Wiki Selling TSLA Options - Be the House

[ReddyLeaf]

Made some decisions overnight and I think I've figured out how to handle my fully ITM put spreads. I had 160/140 and 170/150s as the big positions, but also a closer set of 135/120s. All of these expiring today and the next two weeks. Looking at a wide variety of near and medium duration alternatives, I also looked at Jan '25 and decided to roll all the way out.

Did you also consider flipping to call spreads (which, IIRC, you have done successfully in the past) or iron condors?

……. If I really need to I am able to sit and do nothing for 2 years (well - 18-21 months ).

Thanks for the levity. We all need that right now.

I decided to “do half half” on my straddle/strangles today. Rolled half of the ROTH account from 12/23 -125c/-130p to 12/30 -125c/-125p for a decent credit, thereby generating enough cash to fill out another 100 shares. So now have 1:1:1 straddle and uncovered shares. In the other IRA, I’m still holding 12/23 -p126s/-c125s which are decaying nicely according to plan. I might roll half, or just let everything exercise. SP at 124.xx now. Hmmm, need to review to roll premiums again. Mostly want to be out of CCs, but still looks like the bears and options market are in control. Just compare the massive number of options contracts traded yesterday and today on TSLA vs AAPL, MSFT, GOOG, META, etc.

 

[adiggs]

Did you also consider flipping to call spreads (which, IIRC, you have done successfully in the past) or iron condors?

I didn't consider those. The usual call spreads I sell would put me about $50 ITM below the current share price.

I figure that isn't what you're asking about - are you thinking to turn these sold put spreads into purchased call spreads? Something like +150c/-170c (I haven't actually looked at the option chain)? H'mm..... time for me to visit the option chain and see what I find.

Or something else?

 

[samn]

I've been trying to understand how wash sale rule would apply in my case but haven't found any information. Does anyone have any information or opinions/not-advice?

My situation is I'm in margin call (again) and I have TSLA stock that I can sell at a loss. However, I have had options early assigned to me in the last 30 days which means that I "acquired" TSLA shares in the last 30 days. I can't tell if wash sale would apply if I sell TSLA at a loss now. My feeling is that it shouldn't apply since I did not choose to have the options early assigned and therefore I did not intend to buy and then sell for tax loss harvesting.

Anyone looked into this before?

 

[adiggs]

Also looking at another round of converting shares into Jan '25 200 strike calls. I partook back when those were $32 each, for about a 4:1 lever. Now they're $26 and nearly 5:1 - I'm holding off for now though in case of another leg down.

Also on offer and something I'm considering - 2:1 exchange of shares into 100 strike Jan '25 calls at $59 and 3:1 exchange of shares into 150 strike Jan '25 calls at $39. These latter two represent many fewer contracts and are probably a better choice for me as these are also options I'd be selling back as the share price returns to $200 (whenever that is - I AM on the clock now for Jan '25, so it needs to be this year or next).

 

[ReddyLeaf]

I didn't consider those. The usual call spreads I sell would put me about $50 ITM below the current share price.

I figure that isn't what you're asking about - are you thinking to turn these sold put spreads into purchased call spreads? Something like +150c/-170c (I haven't actually looked at the option chain)? H'mm..... time for me to visit the option chain and see what I find.

I was thinking the former, which at the current SP is probably suicidal.

 

[adiggs]

I was thinking the former, which at the current SP is probably suicidal.

Yeah - that's my take. I'm comfortable with -175/+150 in Jan '25 puts. On the call side I can't find a $25 wide spread worth $18. I just looked at -30c/+55c - no way I'm trying that one. Even writing it out is giving me hives!

Looking at an OTM +c/-c spread though - something like the +150c/-185c (Jan '25) will cost 9.43 up front with a max gain of $35 (net of ~$26) if held to expiration and shares > $185. Since I have the cash already in hand to back spreads at $25/spread, spending 9.43/spread to free up the $25/spread sounds like a good idea (frees up $16/spread) and has a similar upside with a similar share price move required.

The problem is that I haven't done this sort of spread in the past. That mostly means that I have no experience with rolling such a spread, especially when I find myself with a $220 share price in 4-6 months - that spread will be fully ITM but it won't be very close to max gain. And if/when that happens I really don't want to wait for later 2024 to finally take a 75% gain / break even on the overall position, nor do I really want to wait until then to figure it out


Looking some more I'm wondering about a +150c/-200c position. Max gain of $50/spread and costs $13 to enter. That would free up roughly half of the cash backing the -175p/+150p spreads, while creating a significantly larger possible gain. Enough larger that an early 2/3rds gain close ($250 share price?) would be direct and easy and also provide the target gain for the current position.

Looking at more of these, the call debit spreads look like a superior option to these DITM put spreads I have. Especially when I've already committed to this 2 year expiration - I need to learn about managing these call debit spreads once they go fully ITM. A big part of my plan is rolling slivers of this larger position into early close opportunities once the share price has recovered enough ( I expect I'll be adding more spreads, wider spreads, worse strikes, so a little bit better than the spread isn't enough), and I don't know enough about managing call debit spreads.

I suppose that rolling some number of the cc / -c to a nearer expiration (and higher strike to pay for the roll) would create an opportunity for those to expire worthless. I'd just roll some # of those Jan '25 -c's that I can back with shares and when the -c expire worthless then I can also get rid of some of the +c (or keep them!?!?!). And here I've been thinking about buying +150c as a share conversion.

So maybe I combine my put spread recovery with my share to leaps conversion.... if we do go far enough ITM on the calls, I would start buying out the -200c as opportunities arise and leave myself with the +150c's that I want. Or I can buy the combo out in bits and pieces to bring down long exposure as the share price goes up. H'mm....


Sorry about the stream of consciousness. I just spotted my logic problem - the current put spread I'd be replacing these with will cost $19/each to buy out, so my actual opening cash flow is -$28 against $25 reserved. I've just added to my weekend reading and study....

Gotta go read!

 

[SebastienBonny]

125 options target it is for the week…

 

[JSML]

There's a rumor from China Analyst that Tesla China sold 100K cars in December. That should start a rally if China insurance numbers are up week to week next Tuesday.

Despite that catalyst, I am still selling calls for next week. Until the trend reverses, I am not convinced the stock is going up.

1) STO Dec 30 -c135, -c137, -c140. I will not sell any calls next Friday and will wait to see 4Q production/delivery numbers.

All sold calls this week are either closed or so far out that I will let them expire.

2) Decided to roll my Dec 30 -p150 to Jan 25 -p120 for a credit. Decided to treat this as a trading position. Bought some shares since the Dec 30 -p150 will no longer be assigned next week.

3) Rolling down my various leaps with expiration date in Jan 25

From +C 100 to +C140
To +C 50 to +C 90

Paid an average of about 55% of the spread. So if the stock price goes back up my return for this roll will be close to 90% of the investment.

 

[juanmedina]

Q4 is looking promising all the inventory of Model 3's and Y's is gone 200 miles from my house.

 

[adiggs]

I suppose that rolling some number of the cc / -c to a nearer expiration (and higher strike to pay for the roll) would create an opportunity for those to expire worthless. I'd just roll some # of those Jan '25 -c's that I can back with shares and when the -c expire worthless then I can also get rid of some of the +c (or keep them!?!?!). And here I've been thinking about buying +150c as a share conversion.

So maybe I combine my put spread recovery with my share to leaps conversion.... if we do go far enough ITM on the calls, I would start buying out the -200c as opportunities arise and leave myself with the +150c's that I want. Or I can buy the combo out in bits and pieces to bring down long exposure as the share price goes up. H'mm....

Pretty significant logic error in here - doesn't mean that the end result can't be achieved, but a share price above the -c is ITM, and will be making that -c increasingly more expensive. The further ITM the debit call spread goes, the more profitable it is, with a limit of the spread width when time value reaches 0.

So early closes will be closing both sides of the spread for somewhere close to the spread width. Or I'll get early close opportunities due to raising cash and buying out the -c when enough time has passed + enough of a share price drop has occurred, leaving me with the +c.


If something looks like pure goodness, then you're probably missing something. As I was

 

[Max Plaid]

125 options target it is for the week…

Was heading there, then the forced-options close from RH & IKBR caused a 15:00 dump which hasn't recovered

 

[Max Plaid]

Q4 is looking promising all the inventory of Model 3's and Y's is gone 200 miles from my house.

Yes, in fact Model S & X inventory went up, but 3 & Y dropped faster than the share price

 

[AquaY]

I have lost an unbelievable amount of money this year because I kept thinking that what ever positive news I heard (that WAS always noteworthy), would surely make the SP go up, and I was wrong every time. At some point the SP has to turn around if Tesla keeps executing, but I've finally learned to not bet on it. (How many days have we been up 2-3% in premarket and finished down 5% on the day...?) Yes, you can make more money with LEAPS than with stock, but you can also lose a lot more. I ruined my retirement because I thought I could safely trade options if I stayed far OTM. I still got killed. Be careful friends. I know some people can do it, but it is harder than it looks....

P.S. - It is really looking like I need to sell my plane....

I'm sorry to hear about your losses.
Many of us have taken a beating this year. Me included. For me I was great until October. Lost all my profits of the last 2 years and then some

 

[Max Plaid]

Big effort by "them" to stay away from 125 close... I guess we should be happy it was only down 1.76% today...

 

[ReddyLeaf]

I know spreads are what destroyed people this year, but since I moved brokerages and obtained approval for spreads, I thought it would be a good time to learn for myself just how dangerous these are. So, opened a single 12/30 IC: +p95/-p100 & -c150/+c155 for something like $20 on $500 risk. I probably should have waited until next Wednesday, following @Yoona’s suggestions, or even tried to “optimize” entry in BPS & BCS pairs, but I’m willing to lose it all just for the experience/feeling of watching. This is not something that I plan to do routinely, and certainly not enough contracts to lose much. Amazing how much the broker takes on commission, now I can see how those really add up. GLTA and have a great holiday season.

 

[OrthoSurg]

Dan Shapiro just posted:

“$tsla not that far away from a long potential. Watching “

https://twitter.com/x/status/1606313410588704771

There’s hope!

CGS throwing a new number?

Hoping for a Christmas Rally to deleverage before I start back to work January 4th because I can’t micromanage my CCs and assigned puts/margin call every day like this if we really go down to $60 and my portfolio goes to 0. Today I had to roll my 6/1 129CCs to 6/1 125CC to get more premium to avoid a margin call at the end of the day. Had to this between 2 carpal tunnel surgeries at the end of the day while the nurse wanted to leave early. This micromanagement does not function well with my job.

 

[Yoona]

i've been away all day but will read previous posts later

don't forget your trailing stop losses - that's your automated exit from unexpected freefalls

https://twitter.com/x/status/1606348573603336192

 

[mickle]

Well this has been the most stressful week of my life in a very long many years (and for my girlfriend too, who is also trading options).

Today was the worst because we had to deal with being assigned on some BPS on Fidelity that put us both into a margin call. We were all set to re-enter the position, my girlfriend sold the assigned shares then went to sell the puts, but the system wouldn't let her. She got some error like "can't do this trade online". By the time we got Fidelity on the phone and they checked the issue and entered the trade, the stock had shot up from 122 to 127 and it looked like the big rally coming, so we sold the puts quickly, ending up with a $15K loss.

After getting out of any margin call issues, she tried to roll some BPS to better positions, but she would get similar errors. Then spent 2 hours(!!) on the phone with Fidelity to try to figure out the problem, nobody had a clue what the errors meant or why she couldn't do anything. Finally had to have them push a roll through over the phone.

Luckily for me, she had the big problem just before I tried to fix a similar assignment, so I called them on the phone ready to sell puts in case I had the same issue. I sold my shares, then still couldn't sell the puts, so they did it very quickly afterwards, then I had no more problems after that with further trades.

Expecting a few more assignment come Tuesday, but we got a few low time value spreads moved to better positions, so hopefully this will stop soon. On Etrade where I had similar assignments and margin calls, never ran into any problems or had to call anyone to deal with this stuff.

 

[Cherry Wine]

Well this has been the most stressful week of my life in a very long many years (and for my girlfriend too, who is also trading options).

Today was the worst because we had to deal with being assigned on some BPS on Fidelity that put us both into a margin call. We were all set to re-enter the position, my girlfriend sold the assigned shares then went to sell the puts, but the system wouldn't let her. She got some error like "can't do this trade online". By the time we got Fidelity on the phone and they checked the issue and entered the trade, the stock had shot up from 122 to 127 and it looked like the big rally coming, so we sold the puts quickly, ending up with a $15K loss.

After getting out of any margin call issues, she tried to roll some BPS to better positions, but she would get similar errors. Then spent 2 hours(!!) on the phone with Fidelity to try to figure out the problem, nobody had a clue what the errors meant or why she couldn't do anything. Finally had to have them push a roll through over the phone.

Luckily for me, she had the big problem just before I tried to fix a similar assignment, so I called them on the phone ready to sell puts in case I had the same issue. I sold my shares, then still couldn't sell the puts, so they did it very quickly afterwards, then I had no more problems after that with further trades.

Expecting a few more assignment come Tuesday, but we got a few low time value spreads moved to better positions, so hopefully this will stop soon. On Etrade where I had similar issues, never ran into any problems or had to call anyone to deal with this stuff.

Wow, that is super frustrating! For what it's worth, IBKR has been pretty rock solid for me since moving over there last year.

 

[BornToFly]

Well this has been the most stressful week of my life in a very long many years (and for my girlfriend too, who is also trading options).

Today was the worst because we had to deal with being assigned on some BPS on Fidelity that put us both into a margin call. We were all set to re-enter the position, my girlfriend sold the assigned shares then went to sell the puts, but the system wouldn't let her. She got some error like "can't do this trade online". By the time we got Fidelity on the phone and they checked the issue and entered the trade, the stock had shot up from 122 to 127 and it looked like the big rally coming, so we sold the puts quickly, ending up with a $15K loss.

After getting out of any margin call issues, she tried to roll some BPS to better positions, but she would get similar errors. Then spent 2 hours(!!) on the phone with Fidelity to try to figure out the problem, nobody had a clue what the errors meant or why she couldn't do anything. Finally had to have them push a roll through over the phone.

Luckily for me, she had the big problem just before I tried to fix a similar assignment, so I called them on the phone ready to sell puts in case I had the same issue. I sold my shares, then still couldn't sell the puts, so they did it very quickly afterwards, then I had no more problems after that with further trades.

Expecting a few more assignment come Tuesday, but we got a few low time value spreads moved to better positions, so hopefully this will stop soon. On Etrade where I had similar issues, never ran into any problems or had to call anyone to deal with this stuff.

That exact thing happened to me weeks ago. Sold shares, couldn't sell the Puts without spending a lot of time on the phone. Cost me $50,000 as the SP climbed. I was MAD, but they refused to compensate. It hasn't happened again since.