Wiki Selling TSLA Options - Be the House

[ReddyLeaf]

Kind of how I'm feeling this morning. I decided to close my 160/150 BPS expiring this Friday. Two days ago I had a 2/3rds profit I decided to wait to take; today I get out with a gain, but more like 20%. Despite the position being OTM right now and on track for full gain in 2 days, I don't want to risk another $5-10 down day tomorrow.

Besides, a big down day is a good day to open a new position! It was the main reason I was thinking about closing a couple of days - so I'd be ready to open the position for next week. Ah well.

EDIT: Aren't I feeling smart right about now.

I feel the pain. Wish I has closed out yesterday. Still holding and wishing. I’m not the smartest light bulb.

I closed my 233.33 and 220 CC for tomorrow and I sold 250x CC for tomorrow for 187.5 and 190 strikes for 0.1 = $2500. Also sold 40x 160P for next week for $2.5 on the shares I sold yesterday at 183. Nice little end of week bonus. Will more than cover the cost of the Angel Flight I’m doing Saturday to fly a cancer patient and her husband home after her treatment tomorrow.

I knew we are in two different worlds. I’m worried about selling 10x CCs. But on a more serious note: THANK YOU for your service. I know a few other pilots and you are definitely an angel. I wish I could help, but my flying skills (which you really don’t want to see), are significantly worse than my options trading skills (which as you have probably already ascertained, are piss poor, at best).

———————————————————————————————————————
Well, I wish I had something clairvoyant and/or informative to provide regarding today’s trading, but alas, I’ve got nothing. Once again, I’m just another stooge that Wall Street has managed to trick. Last ER (January) I sold ATM CCs, to my detriment. Now this week, I have been buying back 1-2x CCs at every drop, thinking I was getting a good deal, only to find out that there was another drop around the corner. So unfortunately, about half of my shares were uncovered going into todays 10% drop. I’m still trying to get back to selling ATM straddles like @Max Plaid but it will be quite awhile. Even buying May +p150s doesn’t really seem to help, as those aren’t really appreciating like I expected. Oh well, still holding 150/160 BPS but rolled 155/165 BPS to next week 150/160 BPS. Hoping that the uptick rule helps the SP stay above 160 Friday.

 

[Jim Holder]

I have a question re a tentative CC plan:

I have 7,600 shares (not on margin) with an average CB of $283. I was thinking for tomorrow or Monday if we lose $159 and seems we’re heading further down, to STO (yes, sell) a LEAP for 3/15/24 -C300 for $44k, Delta 0.358 per contract.

My intention is to BTC for nice gains ($10k-$40k) at wherever SP lands and free up the shares again.

For risk management, if the SP reverses upward I plan to BTC immediately (manual stop loss). If it gaps up and runs away, then I just sit and wait until March and let my shares be called away. I don’t mind.

(Bonus: Since the call is for $300 strike, and I really only need $283 to cover my shares then I make an extra $121k if it gets exercised!)

I’m feeling clever about this plan but I would like to lean on all of your experience to see if there’s anything I’m missing before I take the move.

Thank you

Here’s a link to the CC to view on OptionStrat:

TSLA Mar 15th '24 300 Short Call (50) | OptionStrat

View my options strategy on OptionStrat

optionstrat.com

 

[Max Plaid]

I have a question re a tentative CC plan:

I have 7,600 shares (not on margin) with an average CB of $283. I was thinking for tomorrow or Monday if we lose $159 and seems we’re heading further down, to STO (yes, sell) a LEAP for 3/15/24 -C300 for $44k, Delta 0.358 per contract.

My intention is to BTC for nice gains ($10k-$40k) at wherever SP lands and free up the shares again.

For risk management, if the SP reverses upward I plan to BTC immediately (manual stop loss). If it gaps up and runs away, then I just sit and wait until March and let my shares be called away. I don’t mind.

(Bonus: Since the call is for $300 strike, and I really only need $283 to cover my shares then I make an extra $121k if it gets exercised!)

I’m feeling clever about this plan but I would like to lean on all of your experience to see if there’s anything I’m missing before I take the move.

Thank you

Here’s a link to the CC to view on OptionStrat:

TSLA Mar 15th '24 300 Short Call (50) | OptionStrat

View my options strategy on OptionStrat

optionstrat.com

Not sure where you're getting $44k from, premium for March 2024 -c300 is $5.8 ($5800) as of close yesterday...? If they were priced $44 then I'd yolo my whole shares on them!

 

[SebastienBonny]

Hoping for a little bounce today. Not the first time initial reaction was pretty bad to recover a bit one day after.
Watching Max Pain somewhere between 180 and 185 was the spot to finish the week, but volume suggests this could have shifted to 160-170 for the week.

Debating whether selling CC for next week or 2 weeks (better premiums at higher strike) and adding another one next week for 2 weeks after (like @Max Plaid said I think).

 

[Tachyon]

Not sure where you're getting $44k from, premium for March 2024 -c300 is $5.8 ($5800) as of close yesterday...? If they were priced $44 then I'd yolo my whole shares on them!

I am sure he meant 580 per contract x 76 contracts
He said he is holding 7600 shares

 

[jeewee3000]

I have a question re a tentative CC plan:

I have 7,600 shares (not on margin) with an average CB of $283. I was thinking for tomorrow or Monday if we lose $159 and seems we’re heading further down, to STO (yes, sell) a LEAP for 3/15/24 -C300 for $44k, Delta 0.358 per contract.

My intention is to BTC for nice gains ($10k-$40k) at wherever SP lands and free up the shares again.

For risk management, if the SP reverses upward I plan to BTC immediately (manual stop loss). If it gaps up and runs away, then I just sit and wait until March and let my shares be called away. I don’t mind.

(Bonus: Since the call is for $300 strike, and I really only need $283 to cover my shares then I make an extra $121k if it gets exercised!)

I’m feeling clever about this plan but I would like to lean on all of your experience to see if there’s anything I’m missing before I take the move.

Thank you

Here’s a link to the CC to view on OptionStrat:

TSLA Mar 15th '24 300 Short Call (50) | OptionStrat

View my options strategy on OptionStrat

optionstrat.com

I understand you hatched this plan to try and make some extra profit on the way down to $156 or however low we go.

Personally I wouldn't pull the trigger on a plan like this since it goes against one of my main principles I've been applying since my personal capitulation (November 8th, 2022, I'll never forget I think).

What principle you say? Sell calls into SP strenght, sell puts into SP weakness. NOT VICE VERSA.

Your plan may play out perfectly, but as @dl003 correctly points out: the lower we go, the more % chance we are closer to the bottom than to a (local) top. At these levels ($160's) I'm not confident we will drop very far unless macro happens.

Therefore, after the Q1 2023 ER my current plan is to hold off on selling calls until I see a bounce.

I've thought of selling for example $200cc's monthly from now on, blindly (whatever the current SP) but this only results in tiny premiums. I believe it to be less risky and more profitable to patiently await SP spikes to sell calls into once in a while, whenever the opportunity rises. The extra premium from selling at a higher SP generally outweighs the deliberate weekly/monthly/periodically selling of cc's at tiny premiums.

Not advice, just sharing my own views regarding risk/reward of cc's.

 

[intelligator]

OI shift for 4/21 expiry from the 20th. c170, c165, c200 increased , p195, p185, p200 decreased. Not much action above or below range.

Same chart, this one for the 28th, measuring difference in OI yesterday to today, narrowed to the range where there is notable shift.

c170 stands out, c175, c180, p160, p155 each increased. If we get a decent pop, I may open -c180 , maybe -c175 for next week, watch and adjust as needed. GLTA!

 

[Jim Holder]

Not sure where you're getting $44k from, premium for March 2024 -c300 is $5.8 ($5800) as of close yesterday...? If they were priced $44 then I'd yolo my whole shares on them!

7,600 shares = 76 contracts x $580 = $44.08k

 

[Jim Holder]

I am sure he meant 580 per contract x 76 contracts
He said he is holding 7600 shares

Correct. Thanks.

 

[Jim Holder]

Sell calls into SP strenght, sell puts into SP weakness. NOT VICE VERSA.

I agree with this rule and I follow it too. Similar to the rule never short in the hole. My plan is to STO when we break next support ($160/159) and heading down, as this may be a local top and will continue down to $140’s (and below due to any reason). Cut if not.

A bounce to $170 first will muddy things because perhaps we don’t drop further from there.

Decisions, decisions…

 

[jeewee3000]

I agree with this rule and I follow it too. Similar to the rule never short in the hole. My plan is to STO when we break next support ($160/159) and heading down, as this may be a local top and will continue down to $140’s (and below due to any reason). Cut if not.

A bounce to $170 first will muddy things because perhaps we don’t drop further from there.

Decisions, decisions…

With "never short in the hole" do you mean don't try to roll out of losing positions? (for example by rolling more than a year away?) If not, please do elaborate. The greatest strength of this thread is us learning from others scar-tissue.

 

[CHGolferJim]

Considering shifting CC sales to $20 OTM biweeklies until things turn around which could be awhile. There seems to be a pattern of late-week doldrums followed by occasional Monday bumps, so I’ll wait for that this week. Only open CCs as of today are Jul’23$200 (from an early year 4-month roll).

 

[Jim Holder]

With "never short in the hole" do you mean don't try to roll out of losing positions? (for example by rolling more than a year away?) If not, please do elaborate. The greatest strength of this thread is us learning from others scar-tissue.

“Never short in the hole” means to not open new short positions after a stock already took the plunge. Many people see a stock trending down and then rush to open shorts to catch some profit, not realizing that it may already have fallen to where it’s going to go. And then they get punished as the stock turns back up.

 

[Max Plaid]

I am sure he meant 580 per contract x 76 contracts
He said he is holding 7600 shares

Ah, OK... doesn't seem like much of a ROIC to me...

Still thinking how to play this from here... -c170's perhaps, given that I have 2000 shares with a net purchase price of 169, they can sacrificed in the case of a pop

And maybe some -p150's for some gravy?

I'm going to start closing out the July -p250's, I think there's zero chance they improve much, will use the weekly premiums to preserve cash balance

 

[juanmedina]

I agree with this rule and I follow it too. Similar to the rule never short in the hole. My plan is to STO when we break next support ($160/159) and heading down, as this may be a local top and will continue down to $140’s (and below due to any reason). Cut if not.

A bounce to $170 first will muddy things because perhaps we don’t drop further from there.

Decisions, decisions…

If you comfortable with that do it. I wish I had done something similar when the stock got to $217 because the premium on LEAPs was super hot.

Last year and this year we have been very wrong. Troy has been death on with this projections and no matter the good news like the credit upgrades the stock cannot catch any traction. I am really thinking about trading the $180-170 range aggressively. I sold the 05/15 $175 yesterday and close them soon after after making $2 hoping for a bounce to sell them again.

 

[Max Plaid]

With "never short in the hole" do you mean don't try to roll out of losing positions? (for example by rolling more than a year away?) If not, please do elaborate. The greatest strength of this thread is us learning from others scar-tissue.

This was the mistake made when we dropped to 100, but a big move up from here, well doesn't seem that likely. Doesn't mean it won't happen, but I'm sure we'd hit strong resistance at various points...

And again, don't commit all you stock to contracts, if you just put 20% in play then you can roll those out and still trade the next week

 

[rikkert]

Do we dare to say 160 might be the bottom?
If I understand the alternative uptick rule correctly, shorting under the last shorting price of yesterday is forbidden today, so that could have impact on the price today.

 

[mongo]

Do we dare to say 160 might be the bottom?
If I understand the alternative uptick rule correctly, shorting under the last shorting price of yesterday is forbidden today, so that could have impact on the price today.

Alternate uptick rule means that they can't sell shares at the bid price. This prevents driving the stock down with sales. However, it doesn't prevent capping the stock price at one cent over the current bid, nor slowly accumulating shares and then dumping them in bulk.

 

[Right_Said_Fred]

Premiums for next week are pretty dramatic. Not an invitation to open a position.

 

[Jim Holder]

Premiums for next week are pretty dramatic. Not an invitation to open a position.

The option chain for next week looks like $155-$172 range is expected, do you see that too?