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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
EVNow
Well-Known Member
The one with the least delta. So, that would be anything with longer DTE and more OTM.
EVNow
Well-Known Member
Wow .... you are quite bearish ... but understandable.
I personally feel there will be a reversal soon .... (even if temporary), but may depend on P&D, which can go either way ...
I agree that we'll see a reversal soon. My decision making comes down to two big factors. The first is the realization that I have adequate share and cash resources to be, and remain, retired. However if I keep trying to time the recovery on these max loss BPS, the money each roll is costing me could actually endanger the retirement status.
The second is that getting the timing right on when the recovery will happen is dangerous to my financial health. It could work out great, but I've got several weeks of being badly wrong, and stacking up big (recoverable) losses. I need to not add more logs to the fire now
I guess I'd say that I'm bearish enough to stop poking the bear. I'm also doing a bunch of planning of cash and share resources over the weekend - I want to be ready to execute more share to leap conversions if the share price does keep going down. While bearish over an unknown time period (as little as 0 days, up to 4-6 quarters), I also see this time, right now, as an opportunity to create generational wealth. (not-advice) My tool of choice will be 2 year leaps - 200 strike calls so far; I think 150 strike calls on the next conversions.
I've got adequate cash for living expenses for another year (+). And in that year, simply seeing these max loss BPS recover to 25% of spread width ($6.25 on $25 wide spreads) will represent more than a year of income in total for me. My best income play for the next year is to play for recovery. And the safest play I see for recovery is to avoid week to week (month to month, ..) rolls on these spreads.
Its the timing on the recovery. I think its sooner than later: Q1 or maybe Q2. But I don't think so strongly enough to bet big on it, especially when I don't need to. Because another reasonable progression over the next year is that the shares continue their free fall for another week+, macro news continues bad, this quarterly P&D / earnings isn't as outstanding as we want, the FUD is particularly easy and damaging, and even though financials are great, the stock limps along. What if we're limping at 80-120 for the next year due to recession, increasing interest rates, decreasing cash availability (QT)?
What if great company news is offset by bad macro and we're flattish in the 100-140 range for a whole year? The 135/115 spread would have a chance to be cleared, but the 175/150s have no hope in that scenario (on shorter time frame rolls).
As a bonus I felt about 30lbs fall off when I finished making the rolls. Now I can wake up Tuesday morning and I really don't care if we have another $10 down day. Actually I'll like it as an excuse to buy more of the dip.
Something I've needed more than a year to wrap my brain around - the income earning / losing dynamics on spreads is just straight up different from singleton options. For example - instead of the 170/150 spread that I rolled to 175/150, if I had 170 csp, then I wouldn't have rolled out 2 years for sure. I would have rolled to late Jan (probably) or early Feb to give me recovery opportunity from P&D and then earnings announcement. Given that recovery didn't happen, even if the share price went down further, then I probably roll out 1 quarter. I don't see a likely circumstance in which I roll more than 6 months, with even 1 month rolls on CSP being high.
With spreads though, the change in the spread value on a move from 125 to 150 isn't going to be that great in my favor. If my DTE is low enough, that $25 move in the share price could readily accompany a move in the spread value from $17 to $24 (losing money) as the insurance put finds itself ATM / OTM with no time remaining (max loss). With high DTE there's a lot of time value in all strikes in a fairly wide window around the spread strikes.
When these 2 year spreads are finally OTM, then spread dynamics start working again in my favor. Where rolling a 2 year option in to a 1 week option (say a CSP) would be hideously expensive, its not going to be all that bad with spreads. I expect that once far enough OTM I'll be able to roll into a spread that is somewhere between my current short strike and the share price, for a credit. The 2 year spread turns into a 1-2 week spread, and then expires worthless, and just like that the mess is cleaned up.
Another wonky thing about rolling spreads - once the whole spread is ITM, rolling for 1 week or 2 years is going to carry just about the same debit. More time doesn't get you a smaller debit - it just gets you more time. With csp a 2 year roll will pretty much always get you a better strike (if you want it).
You can test one manifestation of this for yourself. With any DTE, from 0 to 750, look at the option chain and wrap any sized spread evenly around the share price. The spread value will be 1/2 of spread size. Because you're 1/2 of spread ITM on the short leg, and the time value in both directions is equal. This relationship holds for a spread you open on the day of expiration or the Jan '25s. (Bid/ask spreads will push the spread value away from the midpoint, but not THAT much).
On the bright side, all of the TSLAnaires that are going back to work should help some of the labor market numbers and get JPow to back off, right?
Cool to see, but hard to see the catalyst that spurs such momentum at this point in time short of a blockbuster surprise of a P&D report. The rumored 100k December deliveries in China might do it - but that seems very far fetched.
Even NKLA had green counter trend rallies after Trevor Milton was accused of fraud. TSLA has been seeing red days over and over again. If there is no single green recovery days and there is no counter trade rallies, I’d think it’s be strictly options related to destroy all the call holders, make them close their positions at a loss and then reverse it as hard as they can to destroy all the retails who have bought Puts and shorted the stock because it looks like free money.
This relentless selling doesn’t look a natural way to see a mega cap stock with no depts and record profits go under -90%.
Just realized stock market is closed today and I am receiving a pay check Tuesday so I will be able to close my CCs Tuesday before the reversal of the decade. (Hoping for the best)
My parents just asked me to liquidate their account. I tried to convince them to wait until P&D but they are done. Right now they are tight on money trying to sell a house that has been on market for 40 days without even one showing so it is understandable. When the house sells they will double or triple their current investment. Things are getting ugly.
On the "all-in podcast" Elon thinks that he see us coming out of the recession on 2024 Q2 and he advised again to get rid of margin giving the example of a company going down 95%. He said that long term it doesn't matter because the market will recover and hit again all time highs.
On the "all-in podcast" Elon thinks that he see us coming out of the recession on 2024 Q2 and he advised again to get rid of margin giving the example of a company going down 95%. He said that long term it doesn't matter because the market will recover and hit again all time highs.
From $400 a share to $20 before recovering? That’s AMZN dot.com bubble burst scenario.
If we have a counter trend rally till January I guess it will be time to deleverage my underwater puts. If it continues to go down 10% everyday next week then this will be painful
going away from this segment, I had more the impression that he talked about a worst-case scenario. I think many statements he made about a recession in the last few weeks were in context of a "worst-case scenario", and I was under the impression that with his actions (e.g., selling more shares to eliminate margin debt) he's aiming to err on the side of safety (= survival), potentially due to PTSD from Tesla/SpaceX almost going bankrupt during the last recession 2009.
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Some good advice at the end regarding margin, market downturns, keeping powder dry, and increased risks from not having a recession for almost 14 years (2009).
AquaY
Member
The difference in stress can be summed up with the Breakfast analogy of the difference between imvolved and commited.
The Chicken is involved. The Pig is commited.
When you're doing surgery you're involved, But with your money, you're commited.
Weekend charting. Damn, wish I hadn’t seen this, but….. Last week the SP filled a gap going all the way back to Nov 15, 2020, but unfortunately there’s another Aug 11, 2020 gap at 95-100 that’s clearly within sight.
Will the shorts hold until they break that gap? Over 20,000 put contracts at 100 for Friday, so maybe that‘s their target. Hmmmm.
Will the shorts hold until they break that gap? Over 20,000 put contracts at 100 for Friday, so maybe that‘s their target. Hmmmm.
From my Humbled Trader stocks to watch newsletter tonight
| TSLA $122.2- Key level is $110 - Looking for a big flush to bounce TSLA off confirmation signal - If TSLA bounces, will take PT first around $115, $117.5 and $120 - No clear bias, will watch for how TSLA trades around the key level. |
This might have been discussed a long time ago, but I'm wondering about wash sale rules when mixed with assignments.
I decided to liquidate most of my share this week, just can't take the 24 hour stress anymore. Have not bought shares in months, but
was recently assigned on a number of lots. So it seems when I go to sell my shares I am getting hit by the wash sale rules. There also
is some kind of "deferred loss" that accumulates.
So questions are, will I not be able to deduct any losses if I sell ALL my shares?
If I was assigned on 1000 shares and resold those same day, but next day sell my remaining 9000 shares, would I be disallowed losses on those? Or does it only apply to a matching 1000 shares?
Is there a way to use the deferred loss?
thanks!
I decided to liquidate most of my share this week, just can't take the 24 hour stress anymore. Have not bought shares in months, but
was recently assigned on a number of lots. So it seems when I go to sell my shares I am getting hit by the wash sale rules. There also
is some kind of "deferred loss" that accumulates.
So questions are, will I not be able to deduct any losses if I sell ALL my shares?
If I was assigned on 1000 shares and resold those same day, but next day sell my remaining 9000 shares, would I be disallowed losses on those? Or does it only apply to a matching 1000 shares?
Is there a way to use the deferred loss?
thanks!
Well, clearly nobody knows anything
. If the seller from last week is not done selling I guess there is more downside. If the seller is done I would guess we will see a bounce. Option flow should give us some hints.Similar threads
