Wiki Selling TSLA Options - Be the House

[traxila]

This - the drop from 300 to 200 was a self-inflicted wound, missing on Q3 deliveries, then all the Twitter mess, selling more shares on open market, etc., not saying it was justified, but you can see some reasons behind it

Falling from 200 to 100, that was unjustified, pure manipulation by Wall Street to flush-out retail with margin calls then suck up shares cheap, all this rally has done is correct that

From here, who knows, but it's all good news for Tesla right now and the growth-story is back on again. Lots of institutional buying which would accelerate if Moodys were't playing their games. FOMO all over the place. Short squeeze, Gamma squeeze, Investor Day, it's all happening

Interest rates? Who cares. Tesla have little or no debt, don't need to raise, will grow as much as they can regardless of the FED. All smoke and mirrors, which the bears cling onto and spout at every opportunity

ICE is finished, it's over, regardless of the legislation progressively banning them, people don't want them any more. Bet against this and to be honest you're a bit stupid, well more than a bit

I would not be so quick to discount the power of macros and interest rates over TSLA.

 

[dl003]

The bounce in TSLA did indeed go much higher than the one seen in SEDG and now we have a bearish divergence on the daily timeframe. However, it has to be confirmed by a gap down & the gap not filled on the same day to call the top at 215. The consolidation phase seen in SEDG is considered bullish and I'm expecting the one in TSLA to be even more bullish.
View attachment 907540

If today's bear gap cannot be filled today, the downside target is going to be 187 before bouncing.

 

[Max Plaid]

I would not be so quick to discount the power of macros and interest rates over TSLA.

Sure, but the interest rate story is coming to the end now, maybe rates stay higher for longer, maybe the FED to two more 0.25's instead of the one, but the big hikes are in the rear-view mirror - unless there's a dramatic turn-around in inflation, which is highly unlikely

I highly recommend Sasha's take on where we're heading:

 

[dl003]

If today's bear gap cannot be filled today, the downside target is going to be 187 before bouncing.

That was quick. TSLA looks like it's not ready to go down just yet. Still holding my short puts.
Bought 225/240/255 call butterfly & sold 192.5P for 2/24. Small position.

 

[scubastevo80]

You are ignoring the fact that we should have never hit that low. TSLA should still be 300+ right now if you look at its earnings and growth, and compare to other companies like AMZN, etc.

I'm not going to say that macros might save my 227.5CC for tomorrow..., because doing so could jinx it....

Right, but many are ignoring the fact that from a valuation standpoint, we never should have been that high if the fed wasn't buying assets hand over fist. I am going to focus more on my own valuation assessment of what TSLA is worth and buy/sell based on that, and not the neverending opinion that TSLA will be a gazillion dollar company in 10-20 years. As an aside, everything else I'm looking at is now out of my buying range, so I'm not a buyer of anything at this point (except perhaps GOOGL and a select energy company or two). If you look at my recommendations in the "other tech stocks" post, I have sold the other companies I liked late last year (e.g. PERI, BLDR, etc).

 

[dl003]

Personal opinion - everyone is ignoring the fact that TSLA is up over 100% in under 2 months from the lows. The market has gone from it could be a mild landing or bad, to its a mild landing and risk on. There's been so much "chartology" attempting to justify the continued run of all companies, TSLA included, that earnings/valuation realities are detaching from stock prices yet again. I certainly could be jaded here (still rolling 152.5 calls) but I just can't justify a rally of this magnitude amidst higher interest rates.

I agree that TSLA is up over 100% in under 2 months. There is a lot of room to the downside if/when some seriously bad piece of news surfaces.
I disagree that the stock price is detached from reality. We're trading at what, 40x 2023 EPS? PEG should still be under 1 at this point.
Short term movements in TSLA has always been about the story. Right now the story is TSLA just turned the enemy in the White House into an ally. This reduces the risks of undue regulatory crackdown and future exclusion of TSLA from federal incentives. It certainly means a lot to many people. TSLA growth has always been there. It crashed partly because people started questioning TSLA's ability to continue that growth. Now, people are believing in it again due to recent developments.

 

[UltradoomY]

I agree that TSLA is up over 100% in under 2 months. There is a lot of room to the downside if/when some seriously bad piece of news surfaces.
I disagree that the stock price is detached from reality. We're trading what, 40x 2023 EPS? PEG should still be under 1 at this point.
Short term movements in TSLA has always been about the story. Right now the story is TSLA just turned the enemy in the White House into an ally. This reduces the risks of undue regulatory crackdown and future exclusion of TSLA from federal incentives. It certainly means a lot to many people. TSLA growth has always been there. It crashed partly because people started questioning TSLA's ability to continue that growth. Now, people are believing in it again due to recent developments.

Also - like last year down fight the trend.

Trend is up (till it's not) and there isn't anything but good news on the 3 month horizon -
Model Y sold out for first Q with 45 days left in the Q
Investor day
Revamped Model 3
HW4
Master Plan 3 - gigantic scale
New Gigas
Cybertruck final reveal
P&D report
Earnings

Fight your feelings all you want but don't fight the trend!

 

[dl003]

if you are stuck with ITM CC, I again strongly recommend playing my butterfly call & short put strategy. If you bought this last week, each set should have easily turned $0 into $500 - 600 at various points during this week for very very little risk. The potential gain is higher than just selling puts.

For next week I'm doing 225/240/255 and short 192.5P. If you are wary about the trend turning against you but stilll wanna follow it, this is the way. Even if the trend turns against you, as I expect it to at some point - nothing goes up forever, mark my words: TSLA will go up much higher than 215 in 2023. Worst that can happen is you're stuck with some short puts for a couple of weeks.

Just my stream of thoughts:

I've noticed a different kind of divergence: stock price & IV. This Monday we traded and closed higher than last Friday but somehow call IVs were lower, especially considering Monday tends to kick off the week with higher IVs. This may mean that bullish bets via options are drying up. The stock may still make another high to finish the ending diagonal pattern, but this divergence, in my opinion, affirms that should mark the top of wave 1.

My way of hedging against unexpected news, ie Hertz 2.0:

If you are stuck with ITM CCs, consider this strategy:

View attachment 904391

What we're looking at is a 200/210/220 call butterfly paired with a 160 short put. It can give you protection against a "melt-up" scenario in which macro news becomes rosy for the next month or 2. If TSLA close next week around 210, you'll profit $10 per contract. To pay for this, sell a 160 put. Should be ok according to my TA. If TSLA drops, your ITM CCs will get rescued. Win-win for little risks.

At this stage, one should be more afraid of "melt-ups" than some insane spike. Internals show that bullish bets are drying up so any spike should trigger massive profit taking. Melt-ups, on the other hand, are much more annoying to deal with. Now, if BRK files its 13D saying that it bought TSLA, buckle up. Nothing can protect you from something like that, but we do what we can with the tools we have.

 

[Jim Holder]

if you are stuck with ITM CC, I again strongly recommend playing my butterfly call & short put strategy. If you bought this last week, each set should have easily turned $0 into $500 - 600 at various points during this week for very very little risk. The potential gain is higher than just selling puts.

For next week I'm doing 225/240/255 and short 192.5P. If you are wary about the trend turning against you but stilll wanna follow it, this is the way. Even if the trend turns against you, as I expect it to at some point - nothing goes up forever, mark my words: TSLA will go up much higher than 215 in 2023. Worst that can happen is you're stuck with some short puts for a couple of weeks.

Re “Bought 225/240/255 call butterfly & sold 192.5P for 2/24”

For those of us unfamiliar with setting up a butterfly spread, what does it look like as a trade, (buy which/sell which/call or put/qty, etc.). And is it too late to open one today?

Thanks!

 

[dl003]

Re “Bought 225/240/255 call butterfly & sold 192.5P for 2/24”

For those of us unfamiliar with setting up a butterfly spread, what does it look like as a trade, (buy which/sell which/call or put/qty, etc.). And is it too late to open one today?

Thanks!

A butterfly call is a combination of 2 call spreads, 1 bullish & the other bearish
Buy 225/240 bull call spread
Sell 240/255 bear call spread
Maximum profit is realized if the stock closes exactly at 240 on 2/24. Partial profit is realized if the stock closes anywhere else between 225/255.
It's not too late to open these. This morning I opened them during the dip for $0 (including the short puts). They're now 0.48 each but if you are stuck with ITM CCs, this is the price to pay to somewhat have a chance at catching up.

 

[Jim Holder]

A butterfly call is a combination of 2 call spreads, 1 bullish & the other bearish
Buy 225/240 bull call spread
Sell 240/255 bear call spread
Maximum profit is realized if the stock closes exactly at 240 on 2/24. Partial profit is realized if the stock closes anywhere else between 225/255.
It's not too late to open these. This morning I opened them during the dip for $0 (including the short puts). They're now 0.48 each but if you are stuck with ITM CCs, this is the price to pay to somewhat have a chance at catching up.

Thank you

 

[euro2012]

Forgive me to ask the kindergarten level question, but how does this strategy help itm cc? Are you generating premium to eventually buyout the itm cc?

 

[dl003]

Forgive me to ask the kindergarten level question, but how does this strategy help itm cc? Are you generating premium to eventually buyout the itm cc?

First and foremost, assuming your CC is not too ITM, you can use the profit to add to the roll every week for better strike improvement.

 

[SebastienBonny]

A way better strategy to fix CC is to launch a so called recall…

 

[vikings123]

Looks like the recall news was the catalyst for the drop. TSLA holding up relatively OK. I'm not seeing any heavy put buying on option flow.

Seems like 208/209 is good resistance.

 

[vikings123]

A way better strategy to fix CC is to launch a so called recall…

Now imagine if we can close green despite this fake recall lol.

 

[UltradoomY]

A butterfly call is a combination of 2 call spreads, 1 bullish & the other bearish
Buy 225/240 bull call spread
Sell 240/255 bear call spread
Maximum profit is realized if the stock closes exactly at 240 on 2/24. Partial profit is realized if the stock closes anywhere else between 225/255.
It's not too late to open these. This morning I opened them during the dip for $0 (including the short puts). They're now 0.48 each but if you are stuck with ITM CCs, this is the price to pay to somewhat have a chance at catching up.

I have opened something close - my +P's are the $195 (higher OI and closer to the money) and I did $220 / $240 / $250

With the drop I was able to close half the $240's....

Total cost was $0.35 each and the additional $1.20 each to close half the $240 calls - not sure what this is even called now that I have an equal amount of calls laddered....

 

[treb]

Maximum profit is realized if the stock closes exactly at 240 on 2/24. Partial profit is realized if the stock closes anywhere else between 225/255.

Curious - how do you manage these if you're approaching max profit? Do you let all position expire on 2/24, or do you close the positions before expiration?

 

[UltradoomY]

Curious - how do you manage these if you're approaching max profit? Do you let all position expire on 2/24, or do you close the positions before expiration?

Not speaking for @dl003 but if I am approaching max profit - I take that profit.....
Gotta have fast fingers lately.

 

[dropgems]

Where do you guys think we close at today?