Wiki Selling TSLA Options - Be the House

[OrthoSurg]

Thank you for this. At least this gives me some hope, although I think we hit 140 next week.

I'm having a really hard time with the 50% drop in the last 3 months. My stress level is through the roof. I have a constant headache and difficulty sleeping. But I can't sell everything and move on because my financial future relies on the SP going back up and my account recovering some of its losses. I can't stay retired on what I have left.

Even though spreads got me into this mess, I thought about doing BCS of 175/225 for next week. But the reminder of how much TSLA can go up in 4-8 weeks is a good caution to everyone to be careful on the call side. I guess the only difference is that this time we may be in an extended Bear market, so not selling ANY calls might be a missed opportunity....

Totally understand how you feel. I feel like sh1t when I wake up at 5AM and look at the ticker pre market trying to figure out if I have to manage a margin call during the day then I get the classic assignment email from my brokerage account director.

My only rest is when I forget completely the stock price when I have my 80 patients a day in my clinic or my crazy 6-8 patients OR days filled with trauma because of the icy snow, then during the evening bringing my kids to their hockey games or Judo classes while I go run outside or to the gym with friends, then I’d feel crazy depressed. Now I just feel burnt out from working too much and pumping money endlessly in my ****ing brokerage account. I feel exactly how I felt during my 2 last years of residency training in orthopaedics when I was PGY-4 and 5 and our staff did surgery every nights.

Now, objectively:
On a positive note,
Inflation has peaked
Elon sold enough for a while
Capitulation is near, next support is at 138
P&D numbers are arriving soon with a possible run up
TSLA is in oversold territory because of Elon selling
A lot of Tesla bills are a stepping in to call out on Elon and Leo confronted Elon, Ross Gerber is calling out Elon and he wants to be elected on Tesla Board

On a negative note
Elon is now a loose cannon
Every tweet is now a self sustaining fire of FUD
SPY and QQQ has lost support and are in downward trend.
TSLA is now 60% drawdown and we have witnessed 80% drawdown in the past.

I see the SP going to test 138 early next week then bounce back and have a Christmas rally. I have no predictions on any wave however big buyers like Leo stepped in at $160 and I suspect this will lead other buyers to buy at some point leading to P&D reports.

Like @Yoona posted, 70% probability the stock climbs in the next 4 weeks after the 8th worst week in the company history. That’s how I will sleep this weekend telling myself I won’t start liquidating significant portion of my shares if we do down $138.

Every time I feel bad I remember that 18 years old farmer who received a 400 pounds hay bail on the head falling from the tractor trailer and he got C5 tetraplegic at 18y from bilateral C4-C5 dislocation. I try to remember I have my marvellous wife and kids to support me even if my portfolio is being annihilated, and that I am not C5 tetraplegic with only my biceps to contract and move my wheel chair. Focus on what’s important, the people around you.

Good luck everyone and may this Elontwitterstorm finish one day

 

[juanmedina]

Thank you for this. At least this gives me some hope, although I think we hit 140 next week.

I'm having a really hard time with the 50% drop in the last 3 months. My stress level is through the roof. I have a constant headache and difficulty sleeping. But I can't sell everything and move on because my financial future relies on the SP going back up and my account recovering some of its losses. I can't stay retired on what I have left.

Even though spreads got me into this mess, I thought about doing BCS of 175/225 for next week. But the reminder of how much TSLA can go up in 4-8 weeks is a good caution to everyone to be careful on the call side. I guess the only difference is that this time we may be in an extended Bear market, so not selling ANY calls might be a missed opportunity....

Man that sucks. Today I felt like throwing the towel and getting rid of my margin and just letting the rest ride it out. The wife is tired of seeing me frustrated everyday. Thankfully most of my holdings are in retirement accounts that are 95% shares but I am down a significant amount in my after tax account. I feel you, what a horrible feeling and Elon's mouth makes this scarier in addition to his selling. I am trying to hold on until P&D and make decisions soon after depending on the result. I am afraid that even a beat on everything for Q4 might not change anything. The sentiment is just way too negative right now even wallstreetbets is attacking Elon and Tesla non stop. I really need a break from the stock and I am seriously considering selling CC Leaps so I can focus on life even if I end making less money.

Did anyone red my earlier post or it didn't make any sense about -340p's to bps?

 

[JustMe]

Better days are ahead

 

[adiggs]

Maybe a very basic question, but it really isn't covered in any of the options trading courses I've taken over the years, nor has paper trading adequately prepared me for this...

How do you all determine your limit prices for selling options? When paper trading on ThinkOrSwim, if a single option is actually traded at your limit price, your paper trade goes through. But I tried to sell covered calls twice this week, setting my limit locked at the ask, and wasn't able to get the order to fill in either case. Most frustratingly, I frequently saw the last trade price hit my limit, but I'm guessing my orders must be the lowest priority to fill.

Do you just suck it up and set your limit at the bid? Or hope the SP briefly spikes after sending your order?

My own approach - for single leg options with a small bid/ask spread I have moved to pretty much all of these being market orders. What I've found is that I can frequently set a limit at the mid of bid/ask, and I frequently get those orders filled. However I've also had circumstances where the share price moves against me, and keeps going as I move my limit, that I end up giving away a lot more on those few bad fills, than I gain with the mid point limit orders that do fill.

With high enough volume and low enough bid/ask, I frequently get a price somewhere between the two, and that fill is always adjusted for those last minute moves in the price. In short - when bid/ask is small and I'm doing single legs, my better longer term result comes from doing the market order.

What is small enough? I frequently see .10 to .20 wide bid/ask on the TSLA options I am selling. The mid poitn will be .05 to .10 away from the extremes, and therefore what I'd be trying to get by setting a limit. My upside therefore is .05 to .10 (half of the bid/ask). That amount is, for me, small enough that it doesn't change my belief in the goodness of the position - these I use market orders on. I've also seen some 2 year options with bid/ask more like $5+ apart. These ALWAYS get a limit

I also use this market order dynamic when I can on multi-leg positions. Sometimes I can open up 1 leg at a time, and I'll do those individually as market orders.


But spreads require a limit price and I've never seen a spread get me a different or better price. That includes making a mistake on order entry, but mostly hits me when the share price moves between when I get the ticket filled out and when I submit. On spreads I go for the mid point of bid / ask, and then I usually favor the side that is against me. So if I were filling a spread with a bid/ask of 1.00 to 1.50, then to open (STO) I would open for 1.20 (a bit below the mid point), and if I were closing I would set the limit at 1.30. I'm taking a bit less than the mid point to open (sto), and willing to pay a bit more than the mid point to close (btc).


context = My own trading style is to get a position open, or closed, once I decide to act on the position. I don't day trade and I don't track things closely enough to establish a price for a position. I.e. I'd sell <some cc> if I could get 2.00 for it, but if it doesn't get that high I'll pass. If it were trading at say 1.80 and I decided it was a good position then I'd just enter at 1.80 - I don't enter a 2.00 order and hope / expect / let that good position go, trying to get the extra .20. And I definitely don't have good enough information to believe that the trade isn't a good one at 1.80, but becomes a good one at 2.00.

 

[JSML]

My thesis of a $160 bottom is gone.

1) I reduced share count and leaps by another 15 percent and now I am no longer leveraged on the long side.

2) STO Dec 23. - c 165, - c 170 and - c 175.

3) sold shares earlier this week to cover my Jan 20 -p 156.67

4) Will be assigned - p 167.5 today. Sold shares earlier to cover this.

5) Big mistake closing my hedges too early. At this SP I will not open new hedges.

6) Trying to lower my cost basis by selling some shares and then STO Dec 30 -p 150 for $6.25. Will buy back shares if not assigned.

7) BTO call spread Jan 24 +c200 / -c236. I saw this being discussed here and believe it is great risk reward. Buying the call spread instead of selling a put spread because I am too weary of put spreads and early assignments.

 

[samppa]

I've had it with all this drama and options.. I will let my trading account be, it should be fine unless tsla drops below 100..
and I will accumulate to my core account. Thats with a broker that doesn't allow options. I do believe that tsla is s vert good investment with time horizon out to 2030-35.

 

[chiller]

hmm, just got assigned all my Jan 2025 400P.

 

[OrthoSurg]

hmm, just got assigned all my Jan 2025 400P.

Had all my Jan 2025 430p assigned Thursday too. Sold back the 1500 shares and Sold Jan 2025 380p.

Now I have more than 50k on margin to pay with selling agressive CCs and working more! How fun!

 

[SN_8]

Every time I feel bad I remember that 18 years old farmer who received a 400 pounds hay bail on the head falling from the tractor trailer and he got C5 tetraplegic at 18y from bilateral C4-C5 dislocation. I try to remember I have my marvellous wife and kids to support me even if my portfolio is being annihilated, and that I am not C5 tetraplegic with only my biceps to contract and move my wheel chair. Focus on what’s important, the people around you.

Good luck everyone and may this Elontwitterstorm finish one day

OT: Have you ever posted your thoughts on the likelihood and timing of Neuralink realizing their claims about mitigating spinal injury? I'd love to read it if you have.

Not so OT: Your list of positives and negatives are spot on. I (fortunately in retrospect) sold to close some leaps a few weeks ago for tax loss harvesting. Those pros and cons are exactly what I grapple with as I debate whether to repurchase this week. For the time being, I'm leaning towards rebuying at the end of the week, but I have a close eye on the break down in the macros.

 

[strago13]

Assigned a few Jun 2024 360's last night. So far its just a few and not everything, but its clear I need to do something to manage these now

 

[mrmage]

My thesis of a $160 bottom is gone.

1) I reduced share count and leaps by another 15 percent and now I am no longer leveraged on the long side.

2) STO Dec 23. - c 165, - c 170 and - c 175.

3) sold shares earlier this week to cover my Jan 20 -p 156.67

4) Will be assigned - p 167.5 today. Sold shares earlier to cover this.

5) Big mistake closing my hedges too early. At this SP I will not open new hedges.

6) Trying to lower my cost basis by selling some shares and then STO Dec 30 -p 150 for $6.25. Will buy back shares if not assigned.

7) BTO call spread Jan 24 +c200 / -c236. I saw this being discussed here and believe it is great risk reward. Buying the call spread instead of selling a put spread because I am too weary of put spreads and early assignments.

Closed my remaining options today. With recent sales, I've closed 40% of my shares and considering selling more. I believe there's a chance of a bad recession and macros could be negative for much longer.

If TSLA gets a bounce, I don't feel comfortable that it can hold against the macros. We have a $2T hangover. Housing prices, rents, restaurants, and malls are only starting to slow.

Most importantly, I don't trust Elon anymore as a steward for my investment.

 

[mrmage]

this week's -14.69% drop (Mon Open - Fri Close) is the 8th largest intraweek in TSLA history

Top 50 TSLA IntraWeek Drops and Stock Price Growth 4-8 Weeks Later

View attachment 885886

• use Tue/Thu if Mon/Fri is holiday
• 12/16 has no data yet for 4 and 8 weeks in the future, default=0 for now

View attachment 885889

Great graph, but the chart should be shown annually. The macro conditions and Elon impact are different this year. The SPs for 4 weeks later and 8 weeks later for 2022 are worse than before.

Edit:
Here's the chronologically ordered drops for 2022. Most likely outcome is not much change at 8 weeks, somewhat higher at 4 weeks.

I considered writing weekly puts @ -15% strike for income. Then realized that I would make more by buying T bills at 4+% rates. With even more rate hikes on the way, it's apparent why investors would shift from a down trending stock market into zero risk 4+% treasuries. Live and learn.

 

[OrthoSurg]

OT: Have you ever posted your thoughts on the likelihood and timing of Neuralink realizing their claims about mitigating spinal injury? I'd love to read it if you have.

Not so OT: Your list of positives and negatives are spot on. I (fortunately in retrospect) sold to close some leaps a few weeks ago for tax loss harvesting. Those pros and cons are exactly what I grapple with as I debate whether to repurchase this week. For the time being, I'm leaning towards rebuying at the end of the week, but I have a close eye on the break down in the macros.

For Neuralink, I will have to speak with my friend I train for marathons, he published 200 articles on pubmed in 9 years on spinal cord injury after traumatic spinal injury and runs a 10M annual budget research Chair at the University. My next training with him is next week end so I’ll see with him at what extent the multimodal nano electrodes penetrating at different depth in the cortices to try to read electrical current in neurons can offer the same impulse for lower motoneurons after a reading of motor current potent in the brain cortices. I have done 8 months of spine surgery rotation in 2014 and haven’t looked much into it since then but I will let you know once I know next week!

This spine surgeon bought some ARKK in 2020 when TSLA was gaining +5% daily. He must have some bitter feeling against Elon with his investment being -80% since then. Will see if it impacts his analysis

 

[intelligator]

I debit rolled Jun '24 -383.33p spreads to Jan '25 -290p , same width. Before roll they were $1-2 extrinsic, now have 7 or so. I don't know how long that buffer will last. Which greek (s) would be best to calculate projected extrinsic at SP 140, 130, etc. Is it possible?

 

[TexasGator]

I have been using the option profit calculator site to see put values at various SP figure it's a good rough estimate taking into account it uses current IV IIRC

Edit:. Was going to check ur put and of course it's down atm.

 

[mongo]

I have been using the option profit calculator site to see put values at various SP figure it's a good rough estimate taking into account it uses current IV IIRC

Edit:. Was going to check ur put and of course it's down atm.

You can also model changes in IV on there.

 

[juanmedina]

Great graph, but the chart should be shown annually. The macro conditions and Elon impact are different this year. The SPs for 4 weeks later and 8 weeks later for 2022 are worse than before.

Stocks are not going to go straight down either. I think we are do for a bounce like what Meta and Nvidia have seen which have defied the macro. I actually increased my leverage on the long side yesterday by a little bit but it will be a short term play and with stops.

 

[JustMe]

Stocks are not going to go straight down either. I think we are do for a bounce like what Meta and Nvidia have seen which have defied the macro. I actually increased my leverage on the long side yesterday by a little bit but it will be a short term play and with stops.

I agree. Near term is pretty scary but some substantial positive news could quickly turn things around.

FWIW, max pain for 12/23 is $160 and there is a significant put wall at $160 for 12/30. Perhaps we will settle around $150 - $160 for a bit as the market reassesses.

 

[SebastienBonny]

Don’t you guys think it’s funny how Reuters kept on publishing fud and now we’re at 150 they’re releasing news about Mexico plant & 100 Semis in 23 for Pepsi? Maybe nothing, but part of me is happy not having sold calls yesterday...

 

[CHGolferJim]

I agree. Near term is pretty scary but some substantial positive news could quickly turn things around.

FWIW, max pain for 12/23 is $160 and there is a significant put wall at $160 for 12/30. Perhaps we will settle around $150 - $160 for a bit as the market reassesses.

Interesting that is the case, and CC premiums up to +15% and 3 weeks are so paltry — reinforces my inclination to stay away and enjoy having zero open CC for the holiday period. We’ll see if there is any SP movement by end-Jan re Jan2 P&D and ~Feb2 ER.