Wiki Selling TSLA Options - Be the House

[BornToFly]

Last Friday TSLA opened at 128. We just had a 39% move in a week.

The 200 strike calls I sold this morning for 0.24 are up over 1,000% to $2.7.

I feel like I can't win. I opened CC well OTM last week, and only did 1/3 of available shares. I used the other 2/3 to help pay for rolls. Now 1/3 are already ITM (after rolling OTM), and the other 2/3 could go ITM next week (all for Friday).

I should have avoided ER week!!!

 

[intelligator]

It's early to tell... this has the looks of a week in the low 170s. Options volume snapshot taken at mid-day suggested the same. It's anyone's guess, mine is we revisit the mid 160s.

 

[OrthoSurg]

Last Friday TSLA opened at 128. We just had a 39% move in a week.

The 200 strike calls I sold this morning for 0.24 are up over 1,000% to $2.7.

I feel like I can't win. I opened CC well OTM last week, and only did 1/3 of available shares. I used the other 2/3 to help pay for rolls. Now 1/3 are already ITM (after rolling OTM), and the other 2/3 could go ITM next week (all for Friday).

I should have avoided ER week!!!

The 120CCs I sold early January for $2.60, I had to roll to 140 in February for $5.65 then rolled them for $9.90 to 370 Jan2025 are now worth $21.50

That’s a magnificent -1000% return too!

I am still happier to lose all my shares at $370 in 2 years than getting margin called and liquidated if SP reached $60 like all bears advocated.

I still have the option to roll back in if the trend reverses and salvage then however it’s going to be tricky.

Almost rolled back in my CCs ATM before the earnings because I was expecting a miss, then the stock skyrocketed over +20% in 2 days. That would have been a greater catastrophe than the disaster my CCs are currently in. However if we have really got out of the bear market, I consider exiting it with 100x Jan2025 110 LEAPs locked at a 370 gain a greater success than selling it all at them bottom waiting to buy back at $60

 

[gabeincal]

The 120CCs I sold early January for $2.60, I had to roll to 140 in February for $5.65 then rolled them for $9.90 to 370 Jan2025 are now worth $21.50

That’s a magnificent -1000% return too!

I am still happier to lose all my shares at $370 in 2 years than getting margin called and liquidated if SP reached $60 like all bears advocated.

I still have the option to roll back in if the trend reverses and salvage then however it’s going to be tricky.

Almost rolled back in my CCs ATM before the earnings because I was expecting a miss, then the stock skyrocketed over +20% in 2 days. That would have been a greater catastrophe than the disaster my CCs are currently in. However if we have really got out of the bear market, I consider exiting it with 100x Jan2025 110 LEAPs locked at a 370 gain a greater success than selling it all at them bottom waiting to buy back at $60

By all means. It is better to be homeless in San Diego than in the Ukraine

 

[CHGolferJim]

The 120CCs I sold early January for $2.60, I had to roll to 140 in February for $5.65 then rolled them for $9.90 to 370 Jan2025 are now worth $21.50

That’s a magnificent -1000% return too!

I am still happier to lose all my shares at $370 in 2 years than getting margin called and liquidated if SP reached $60 like all bears advocated.

I still have the option to roll back in if the trend reverses and salvage then however it’s going to be tricky.

Almost rolled back in my CCs ATM before the earnings because I was expecting a miss, then the stock skyrocketed over +20% in 2 days. That would have been a greater catastrophe than the disaster my CCs are currently in. However if we have really got out of the bear market, I consider exiting it with 100x Jan2025 110 LEAPs locked at a 370 gain a greater success than selling it all at them bottom waiting to buy back at $60

For your Jan CC, don’t you want to calculate the return including the sto premiums within each roll not just the btc closing costs?

 

[traxila]

My biggest disappointment is in myself and my inability to switch gears properly. I can talk about how I have businesses and family to manage, but you either play this game right or you HODL and not waste your time.

I saw and even commented on the great risk to the upside based on the ridiculous and obviously manipulated trashing of the SP which proved again the power of WS over retail, but instead of stopping the CCs, sitting out, or even more importantly taking a decent position with short term calls and taking in the profit, I only increased the percentages on the strikes I sold.

My one saving grace was some 150 calls I had loaded up on which I basically ended up selling to use the profit to close out a bunch of CCs. I also aggressively rolled some CCs early on hard ending up with strikes of 375 to 425 with dates of Jun 23 to Jan 24. I am happy to let the shares go at those prices, but I am confident that they will not be a problem for me either way.

But honestly guys and gals, we should have been buying calls not selling. No matter how much we strategize and study percentages about where the free money is for selling options, and the percentage moves that have never happened you cannot escape having to time the market. The market timing here was screaming to either sit out or go long hard on TSLA. I felt it in my bones, but I didn’t simply load up on calls that went up from 300 to 1000 percent yesterday.

Have two long term accounts, one margin (basically zero margin in that account) one not, that I took losses in to save shares from 2015. Ridiculous and sad on my part.

My complaint here is not about my returns yesterday, I made great money as I have large long positions. Not as much as I lost on the way down of course, deleveraging and selling as I did to save my trading account. But this last week was an opportunity to make everything back plus with eye popping returns, but no matter how many times TSLA allows this gift to come my way can’t seem to close the deal. I should really spend my time somewhere else and perhaps acknowledge I have a gambling problem and I am not a good gambler, my so called ‘risk management’ be damned.

I hope everyone managed the best they could, and I certainly hope at least a few of us here were good enough at this to make some major coin! Overall, we should have done great, as we are all bulls with long positions, and TSLA rocketed.

 

[CHGolferJim]

My biggest disappointment is in myself and my inability to switch gears properly. I can talk about how I have businesses and family to manage, but you either play this game right or you HODL and not waste your time.

I saw and even commented on the great risk to the upside based on the ridiculous and obviously manipulated trashing of the SP which proved again the power of WS over retail, but instead of stopping the CCs, sitting out, or even more importantly taking a decent position with short term calls and taking in the profit, I only increased the percentages on the strikes I sold.

My one saving grace was some 150 calls I had loaded up on which I basically ended up selling to use the profit to close out a bunch of CCs. I also aggressively rolled some CCs early on hard ending up with strikes of 375 to 425 with dates of Jun 23 to Jan 24. I am happy to let the shares go at those prices, but I am confident that they will not be a problem for me either way.

But honestly guys and gals, we should have been buying calls not selling. No matter how much we strategize and study percentages about where the free money is for selling options, and the percentage moves that have never happened you cannot escape having to time the market. The market timing here was screaming to either sit out or go long hard on TSLA. I felt it in my bones, but I didn’t simply load up on calls that went up from 300 to 1000 percent yesterday.

Have two long term accounts, one margin (basically zero margin in that account) one not, that I took losses in to save shares from 2015. Ridiculous and sad on my part.

My complaint here is not about my returns yesterday, I made great money as I have large long positions. Not as much as I lost on the way down of course, deleveraging and selling as I did to save my trading account. But this last week was an opportunity to make everything back plus with eye popping returns, but no matter how many times TSLA allows this gift to come my way can’t seem to close the deal. I should really spend my time somewhere else and perhaps acknowledge I have a gambling problem and I am not a good gambler, my so called ‘risk management’ be damned.

I hope everyone managed the best they could, and I certainly hope at least a few of us here were good enough at this to make some major coin! Overall, we should have done great, as we are all bulls with long positions, and TSLA rocketed.

What you say is certainly true to me, but I’ve made so many poor decisions buying short-term calls over the years that I’ve simply stopped, and try to avoid hindsight regrets. Only do short-term CC and buy-writes, and long-term LEAPs and core shares (and occasional medium-term CC to escape ITM CC).

 

[chudiddy]

My biggest disappointment is in myself and my inability to switch gears properly. I can talk about how I have businesses and family to manage, but you either play this game right or you HODL and not waste your time.

I saw and even commented on the great risk to the upside based on the ridiculous and obviously manipulated trashing of the SP which proved again the power of WS over retail, but instead of stopping the CCs, sitting out, or even more importantly taking a decent position with short term calls and taking in the profit, I only increased the percentages on the strikes I sold.

My one saving grace was some 150 calls I had loaded up on which I basically ended up selling to use the profit to close out a bunch of CCs. I also aggressively rolled some CCs early on hard ending up with strikes of 375 to 425 with dates of Jun 23 to Jan 24. I am happy to let the shares go at those prices, but I am confident that they will not be a problem for me either way.

But honestly guys and gals, we should have been buying calls not selling. No matter how much we strategize and study percentages about where the free money is for selling options, and the percentage moves that have never happened you cannot escape having to time the market. The market timing here was screaming to either sit out or go long hard on TSLA. I felt it in my bones, but I didn’t simply load up on calls that went up from 300 to 1000 percent yesterday.

Have two long term accounts, one margin (basically zero margin in that account) one not, that I took losses in to save shares from 2015. Ridiculous and sad on my part.

My complaint here is not about my returns yesterday, I made great money as I have large long positions. Not as much as I lost on the way down of course, deleveraging and selling as I did to save my trading account. But this last week was an opportunity to make everything back plus with eye popping returns, but no matter how many times TSLA allows this gift to come my way can’t seem to close the deal. I should really spend my time somewhere else and perhaps acknowledge I have a gambling problem and I am not a good gambler, my so called ‘risk management’ be damned.

I hope everyone managed the best they could, and I certainly hope at least a few of us here were good enough at this to make some major coin! Overall, we should have done great, as we are all bulls with long positions, and TSLA rocketed.

Gosh this is me to a "T." It's like the stock does the total opposite of what I think it will do. I sell CC the stock shoots up, I buy puts...same thing, buy calls, stock tanks. I just can't win yet I see others that hit total home runs and I'm left in the dust.

 

[juanmedina]

Tesla stock moves irrationally but 33% in a week was ridiculous. I always play earnings and this is the first time I had issues. For some reason I do not feel too worried. I have 20% of my Tesla holding on $182.5cc's from $162.5 that I rolled and I think I am going to let them go and do the wheel. There has to be a retracement at some point; macro driven or not. Cory thinks that $183 and $196 are resistances with supports at $173 and $166 plus some lower gaps. I hope we trade under the $200 range so I can free up all my shares and I don't want to do a long term roll because I feel I will find myself trapped for a year or more.

 

[MikeC]

Don’t fall for hindsight bias looking at 1000% weekly call gains. Even if you had bought them it’s almost impossible to hold them all the way with 1-2 DTE. I had short-term calls but sold them after modest increases Thursday and early Friday morning. Lost much, much more buying calls on the way down last year.

Getting burned selling calls when you know the stock price is unreasonably low is a learning experience. Yes, still much better than getting margin called on short puts, but it sucks in its own way when you’re a bull and you’re getting burned by a nice rally.

What I’ve learned from the last couple years is that the only “safe” option to sell is the one you don’t mind having exercised/assigned against you.

I’m only holding 1/25 400 CC and 600 CC now after closing out short term CCs 1:1 with recent long call LEAPS because I’ve been burned on weeklies too many times. I did sell a few 220 CC for next week which I would be okay with exercising (or closing out along with corresponding LEAPS).

 

[ReddyLeaf]

What you say is certainly true to me, but I’ve made so many poor decisions buying short-term calls over the years that I’ve simply stopped, and try to avoid hindsight regrets. Only do short-term CC and buy-writes, and long-term LEAPs and core shares (and occasional medium-term CC to escape ITM CC).

Gosh this is me to a "T." It's like the stock does the total opposite of what I think it will do. I sell CC the stock shoots up, I buy puts...same thing, buy calls, stock tanks. I just can't win yet I see others that hit total home runs and I'm left in the dust.

Agreed!!!!!!! I lost $10k buying calls for the “normal” Jan 3rd SP jump that didn’t happen, then sold -c130s later because I was worried about a further dump. Last week was another dumpster fire when I sold CCs and rolled them back IN to -c150s. Arrggg. Then, with multiple accounts, traveling, etc. I missed timed trading and only managed to roll out a few weeks at the same strike for minimal credits. If we don’t have a pullback soon, I’ll take my lumps, definitely in the five figures. Unfortunately, I decided to move everything to another brokerage with a better trading interface and will probably be locked out for awhile anyway. Well, at least the puts printed, but not enough to compensate for the CC losses (exasperated by having 2x CCs vs CSPs). Edit: At least one good thing for me was converting most of my smallest account into a ROTH IRA on the 2nd lowest closing of the year!

 

[SebastienBonny]

My biggest disappointment is in myself and my inability to switch gears properly. I can talk about how I have businesses and family to manage, but you either play this game right or you HODL and not waste your time.

I saw and even commented on the great risk to the upside based on the ridiculous and obviously manipulated trashing of the SP which proved again the power of WS over retail, but instead of stopping the CCs, sitting out, or even more importantly taking a decent position with short term calls and taking in the profit, I only increased the percentages on the strikes I sold.

My one saving grace was some 150 calls I had loaded up on which I basically ended up selling to use the profit to close out a bunch of CCs. I also aggressively rolled some CCs early on hard ending up with strikes of 375 to 425 with dates of Jun 23 to Jan 24. I am happy to let the shares go at those prices, but I am confident that they will not be a problem for me either way.

But honestly guys and gals, we should have been buying calls not selling. No matter how much we strategize and study percentages about where the free money is for selling options, and the percentage moves that have never happened you cannot escape having to time the market. The market timing here was screaming to either sit out or go long hard on TSLA. I felt it in my bones, but I didn’t simply load up on calls that went up from 300 to 1000 percent yesterday.

Have two long term accounts, one margin (basically zero margin in that account) one not, that I took losses in to save shares from 2015. Ridiculous and sad on my part.

My complaint here is not about my returns yesterday, I made great money as I have large long positions. Not as much as I lost on the way down of course, deleveraging and selling as I did to save my trading account. But this last week was an opportunity to make everything back plus with eye popping returns, but no matter how many times TSLA allows this gift to come my way can’t seem to close the deal. I should really spend my time somewhere else and perhaps acknowledge I have a gambling problem and I am not a good gambler, my so called ‘risk management’ be damned.

I hope everyone managed the best they could, and I certainly hope at least a few of us here were good enough at this to make some major coin! Overall, we should have done great, as we are all bulls with long positions, and TSLA rocketed.

Great post! Just the way I feel now. Selling calls against strikes you don’t mind getting ITM with is a cash cow, but under those strikes you should sit it out. For me it was like a month. Looking back it was a month there was no problem getting no premium income.
I fixed things by upgrading strikes of sold long term puts, but that’s a fix you rather want to avoid.

Now at 200 CC’s I’m feeling more comfortable of course and I’ll roll way before getting ITM should I wouldn’t want to lose the shares after all.

Another thing when low SP: premiums. You have a certain premium in your mind, like 2/share, but at the lows that was really close. Forget premiums and only look at percentages. Selling 15 to 20% OTM is fine most if the time (uhm unless this week…), but premiums will change every week due to IV and SP (action).

 

[BornToFly]

I was only selling CC for 0.3 (staying way OTM), and did only 1/3 of my shares. But a 39% move in a week put them ITM, forced me to roll and sell additional CC for the roll, and now all my shares are in danger. (I really don't want to roll to 2024 and eliminate all income for the rest of the year after only making 0.3 )

We have had big gains in the past after earnings. Anyone have charts on what happens the week after when the post ER Thursday and Friday are this hot? I'm worried that a good macro is still going to pull us up another 10-20% this week. I need to look up the date of the next CPI numbers and Fed meeting.....

Edit: CPI is Feb 14th

Edit2: Fed Meeting is the 1st! Next week could be big in either direction....

 

[EVNow]

Tesla stock moves irrationally but 33% in a week was ridiculous. I always play earnings and this is the first time I had issues.

I don't play earnings & delivery reports for this reason. Except this time I did ... hopefully my strategy of hedging using spreads instead of plain CC will pay off. We'll know in a week or two.

ps :

Here is some back testing using Black-Scholes spreadsheet. Note that
- IV is 60
- Doesn't account for bid/ask spread
- Using 10% OTM
- I used the last big jump over 3 consecutive weeks for testing from 11-Mar-22

As you can see
- Vertical Spread works better in this case as by 15-Apr it is no longer trapped. Covered Call is still trapped.
- In general to get x premium, we need 2x spread. I tried to pick strikes where short strike is 1x below SP and long leg is 1x above SP.
- If the SP keeps going up several weeks in a row, the difference in buy/sell strikes keeps getting doubled and becomes more like a covered call.


View attachment 879860

 

[Krugerrand]

Tesla stock moves irrationally but 33% in a week was ridiculous. I always play earnings and this is the first time I had issues. For some reason I do not feel too worried. I have 20% of my Tesla holding on $182.5cc's from $162.5 that I rolled and I think I am going to let them go and do the wheel. There has to be a retracement at some point; macro driven or not. Cory thinks that $183 and $196 are resistances with supports at $173 and $166 plus some lower gaps. I hope we trade under the $200 range so I can free up all my shares and I don't want to do a long term roll because I feel I will find myself trapped for a year or more.

Way to talk yourself into a narrative that might not happen. As ridiculous as you think the rise was this week, the elevator down the last half of Decemberish was equally as ridiculous and yet it happened. I’ve seen several other ‘ridiculous’ price movements in this stock (and others) over the last decade.

The stock doesn’t have to retrace anything, but it might. I heard about all kinds of resistance levels here just a few days ago - stock didn’t bother to pause at any of them.

This is a crooks game, gentlemen. And if you aren’t a member of the gang, you are simply guessing. If I was a gang member; I’d change the game every single time my mark thought they’d figured my game out.

And sorry, not sorry. I hope the stock is trading above $200 immediately.

 

[EVNow]

As ridiculous as you think the rise was this week, the elevator down the last half of Decemberish was equally as ridiculous and yet it happened. I’ve seen several other ‘ridiculous’ price movements in this stock (and others) over the last decade.

Right.

Here is the funny thing - when going down, because of percentages, starting at 200 the drop looks smaller. When the SP goes up from 100, the raise looks steeper.

The fact is - the drop and raise might be equally steep if you look at the chart angle.

 

[myt-e-s-l-a]

...

What I’ve learned from the last couple years is that the only “safe” option to sell is the one you don’t mind having exercised/assigned against you.

...

This !

Then rinse and repeat
(best done in IRA account for optimum tax strategy)

 

[Jim Holder]

Sharing a few lessons I wrote for myself after getting hammered having to BTC 58x 170 -CC on Friday, turning a “sure and easy” $4,200 gain into a -$14,900 loss (and could’ve been much much worse had I not BTC out when I did):

1) When selling covered calls and price action nears within a few dollars of the strike, BTC even for pennies gain and live to play another day.

2) If your share cost-basis is above the strike and you can’t afford to lose them, always go 2-3 resistance levels further above the one you think is safe. (I had 4 resistance levels above me for Friday, from 153 all the way to 167.30, yet TSLA blew past them all).

3) Beware of obscure macro effects that may cause price action to overshoot strike, such as being 31 days after many people sold for tax purposes in December and were only now able to re-purchase, possibly helping send the prices soaring.

Please share any others that you’ve learned along the way as well so that we could all at least benefit from my loss in some way.

 

[Jim Holder]

@Yoona We miss you!

 

[OrthoSurg]

My biggest disappointment is in myself and my inability to switch gears properly. I can talk about how I have businesses and family to manage, but you either play this game right or you HODL and not waste your time.

I saw and even commented on the great risk to the upside based on the ridiculous and obviously manipulated trashing of the SP which proved again the power of WS over retail, but instead of stopping the CCs, sitting out, or even more importantly taking a decent position with short term calls and taking in the profit, I only increased the percentages on the strikes I sold.

My one saving grace was some 150 calls I had loaded up on which I basically ended up selling to use the profit to close out a bunch of CCs. I also aggressively rolled some CCs early on hard ending up with strikes of 375 to 425 with dates of Jun 23 to Jan 24. I am happy to let the shares go at those prices, but I am confident that they will not be a problem for me either way.

But honestly guys and gals, we should have been buying calls not selling. No matter how much we strategize and study percentages about where the free money is for selling options, and the percentage moves that have never happened you cannot escape having to time the market. The market timing here was screaming to either sit out or go long hard on TSLA. I felt it in my bones, but I didn’t simply load up on calls that went up from 300 to 1000 percent yesterday.

Have two long term accounts, one margin (basically zero margin in that account) one not, that I took losses in to save shares from 2015. Ridiculous and sad on my part.

My complaint here is not about my returns yesterday, I made great money as I have large long positions. Not as much as I lost on the way down of course, deleveraging and selling as I did to save my trading account. But this last week was an opportunity to make everything back plus with eye popping returns, but no matter how many times TSLA allows this gift to come my way can’t seem to close the deal. I should really spend my time somewhere else and perhaps acknowledge I have a gambling problem and I am not a good gambler, my so called ‘risk management’ be damned.

I hope everyone managed the best they could, and I certainly hope at least a few of us here were good enough at this to make some major coin! Overall, we should have done great, as we are all bulls with long positions, and TSLA rocketed.

When I let hingsight bias in, I find myself stupid for not buying OTM weekly calls like there is no tomorrow. However MauroBianchi, Chicken Genius Singapore and a lot of other people who called the 60%+ drop convinced me that it was also going to 60-80 range. I am just happy I didn’t sell all my shares to buy puts. Instead I bought LEAPS when the SP was $110. With hindsight bias at work. I should have sold at the top to buy back at the bottom but with all the FUD around and the bulls turning bears I am just happy I didn’t sell during capitulation while my broker was calling me every day for more money. This year I learned that next time we are near ATH and there is a change of trend from uptrend to congestion zone then start of a down trend I will take profit and sell. That’s what I learned this year. I am no more a HODLer. This will have turned me into a trend trader.