allow TSLA to climb? That is my concern with CC and BCS.

Yes, me too. I am ready to roll as soon as we start climbing and I expect it to be at the end of this week

 

[adiggs]

I have a basic question about selling covered calls. I'm looking to sell some shares this year above $330. Am I correct in choosing Dec 16 covered calls as the best choice since I want to sell anyway?

not-advice.

Yes! No! Maybe!

You don't mention it but lets assume that you need to sell these shares by the end of the year. That will at least frame the discussion and considerations.

The benefit (reward) of selling those cc today is that they should produce a pretty tidy premium and you'll sell the shares that you want to sell anyway come December for $330 (the price that you want anyway) AS LONG AS the shares are actually at $330 or higher.

The risk of selling those cc today is that the shares go down from here. You -could- have sold them today for ~$275ish (less than you want) but still more than you-could- have sold them then.

Or some of the wide in-between world; the shares are $300 come December so the cc expires worthless (you keep all of the premium you received up front) and then sell the shares at $300 (or whatever).


There are always tradeoffs, risks and rewards, costs and benefits. If you can't identify the other side then you (1) need to keep looking or (2) ask!

Looking to get $330, or whatever, this year may not be reachable. But you might be able to get some of the incremental money by selling those cc.


There is another more subtle risk. The shares today go to $400 in October (great production and earnings) but you sold those $330 cc. As you go deeper and deeper ITM its actually ok - you'll be able to close those shares AND the cc for $330 ($329 and change) when you'd like. The subtlety here is that the situation might be emotionally difficult to handle - you sell shares at $330(ish) that you -could- have sold for $400 if you'd just sat on your hands and did nothing. You -do - earn (virtually) all of the opening credit in this situation. If that opening credit were $20 then you'll have effectively sold your shares for $20.

That $20 is incremental gain on a sub $330 share price, while limiting your upside on the share sale to $350. Limiting the upside to $350 when you've decided to sell at $330 is a pretty sweet deal.

 

[OrthoSurg]

Today, I have listened to my inner Yoona and closed my CCs after +30% intraday gain.

Not my fault, patients are too slow to arrive at the office today and had 3 no shows where I had time to manage positions.

 

[JRP3]

You don't mention it but lets assume that you need to sell these shares by the end of the year.

I did say this year but didn't specify "need". I want to lower my TSLA exposure and I'd like to spread some of the tax burden to this year but I don't have to sell. Thus if my price never gets close it's OK. I also won't be upset if the price goes well beyond my price and I "miss out" on some gains, I'll still have way too many TSLA shares and will sell some of those next year.

So given those parameters it sounds as though my premise of selling Dec covered calls is correct.

 

[ReddyLeaf]

Adjusted into a tight strangle 270/280&285 CSP/CCs for the week about $5-6 per side. Had to move the -p285s, sold last week, down to 270s for debit, so no profit on those. Thought about closing the CCs at the MMD, but I’m trying to reduce trading costs (3x contracts). Last week I let -c280s expire just to spite the MMs and will likely do the same this week, maybe both sides, and just run the wheel. Strange how $5 premium seems “low” even though I know it’s risky. Edit: Like @UltradoomY I think the SP will languish until EOQ, or China sales are higher than expected. I finally realize that I can’t time trades very well, so have decided that strangles are best for me. GTLA

 

[jeewee3000]

I did say this year but didn't specify "need". I want to lower my TSLA exposure and I'd like to spread some of the tax burden to this year but I don't have to sell. Thus if my price never gets close it's OK. I also won't be upset if the price goes well beyond my price and I "miss out" on some gains, I'll still have way too many TSLA shares and will sell some of those next year.

So given those parameters it sounds as though my premise of selling Dec covered calls is correct.

Yes but at current price levels those dec22 330 calls are not worth it IMO.

If I were you I'd at least wait for P&D numbers, and when the SP gets a bump to say 300 you the sell the 330 cc's. Will net you way more. I'd think by ER at the latest 300 is very likely.

Not advice of course, but just remember that the number one rule to let covered calls work to your advantage is to sell them when SP and IV is high. Right now it's the opposite.

 

[UltradoomY]

STO 09/09 $280 C's for $4
Ready to play with some volatility this week again!

 

[EVMeister]

Sorry for the slight OT...

@Drezil

Did you just play the closing price guessing game for today (06th Sep 22) on Yashu's YouTube channel and get the closing price exactly right? Somebody with your name just did that, so if it was you - congratulations.

 

[JRP3]

Yes but at current price levels those dec22 330 calls are not worth it IMO.

If I were you I'd at least wait for P&D numbers, and when the SP gets a bump to say 300 you the sell the 330 cc's. Will net you way more. I'd think by ER at the latest 300 is very likely.

How is that affected by time though? Today it looks like a Dec 16 333.33 call is $13.10 but the Nov 18 333.33 is $9.25.

 

[WattsHappening]

How is that affected by time though? Today it looks like a Dec 16 333.33 call is $13.10 but the Nov 18 333.33 is $9.25.

Yep, that's the trade off. $4.15 in theta versus potential increase in volatility and/or SP. One thing you could do to play both is to sell weeklies between now and P&D announcement.

 

[BornToFly]

How is that affected by time though? Today it looks like a Dec 16 333.33 call is $13.10 but the Nov 18 333.33 is $9.25.

I really, really, really hope we are over 300 after Q3 ER. If we are, that is the better time to sell the Dec. CCs. I would only sell them now if you are convinced the market is going to tank the rest of the year and take TSLA with it.

 

[CHGolferJim]

I have a basic question about selling covered calls. I'm looking to sell some shares this year above $330. Am I correct in choosing Dec 16 covered calls as the best choice since I want to sell anyway?

Do you want to sell just one date and be done with it? Another possible approach is to sell $330 CC 2-3 weeks out and roll multiple times until mid-December, or sell at say $30 OTM several times, it would probably earn more premium.

 

[JRP3]

I really, really, really hope we are over 300 after Q3 ER. If we are, that is the better time to sell the Dec. CCs.

How do you calculate the potential price of a $333 Dec call a month from now if the stock price is around $300?

 

[BornToFly]

How do you calculate the potential price of a $333 Dec call a month from now if the stock price is around $300?

I don't know if this is the best way, but I would look at the difference in the options chain of selling a call, in this example, that is $30 above the current SP in two months, vs $55 dollars above the current SP in 3 months. But, if the SP starts to really climbs, IV will change, etc., and the numbers will be different.

Edit: Call premiums can really go up when the stocks starts to move. I've watched OTM CC I sold go red quickly by 300%....

 

[MikeC]

How do you calculate the potential price of a $333 Dec call a month from now if the stock price is around $300?

Very roughly, you could compare it to a call that is two months out and ~$33 out of the money now (but hopefully IV picks back up by then):

 

[JRP3]

Do you want to sell just one date and be done with it?

Basically. This is starting to seem like work

 

[JRP3]

Maybe I'll sell a few now and wait until Q3 is over to reassess.

 

[llirk]

I've decided to use the split to sell 1/3 weeklies, 1/3 monthlies and keep 1/3 HODL. Taking a 50% or 60% profit on monthlies with one or two weeks left to expiration is yet another way to achieve weekly income targets.

Current positions:
9/9 -c280, -c290
9/30 -c300 (not technically the Sept "monthly" but nicely timed to expire just before P/D)

Oh, and still wheeling with 9/9 -p265 for good measure.

 

[MrMoo]

Yes but at current price levels those dec22 330 calls are not worth it IMO.

If I were you I'd at least wait for P&D numbers, and when the SP gets a bump to say 300 you the sell the 330 cc's. Will net you way more. I'd think by ER at the latest 300 is very likely.

Not advice of course, but just remember that the number one rule to let covered calls work to your advantage is to sell them when SP and IV is high. Right now it's the opposite.

I don't agree with this.

You are under the assumption it will get to 300. From that logic why not just buy calls now, expiring in December?

No one ever went broke taking profit. If he has to sell the shares in December he may as well sell the contracts now. Alternatively a middle way suggestion would be to sell half the contracts now and the other half after the Q3 run up (If there is one). There's too many uncertainties at the moment to try to squeeze 10-20% more premium from a contract if he needs the money.