I am assessing a roll of BPS from Oct 28th to Dec 16th, by widening and taking a credit. It'd add 3.15 of time value to the 260 short leg. But I am getting deeper into the margin rut, which I shouldn't be in to begin. If I instead roll to same expiry , same width , the loss is reduced to 15% of the cost to buy and sell, exercising all options if I let them get assigned. The way I am looking at this, it's a smaller loss. Would something like that work for you?
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
I am assessing a roll of BPS from Oct 28th to Dec 16th, by widening and taking a credit. It'd add 3.15 of time value to the 260 short leg. But I am getting deeper into the margin rut, which I shouldn't be in to begin. If I instead roll to same expiry , same width , the loss is reduced to 15% of the cost to buy and sell, exercising all options if I let them get assigned. The way I am looking at this, it's a smaller loss. Would something like that work for you?
Every time you roll a BPS that is ITM, it will cost you. So decide if it will be OTM on Dec. 16th. I rolled everything to Jan 2024 so I hopefully only roll and pay once.
The only way to take an -actual- max loss is to allow the BPS to expire.
If you've decided that you're there and don't want to keep rolling, then closing the BPS will yield at least a little bit of value. And the sooner you take the early close the more time value there will be. Of course, the sooner you close the sooner you lose access to a significant move in your favor (tradeoffs, tradeoffs).
@TheTalkingMule
Allowing the BPS to expire can be troublesome with some accounts. For example with IB, they will often liquidate the position within an hour of close but will typically just sell the P-, leaving the P+. By the time you sell the P+ it's usually lost some value meaning its cost you more than the original BPS was worth. That's why it's usually better to BTC well before market close if deciding to close it out and not roll.
If considering a roll you need to decide how likely it is that the BPS will expire OTM and in what timeframe. If it's a week or two then paying a debit to roll as is can be a worthwhile approach. If you can't tolerate a debit roll then you can expand the spread or do a split roll (all requiring more margin) but recognose that you have expanded your potential max loss. If doing multiple debit rolls I find it best to keep the expiry at least a week or two away as this reduces roll cost. Debit roll cost increases dramatically in the week of expiry as the final day approaches. At some point when rolling it may become better to just take the total loss rather than just sinking more loss in with each roll.
Seems to me we didn’t see Orange writing post for a while. Were you on vacation?
I am not sure what to do about continuing my agressive CCs selling spree. I have expanded my margin of about 5% and can now sustain a drop in the 150/160 instead of the 180/190 with the money made from selling CCs and working like crazy.
I remember 1 month ago being scared selling 330 strike price CCs because ai thought we were going sky high into earnings but now I feel confident selling 230 strike price CCs. Turning a TSLA bull into a TSLA bear must mean something for the market no? Does it mean we will breakout and steam roll all the call sellers?
Today will show us if we triple/ quadruple bottom around the low 200s. If we breach 200 I feel like selling 200 CCs to expand margin even more. What is the rationale of strike price selection from other CC sellers here?
IMO nothing goes straight down. I have a feeling we are going to break out hard(not sure which way lol) today. We are set up for a nice gamma squeeze and what better to do it then on options Friday.
BTW TWTR down 8% but TSLA not getting any bump. Sounds about right
This week I certainly proved to myself that one should sell CC the day of earnings, and not wait until the day after: IV crush and the SP drop reduced premiums for SP+15% 10/28 by 80%. Feel like an idiot, but I had a busy Wed afternoon and didn’t get to it. Have made a note for January!
Now the risk-reward for 10/28 SP+15% may not be there given the possibility of a breakout (steamroller) prior to or around “Twitter Day” on 10/28. Not sure I want to play against something as meaningful and unknown as whether Elon is selling as many as 25 million shares over 1-2 days starting today or Monday. While it’s tempting to sell an ATM assuming he will, the hit if that approach is wrong would be significant.
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The risk is a short/Gamma squeeze putting your calls ITM by 20-30%, ask me how I know... what would be your strategy if that happened?
In theory there will always be a roll, albeit some months in the future, but then you lose your income-generation opportunity
One strategy I often thought about was being aggressive with a lower number of calls. For example, imagine you have 10k $TSLA and can write 100 weekly cc's - my personal target being $10k premiums I could write 100x -c232.50 for next week to achieve that, which is around 13% OTM as of close yesterday. Are those strikes safe? Probably, but not if there was any kind of squeeze or even a generalised bear-market rally, facing the prospect then to roll for even money and no further income
Another option could be to write 10x -c205's - same premium, but only 10% of shares at risk. Or 30x -c220... easier to roll a smaller position and still have the majority of shares unallocated so can write positions still, at a higher strike, of course, so less risk - if the share cost-basis is 300, you could ladder-up 10x chunks until most of the shares are well in profit, then you have options to close out the handful under-water
And then write strangle puts at the ITM call strike - in fact if you straddle puts you can move the strike up quite a bit, of even form a strangle with some lower strike puts, the ITM cc's acting as an insurance... hmmm, I'm quite liking this idea... can do it with my "burner" shares that were assigned -p240's -> not *that* much to lose in case of an early assignment
I'm going to try it!
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I was holding $230 CCs on most of my shares through earnings. I was pretty nervous about that. I had sold 210/190 and 200/180 bps as hedges to pay for rolling the CCs up in the case of a breakout. I took a loss on the bps but more than made up for it by closing the CCs at 90+% profit. I thought about rolling the bps but it felt unsafe to do so given market conditions.
For the first time in ages I’m not holding any options contracts. I can see very real potential for strong moves in either direction from here. So I’ll be focusing on day trading options for now.
Downside risk - Some traders expect a relief rally in the market followed by a “next leg down” - S&P to 3,000 due to recession etc. I don’t know what that would do to TSLA but it’s hard to call $200 the bottom in that scenario.
Upside potential. I can see at least 10% move up in a day or two once the Twitter deal is done. I’ve heard the Twitter deal will likely close by the end of next week. I think that would be a good time to sell weekly CCs. It sounds like Tesla is targeting 450-480 k deliveries for Q4, which would crush Wall Street expectations of 400k. That could send us to $300. That would be the time to sell quarterly CCs and risk off any bps you’ve got.
Your guess is as good as mine but that’s what I’m thinking
same for me next week
when in doubt, do nothing: i am afraid of losing $
sit in the bench 1/52 weeks and watch the game
alterac000
Member
Since this topic is being discussed, a data point to share:
I had 11/4 BPS 290/190 x 12, been rolling these for months, net credit so far ~$14. Like most of this year my timing and choice of spreads has been awful.
Today my brokerage assigned the 290 sold puts leaving behind the 190 protective puts
Unfortunately only the original BPS was cash secured, not the full value of the bull leg. My account is now in margin call. This is in a TDA Roth so no way to add new funds. I have until noon CST today to satisfy the margin. I don't see a way to do this other than selling shares at a steep loss.
Another cautionary tale. I plan to exit BPS completely after a series of personal catastrophic failures in this market.
I was assigned almost 200X Dec. 16th Puts ranging from 320 strike to 330 strike. Sold the shares in pre-market and then closed the long legs after open. Slight increase in theoretical loss for the spread. I need to deal with the rest of them today if I can before they get assigned.
I sold the shares in pre-market because an hour before market open, the NASDAQ was done over 1%, and typically when that happens, TSLA drops hard at the open. If course by the time the market actually opened, the NASDAQ was close to even, so my timing wasn't great....
jkirkwood001
Active Member
Excuse my ignorance about options, but I was interested in today's max pain and wondered why the zoomed in chart looked so put heavy, but there are more calls overall.
If we zoom out (see below), we see there 29,658 calls for $800 for today. Seriously?? Somebody's losing a lot of money this afternoon, amirite? Somebody didn't bet under the mistaken assumption the call price was pre-split (thinking $266.67), did they??
If we zoom out (see below), we see there 29,658 calls for $800 for today. Seriously?? Somebody's losing a lot of money this afternoon, amirite? Somebody didn't bet under the mistaken assumption the call price was pre-split (thinking $266.67), did they??
Those 800 were 2,400 back when the stock was 1,200.
Top leg of a spread? Covered (or naked) calls for cash?
There are no $521 strikes for Jun '24 (at least on mobile Ameritrade)
500, 516.67, 533.33
In general, could be part of a bull put spread.
Rolled 12/16 240p to 11/18 245/100p, expecting we are at/near a low. Still holding 220/170p for today gambling for a better roll later today.
Have some +c230 for next week and also sold shares to buy more 2025 250c.
Have some +c230 for next week and also sold shares to buy more 2025 250c.
with the historic put/call on the market broadly, i think there will be a gamma squeeze before nov 1-2.IMO nothing goes straight down. I have a feeling we are going to break out hard(not sure which way lol) today. We are set up for a nice gamma squeeze and what better to do it then on options Friday.
BTW TWTR down 8% but TSLA not getting any bump. Sounds about right
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