-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
These are good questions and I would like better answers for you than I actually have.
The first part of my answer is that, despite knowing how incredibly important they are, I ignore the impact of interest rates on the share price. It would be most accurate to say that I do consider changes in interest rates and their impact on the short term price of the company. But for a "fair" market valuation - I consider this a long term investment question, and for that - I ignore interest rates. That's not necessarily a good choice
For my long term view of the company I also do not have a financial spreadsheet or analysis of income / units / profitability / .. I think that the best way to think of me is as a story investor. I invest in the big picture, understand enough finance and accounting to follow company financials and confirm or deny that the company is on track financially, and don't sweat the rest of it.
The story I see right now is that the company spiked to $400 a year ago (and a bit). I think the share price got well ahead of the company at that point. However it didn't get 3x ahead, or now at $210, it wasn't 2x over priced a year ago. Yes interest rates are up, but I tend to believe that for a long term buy and hold, growing as fast as Tesla is, as profitably as Tesla is, whether interest rates are 0, 5, or 10% isn't all that meaningful. It actually is, but as a long term buy and hold investor I mostly discount it. Over a 5+ year time horizon, whether the interest rates this year are 4%, 5%, or 8% I think will matter very little.
NOT-ADVICE
Yes I expect TSLA to go over $300 this year. That would be $900 pre-split, and that doesn't sound unreasonable to me. If we were to live between 150 and 300 the rest of the year, that wouldn't surprise me. If we blew the top off and ran over $400 on our way to something much higher, that wouldn't be a great shock to me.
Something like 250-350?
I still consider every share price <250 to be low. That doesn't mean we can't drop below 250 - only that we won't/can't go a lot below (say 200 at the lowest end that can be sustained). Therefore yes, I still consider 210 to be too cheap.
Real point for the moment - I still consider 210 to be too cheap to hold, but we're clearly a lot closer to a fair value than when we were $110. It's reasonably accurate to say that I'm not ready to sell cc yet because the strikes I would be selling aren't strikes I am ready to take assignment on. But we're getting close.
Thanks all for the replies.
Outside of transaction fees, if any, you only have pennies to lose in exchange for peace of mind.
jeewee3000
Active Member
Nostalgia. We had this discussion many times in the early days of this thread.
Bottom line: if far OTM the risk is very low and you can save yourself a few dollars by not closing the cc's out.
However, if SP is remotely close to the strike price (say 10%) than it's better to close out cc's IMO. You do risk execution should the stock do something crazy after hours.
Edit: @intelligator replied already
At 213 I closed 20 -p195 2/24 for $2.80, which I had sold two days ago for $12.69. That was lucky timing (for now). I'm waiting for a new entry point.
The only option position I currently have is 90 -c666.67 1/19/24, which is the result of a case of writing calls gone wrong when we were are 365 last March. At that time I rolled them out by 22 months. They brought in a lot of premium (@55.40 post-split!!), but what I don't understand is that they are still worth $3.90 with half the time gone and at a much lower SP. Do people really expect the SP to more than triple within 11 months?
The only option position I currently have is 90 -c666.67 1/19/24, which is the result of a case of writing calls gone wrong when we were are 365 last March. At that time I rolled them out by 22 months. They brought in a lot of premium (@55.40 post-split!!), but what I don't understand is that they are still worth $3.90 with half the time gone and at a much lower SP. Do people really expect the SP to more than triple within 11 months?
jeewee3000
Active Member
Well in 2020 the stock price went x7 or so, so who knows
.But I'm guessing those calls are safe.
You could convert half of them to $85 puts (same expiration, same premium) but then you'd be stressed in case of a return to $100 of course.
Well in 2020 the stock price went x7 or so, so who knows
But I'm guessing those calls are safe.
You could convert half of them to $85 puts (same expiration, same premium) but then you'd be stressed in case of a return to $100 of course.
Converting the calls to puts would be an idea, but then I could be locking in for 11 months (max) the 400k I'm playing with. I like the short term game better
Rolled my puts, got bored thinking about them, the deal seemed good enough: BTC 15x 2/17 -p215 -$8.35 (+$3 profit) -> STO 15x 2/24 -p200 +$4.8, so I gave back $4 for the better strike, which is much more comfortable gong forwards (as mentioned I try to move away from straddles to strangles)
110: Delta: 0.89 with a $5 bid ask spread
370: Delta: 0.42 with a $0.70 spread
They are both low volume so the change in value is highly influenced by when the two trades occured.
Edit: Vega on the 370 is about double also, so if IV dropped that would also added to the disparity.
Last edited:
Options volume (where contracts > 500) , as of noon, call to put ratio 3:1
What follows is definitely NOT advice. Many may recall that I have been selling ATM straddles since about Sept/Oct, all cash/share-backed. That strategy worked fairly well last year because it allowed me to sell CCs that I never would (and now should) have because of the risk of losing my shares. I rolled down each week, and any extra cash earned (or realized from needing less cash to back the CSPs) was used to buy TSLA shares. This allowed me to buy too many shares and thus my put/call ratio went from 1:1 to 1:2. All was great until the SP turned around Jan 8th.
Unfortunately, I kept selling ATM CCs and was caught in the run with DITM CCs that cannot be rolled for strike improvement without a large debit. With fewer CSPs than CCs, I was earning 4-5x less premium on puts than I was losing on the calls. Adding to my troubles was moving to a new brokerage that locked me out of trading for two weeks. In anticipation of this, I rolled early out several weeks, but this was before the big gap up run near 150s.
I’ve tried several trades to salvage this, including buyback some CCs at huge loses using the cash from the CSPs, roll CCs for credit at same strike, roll for debit at higher strikes, and selling BPS initially then paired with BCS to form ICs. I’ve also tried timing trades, but most of the run up occurs after hours (hmmmm, MMs trying to neutralize the options market) and in the first hour of trading which I’ve missed because of sleeping in.
So today I capitulated and pushed everything out to March 3rd which took a bit of juggling. I had a bunch 180/190/250/260 ICs and got nervous two days ago, and I stupidly rolled the BCS side down to 200/210. In hindsight, I should have rolled everything out a week and just lowered the BPS side. Furthermore, thinking more clearly, I never should have opened the BCS side because it does not offset my ATM CCs.
So, anyway the trade was to close the OTM 2/17 BPS side, flip roll the ITM 2/17 BCS to 3/3 ITM BPS 210/220, then pair with a 3/3 260/270 BCS. All of the CCs were rolled to 3/3 at same strikes for credits. The residual cash was used for ATM 2/24 CSPs. Unfortunately, I still have CCs at 150, 155, 200, 215, and 220. I will continue to roll and widen the ICs until they finally expire.
This whole thing has been a mess and forced me into reactive trades that can still go bad. I’m starting to realize that the only good options trades are those that expire worthless on Friday. Once I clean up this mess, no more options selling for me until two days before expiration. Furthermore, TSLA is no longer following the macros; it now seems to be the inverse of the macros as people finally understand it is growing while everyone else is suffering a recession. This is a new paradigm from the 2022 narrative. Great days ahead for Tesla and TSLA, which I hope to eventually benefit from. As always, GLTA.
Unfortunately, I kept selling ATM CCs and was caught in the run with DITM CCs that cannot be rolled for strike improvement without a large debit. With fewer CSPs than CCs, I was earning 4-5x less premium on puts than I was losing on the calls. Adding to my troubles was moving to a new brokerage that locked me out of trading for two weeks. In anticipation of this, I rolled early out several weeks, but this was before the big gap up run near 150s.
I’ve tried several trades to salvage this, including buyback some CCs at huge loses using the cash from the CSPs, roll CCs for credit at same strike, roll for debit at higher strikes, and selling BPS initially then paired with BCS to form ICs. I’ve also tried timing trades, but most of the run up occurs after hours (hmmmm, MMs trying to neutralize the options market) and in the first hour of trading which I’ve missed because of sleeping in.
So today I capitulated and pushed everything out to March 3rd which took a bit of juggling. I had a bunch 180/190/250/260 ICs and got nervous two days ago, and I stupidly rolled the BCS side down to 200/210. In hindsight, I should have rolled everything out a week and just lowered the BPS side. Furthermore, thinking more clearly, I never should have opened the BCS side because it does not offset my ATM CCs.
So, anyway the trade was to close the OTM 2/17 BPS side, flip roll the ITM 2/17 BCS to 3/3 ITM BPS 210/220, then pair with a 3/3 260/270 BCS. All of the CCs were rolled to 3/3 at same strikes for credits. The residual cash was used for ATM 2/24 CSPs. Unfortunately, I still have CCs at 150, 155, 200, 215, and 220. I will continue to roll and widen the ICs until they finally expire.
This whole thing has been a mess and forced me into reactive trades that can still go bad. I’m starting to realize that the only good options trades are those that expire worthless on Friday. Once I clean up this mess, no more options selling for me until two days before expiration. Furthermore, TSLA is no longer following the macros; it now seems to be the inverse of the macros as people finally understand it is growing while everyone else is suffering a recession. This is a new paradigm from the 2022 narrative. Great days ahead for Tesla and TSLA, which I hope to eventually benefit from. As always, GLTA.
Last edited by a moderator:
Watch the close today. IMO, if it closes strong, then tomorrow should be a gap up & MAYBE blow off top. If meh, then watch for a gap down.
EDIT: option flow is still bullish although IV peaked an hour ago. That's why I need to watch the close instead of calling for new high tomorrow right now.
Last edited:
As I mentioned upthread, I flipped my 22x 2/3 -c130's to 11x 7/21 -250 straddle for break-even (give or take a couple $1000's), this was when the SP was around around $180 and each -c130 was around $50 (approximate numbers) - there was almost no extrinsic in the calls and no straight roll up-and-out
On the straddle, the -p250's paid $82 and the calls $11.1 -> I chose a put-heavy strike as I'm bullish in the stock and this expiration had quite a bit of extrinsic on the put side. Even now, with the SP $212, the puts are $56, so very safe from early assignment
I figured the puts would like go OTM and the calls ITM, but with the calls I'll normally have plenty of time to roll them up and out as the SP approaches $250 - of course if we get an overnight 20% gap up from here that might become more difficult, but 11x -c250 ITM is way better than 22x -x130 DDITM
I note there are 13403 -c130's open for expiry this week, I think a lot of folks got caught-out!!
So, for instance, today, if you had a -c150 still open (14995 OI), premium ~$62, you could flip these to July -p260's for $64, only issue there is there's not much liquidity (63 OI), the -p250's are more traded, but you'd fall slightly short on the premium, however, straddle them with a call and you'll get and extra $23, if you're stressed on the call side, then a July -c300 would give you $13
Struggling to get over 214.88 a few times. Might be local top. I was hoping for at least 230-252 before retracement.
If down from here, does that spoil the new high late March/April?
huh? No I never said new high late March. Only said if it corrects, it will rise back up to near 213 rather than stay low near 160 before Q1 P&D. Regardless, TSLA is not done yet. Even if 215 is the top or 225 tomorrow, after consolidating / correcting it will rise much higher in 2023.
Thanks. No worries, it wasn’t you who said new high March/April, it’s just from the aggregate of many TA themes pointing to 252 as a top, but could retrace before it gets near there.
I STO 30x $280 -CC for Feb-24 (9 days out). They seem quite safe at this point.
Now, I'm just guessing based on what's happened this week. TSLA is on day 2 of the 3 day pump script. Yesterday, day 1 - strong pump without much elevated IV. Today, day 2 - choppy action with much higher IV. Tomorrow, day 3 - gap up & top made. It could do a shallow pullback before creeping higher. I don't know.
However, looking at the entire market. Stuff like AMC, RIVN, LCID, etc... all shooting higher today while SPY is flat. So a market-wide short cover/squeeze today on heavily shorted names. The days following the squeeze favor a pullback at a minimum. I'm also watching other markets such as US10Y and DXY. Everything else doesn't scream risk-on so this rally on heavily shorted stocks seems to be exhaustive and on borrowed time. Not bearish on TSLA. Of course it is worth 210 and much more, but that is the current state of the market. Can TSLA defy gravity like it did in September? Maybe. If it was me, instead of putting TSLA, I'd put the market instead.
Last edited:
100%
It’s definitely been a strange kangaroo market recently and the music might stop at any moment but TSLA might keep hopping lol.
Are you selling any covered calls on TSLA. What ranges you’re looking at if you are for say next week expiration, or for those of us who are able to open more?
If you're willing to let them shares go, just do 260 for beer money. Right now I'm still selling 210P exp next week. Yes, the rally is coming to an end, IMHO, but it doesn't have to be an abrupt reversal. I'll have to see the next reversal candle before closing these puts.
Similar threads
