Wiki Selling TSLA Options - Be the House

[mickle]

I usually sell weekly CC's on Mon or Tues at around 15% OTM and haven't had much trouble, sometimes 10% or 20% depending on whether I expect any news that week or not. And I often split them up into 2 or 3 different strikes so I can manage them in chunks. The trick is you need to roll them up and out if the SP moves up and you are getting close to the strike.

During the trading day it isn't too hard to watch the SP and roll if needed. The bigger issue would be an overnight jump that wasn't expected. Does anyone have stats on the percentage jumps seen between closing and opening between M-F, and maybe another for the weekend?

 

[Jim Holder]

for ex, i have 12/2 -c200 that is +76% with trailing stop 50%

CC is happy if sp falls but if the prem rises up 50% from today's bottom, instant close... if latest prem (not opening prem) is $1 and moves to $1.50, auto BTC

obviously, TSLA's large swings may accidentally close the CC and that's ok (never regret pocketing loose change is an important mindset)

trailing stop loss is only for shares that i care about or have high cost basis... for buy-writes i don't bother since i intentionally ITM them

This is great!! So you set the trailing stop only after it turns green (SP fell) to some degree not when starting the position, correct?

I’m trying to figure out how to do the same workflow in TOS. It’s definitely great insurance!

Thanks for sharing this idea.

 

[EVNow]

During the trading day it isn't too hard to watch the SP and roll if needed.

I don’t want to be “wasting” my time watching SP

My idea is to spend 30 minutes per week trading - and keeping track of daily news with TeslaDaily (Thanks Rob).

Besides, on the west coast who wants to get up at unearthly hour of 6:30 am

 

[treb]

which means CCs above 190 should be safe for 9/9

Assume you meant safe for Dec 9?

 

[SebastienBonny]

How about Friday to Friday ?

Anyway, 20% OTM may be ok. I’ve been trading 10%.

I’ve to say 20% OTM premium can be very small … sometimes so small I don’t care much

BTW, for the premium you get at 20% OTM, you may be able to do a properly hedged 10% OTM spread ….

It's not that easy: going 20% OTM may be okay friday to friday looking at the past, but what will you do when your contract is ITM on wednesday? Will you let it run and hope the SP going down again? It's not like you can sit back and relax, even selling 20% OTM. Excersisement is still possible on a daily spike.

But I'm selling 10% OTM as well, so sitting back and relax almost never happens .

 

[BornToFly]

I realized that when I rolled my 185CC from next week to the 16th, I put them three days after CPI. That could get ugly. I may try to close them before CPI comes out, even if for a small loss, if the SP is anywhere close to 190.

 

[dl003]

Assume you meant safe for Dec 9?

yes, sorry. 12/9

 

[CHGolferJim]

Does anyone have any data comparing multiple appreciation scenarios of a) holding shares and selling 10%-15% OTM covered calls for 2 years vs. b) buying LEAPs?

I am thinking of converting 1/2 of TSLA shares in a smaller IRA, but just realized my plan was based on a vs. b without consideration of CC income.

 

[JSML]

Does anyone have any data comparing multiple appreciation scenarios of a) holding shares and selling 10%-15% OTM covered calls for 2 years vs. b) buying LEAPs?

I am thinking of converting 1/2 of TSLA shares in a smaller IRA, but just realized my plan was based on a vs. b without consideration of CC income.

You can still sell CC off your leaps.

 

[Jim Holder]

yes, sorry. 12/9

This means our sold 195 CC for 12/2 (2 days) seem safe, correct?

 

[JSML]

You can sell CC off your leaps. From a selling CCs point of view you may actually increase the number of CCs sold with leaps as I assume you want to increase your overall delta and leverage.

From a risk profile, you are increasing leverage. So now you will have additional downside risk on top of the upside risk of CCs and if you increase the number of CCs you sell, there’s additional risk there as well.

 

[Yoona]

This means our sold 195 CC for 12/2 (2 days) seem safe, correct?

maybe will touch 180.83 first to fill gap from yesterday

edit: beautiful fibs lining up on .382

 

[Jim Holder]

maybe will touch 180.83 first to fill gap from yesterday

edit: beautiful fibs lining up on .382

View attachment 879792

Thanks. Do you see us closing at 195 in the next two days (by Friday)? There seems to be so many resistances between here and 195. Wondering if to BTC my -CC’s. Also practicing setting trailing stops.

 

[UltradoomY]

Thanks. Do you see us closing at 195 in the next two days (by Friday)? There seems to be so many resistances between here and 195. Wondering if to BTC my -CC’s. Also practicing setting trailing stops.

There are 2 unknowns between now and Friday close -

Today - Fed Chair Jerome Powell speaking at 1:30ish EST - could make the market crash or rally.
Tomorrow - Tesla Semi event - if something unexpected is announced - could make the stock crash or rally.

Good luck!

 

[Jim Holder]

There are 2 unknowns between now and Friday close -

Today - Fed Chair Jerome Powell speaking at 1:30ish EST - could make the market crash or rally.
Tomorrow - Tesla Semi event - if something unexpected is announced - could make the stock crash or rally.

Good luck!

Good points. I followed my rule of not holding leverage over major events and BTC for 20% gains. Will re-evaluate after JP speaks. I still don’t think we will breach and close over 195 by Friday. But why risk it? We can always trade another day.

(BTW TD Ameritrade told me that if I STO a CC and the strike was touched or even surpassed during a trading day the shares CANNOT be called away during trading day. The day has to close over the strike and only then, overnight, does it get assigned. Is this accurate from your experiences?)

 

[Chenkers]

(BTW TD Ameritrade told me that if I STO a CC and the strike was touched or even surpassed during a trading day the shares CANNOT be called away during trading day. The day has to close over the strike and only then, overnight, does it get assigned. Is this accurate from your experiences?)

Assignment only happens overnight. It's conducted by the Options Clearing Corporation (OCC) via a random allotment that the individual brokers then allocate to holders. All this happens after hours, for me usually around 7.5 hours before the next days open.

 

[jim0266]

Good points. I followed my rule of not holding leverage over major events and BTC for 20% gains. Will re-evaluate after JP speaks. I still don’t think we will breach and close over 195 by Friday. But why risk it? We can always trade another day.

(BTW TD Ameritrade told me that if I STO a CC and the strike was touched or even surpassed during a trading day the shares CANNOT be called away during trading day. The day has to close over the strike and only then, overnight, does it get assigned. Is this accurate from your experiences?)

Even after close the SP can move against you up to 90 minutes. Interesting case:

 

[Yoona]

maybe will touch 180.83 first to fill gap from yesterday

edit: beautiful fibs lining up on .382

View attachment 879792

gap 180.83 touched, maybe 183 is next

 

[Yoona]

Thanks. Do you see us closing at 195 in the next two days (by Friday)? There seems to be so many resistances between here and 195. Wondering if to BTC my -CC’s. Also practicing setting trailing stops.

maybe 172-190?

 

[adiggs]

I used the morning upwards start to close out a 3 week (rolled 2x) bps for a net $1 - $1.30 gain over the whole sequence. These were 175/155s expiring this Friday.

Partly I wanted to clear that position out ahead of what Powell has to say (remove risk), and partly I want to be ready for the market to express displeasure and open a replacement position.