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Wiki Selling TSLA Options - Be the House

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I lost so much money last year by closing-out ITM calls and puts, then selling the opposite and have the same happen again, almost on a weekly basis. Took me until March to get my act together and adapt... in every case if I had rolled the position a few weeks, the SP came back and they would have expired worthless

Not advice, if the SP keeps going all the way to ATH without a breather, then maybe just bailing-out now would be best, who knows...
I agree with you, we have our history hahaha

I'll try to roll for $1 a week - that covers all family expenses. If the roll dips below $1, then I'll most likely give up on shares and trail the SP with short puts until eventually I eat it that way. Worked pretty well in the past couple years...

My fear is that I capitulate here, let 'em take my shares at 135, then I can't sit on my hands well enough, sell 160p's in a week or so and we dip down to 75 and I get early assigned yet again. I'm not keen on this storyline and it's hard to avoid it.
 
I agree with you, we have our history hahaha

I'll try to roll for $1 a week - that covers all family expenses. If the roll dips below $1, then I'll most likely give up on shares and trail the SP with short puts until eventually I eat it that way. Worked pretty well in the past couple years...

My fear is that I capitulate here, let 'em take my shares at 135, then I can't sit on my hands well enough, sell 160p's in a week or so and we dip down to 75 and I get early assigned yet again. I'm not keen on this storyline and it's hard to avoid it.
That's why I rolled my -c130's, but left the -c150's in place, would want to be selling puts at a lower strike than the calls were exercised, which is feasible from 150, but 130 looks a stretch...

Now I'm looking at next week's premiums, I see there's a +$2 for a -c150 roll, that's tempting, can use that to close-out a couple of the -c130's... hmmmm, plus there's a reasonable chance the SP pulls-back at some point

Let's see tomorrow, I expect the MMHedgieWedgies to defend 160
 
I lost so much money last year by closing-out ITM calls and puts, then selling the opposite and have the same happen again, almost on a weekly basis. Took me until March to get my act together and adapt... in every case if I had rolled the position a few weeks, the SP came back and they would have expired worthless

Not advice, if the SP keeps going all the way to ATH without a breather, then maybe just bailing-out now would be best, who knows...
As you know, for ITM CC, the higher SP goes, the less attractive rolls become, so a middle ground seems to be rolling 1 week at same strike for a small credit or debit and wait for SP downtrend. I’m gardening 2/3$125 CC (on a $116 buy-write) which are now worth ~$35; a 2/10$125 roll would be <$1 debit. Also considering rolling 2-4 weeks to $150+ where debit < strike gain. Probably wait until 2/1 for Fed market jitters.
 
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Do you think bonds will hold as we retest 3600, heads towards 3200? Or bonds will also slide down with overall market, so should be patient to enter bonds? Rate hikes are almost done and we will hold for foreseeable future.

For the first time in a long time, I'm actually considering buying some bonds 1-3 years maturity... and not necessarily buy the whole dip in tech like TSLA
For short term bonds held to maturity this is immaterial.

The two year is at 4.1 currently and a decent return for zero risk.

I am rolling baskets of bonds - 8 week, 13 week, 17 week and 26 week.


The yield on these ranges from 4.5 to 4.9. Again state and local tax free, so equivalent returns for high tax states would push into the low 5s.

Don’t see why you should care if these bonds move slightly in their value during your hold. Your coupon is assured and the maturity date is always a week away if you scale into them.

Do not be so certain the hikes are done. First problem is everyone thinks they are. Second problem is the FED does not agree. When YOY CPI comes in under 3, then you can be confident they will not raise. Third problem is that the market is already pricing in cuts. If the rabid FED sticks to its guns to crack the labor market, they will not cut and have said so. Again, everyone thinks they will cut. Problematic.

I do think that they will be forced to stop and may cut soon after. But I hate it when everyone thinks so. Groupthink…. events do not usually cooperate.
 
Huge gamma exposure spike at 160, both put and call, there's enough interest at c155 and c165 as well. I ended up selling a +140/-145 BPS for .25, thx @EVNow for reeling me in from the 5 wide -c148 BPS I was considering... it ended the day at 80%. Makes me wonder why I bothered to sell 160, 162.5, 165 CC that are ITM and *may* need a roll tomorrow. I'm going to watch closely working the nearest to the money first, pick the same strike or small increment, 6 DTE ala @CHGolferJim. Alternatively and if IV continues to slide, I'll close them near even or for a small debit. GLTA!

TSLA-TotalGamma-26Jan2023.png
 
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I'm all back in after panic selling 2,000 shares on capitulation day. I lost 327 shares with that winning move. So about a $52,000 loss so far at this stock price. I'm hoping to be able to make it back selling weekly calls on about 4,000 shares. I would like to stay real conservative and not sell below 20% of whatever the current stock price is within a week of DTE. I'm hoping for about a $1,000 a week. I also have an additional 1200 shares I could sell CCs against. Would it be better to sell more contracts at higher strike prices? Is $1,000 a week doable without much risk?

If I can pull this off and get some experience and confidence, I was hoping to be able to retire on selling calls without touching the principle. This is all in a Roth so I would have to make enough to live on after paying income taxes and the 10% penalty. I still have about ten years before I can pull money out of my Roth without paying taxes.
 
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I'm all back in after panic selling 2,000 shares on capitulation day. I lost 327 shares with that winning move. So about a $52,000 loss so far at this stock price. I'm hoping to be able to make it back selling weekly calls on about 4,000 shares. I would like to stay real conservative and not sell below 20% of whatever the current stock price is within a week of DTE. I'm hoping for about a $1,000 a week. I also have an additional 1200 shares I could sell CCs against. Would it be better to sell more contracts at higher strike prices? Is $1,000 a week doable without much risk?

If I can pull this off and get some experience and confidence, I was hoping to be able to retire on selling calls without touching the principle. This is all in a Roth so I would have to make enough to live on after paying income taxes and the 10% penalty. I still have about ten years before I can pull money out of my Roth without paying taxes.

The risk is that the stock runs over your CCs on a rally and you either lose your shares or buy back at a loss. Look back at 2021 posts - a lot of us were planning to make steady income doing this and it doesn’t always work out. Also, I would definitely not do it in a Roth and pay taxes and penalties you don’t have to.
 
I'm all back in after panic selling 2,000 shares on capitulation day. I lost 327 shares with that winning move. So about a $52,000 loss so far at this stock price. I'm hoping to be able to make it back selling weekly calls on about 4,000 shares. I would like to stay real conservative and not sell below 20% of whatever the current stock price is within a week of DTE. I'm hoping for about a $1,000 a week. I also have an additional 1200 shares I could sell CCs against. Would it be better to sell more contracts at higher strike prices? Is $1,000 a week doable without much risk?

If I can pull this off and get some experience and confidence, I was hoping to be able to retire on selling calls without touching the principle. This is all in a Roth so I would have to make enough to live on after paying income taxes and the 10% penalty. I still have about ten years before I can pull money out of my Roth without paying taxes.

$1000/week on 4000 shares means you have 40x contracts to work with and need to earn $25 per contract (~$0.25/share). At first glance (2/3 192.50 calls are at $0.30/share), so that "should" be possible. But today's closing price is 21% above last Friday's closing price ($133), so that particular "weekly income" would've been a loss and needed to be rolled to next week at less than 20% OTM. Unless Friday closes below 160?!

There are no "sure things", but if you enjoy doing it (for the thrill or the learnings), then it's worth the effort.
 
I'm all back in after panic selling 2,000 shares on capitulation day. I lost 327 shares with that winning move. So about a $52,000 loss so far at this stock price. I'm hoping to be able to make it back selling weekly calls on about 4,000 shares. I would like to stay real conservative and not sell below 20% of whatever the current stock price is within a week of DTE. I'm hoping for about a $1,000 a week. I also have an additional 1200 shares I could sell CCs against. Would it be better to sell more contracts at higher strike prices? Is $1,000 a week doable without much risk?

If I can pull this off and get some experience and confidence, I was hoping to be able to retire on selling calls without touching the principle. This is all in a Roth so I would have to make enough to live on after paying income taxes and the 10% penalty. I still have about ten years before I can pull money out of my Roth without paying taxes.

There is always some unexpected Hertz/Twitter situation that will happen and do the infeasible and destroy your original plan. Just have to be ready to react and adapt accordingly.
 
Max Pain has jumped from $140 yesterday to $147 today reflecting options activity yesterday. I suppose this suggests something for SP movement today, although pre-market activity is strong so far.
What's much more interesting than the max pain at $147 is the way the call and put walls have moved around since yesterday. Call walls below $160 have completely disappeared and even the $160 wall could be taken out by put buying/call closing during the day. So looking at the OI chart there seems to be plenty of support above $155 and the potential to run up to $165 or even higher if we get some gamma squeeze or short squeeze activity going on. Pre-market action is already looking squeezy.

1674821977280.png


This Gary Black tweet serves as a reminder of what can happen when Tesla gets going on a short term run: "TSLA rose +17% on 10/24 and another +10% on 10/25."

 
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News? Up more than 1% again premarket after seeing us slightly red first.
No news just momentum and technicals. Fridays are the best for a gamma squeeze. I think we will test the 166-167 level and based on what kind of option bets we see at the open we could be in for an adventurous day.

edit: PCE numbers at 8:30 EST so this could just be MMs positioning for a drop in case the markets react negatively to the news.
 
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What's much more interesting than the max pain at $147 is the way the call and put walls have moved around since yesterday. Call walls below $160 have completely disappeared and even the $160 wall could be taken out by put buying/call closing during the day. So looking at the OI chart there seems to be plenty of support above $155 and the potential to run up to $165 or even higher if we get some gamma squeeze or short squeeze activity going on. Pre-market action is already looking squeezy.

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I have always equated the Max Pain indicator with movement in the call and put walls. However, your nuance that the walls’ movements are probably more influential on daily action, while the MP calculation is affected by outlier positions, is probably more precise. Thanks.