Rob sure is an asset to the investor community but what we do in this thread is not investing. As speculator in the short term SP, we dont need noises. The chart itself is the most accurate summary of the collective sentiment, regardless of what is reported on Youtube.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Gap at 146 will need to be filled
This succinct gem took me a long time to learn and accept. I was always confused how could good chartists function without related news, especially around earnings. But ultimately it all gets reflected in the chart and that’s sufficient.
This is probably why many good chartists say they prefer to stay away from news/noise. The chart shows it all.
Just realized the bottom was 152.3, not 151. Its still too early to predict the magnitude of the pullback, but a retest of the low is entirely possible.
SpaceXaddict
Member
Have switched strategies and am now just writing Covered Calls against my long TSLA. Don't want to do wheel because I don't want to move in and out of the stock.
Can someone point me to a TSLA specific guide for writing these calls? The stock is so volatile, I've been writing weeklies about 8-15 days out. And I've been doing it at the 1 standard deviation mark.
This is easy mode when the stock is declining, but I've not been here for a TSLA massive bull run, and I don't think "I'll just roll out and up" is a sufficient strategy for covering it.
Thanks.
Can someone point me to a TSLA specific guide for writing these calls? The stock is so volatile, I've been writing weeklies about 8-15 days out. And I've been doing it at the 1 standard deviation mark.
This is easy mode when the stock is declining, but I've not been here for a TSLA massive bull run, and I don't think "I'll just roll out and up" is a sufficient strategy for covering it.
Thanks.
Not a retest in EWT talk. A retest implies that 153.xx was the orthodox low of the leg down from 208. 152.37, then, would be part of the new bull run - a retracement overshooting the previous low. This cannot happen. But its also not important right now. The most important level rn is 167. Its the 0.381 retracement level of (192 - 152). Breaking above 167 will be the confirmation we need for 152.3 to be the bottom. As long as we stay under 167 it’s possible we’ll make a new low. I give this a low probability.
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Search for old posts from @Yoona regarding acceptable % above SP to sell CCs. The number was something ridiculously high, like 20-30%, for certainty to not lose your shares. Unfortunately, the premiums are minuscule at those levels, as they should be. Writing CCs at 1 standard deviation implies that you should lose your shares about 1/3 of the time. As you said, it works great with decreasing SP, but not at all in a rising SP environment.
Anecdotally, I’ve noticed that selling CCs into a rising SP is very difficult, if not impossible, to gain net positive premiums, because premiums are so small at relatively safe SPs (and seem to decrease exponentially faster than the “safety” increases). For example, using numbers from MaxPain: sell CCs at SP+20% for $0.10, one week out gives 0.10/160=0.06% or 3%/yr. Ok great, sell options and earn 3%/yr. That will get your heart rate spiking.
Then, don’t forget, TSLA can easily move +/-20% in DAYS. If you got it wrong, then you can always roll out, right? Well, TSLA can move 80-100% in a few weeks, so those rolls just keep getting worse, plus you’re not earning any premiums during those weeks. Hmmmmm, now earning LESS than 3%/yr. Yipeee.Don’t get me wrong, I’m still playing the game, but still digging out of the hole caused by selling ATM CCs right before Q1 earnings. Even if the SP drops back to $145, I’ll barely be positive on premiums, and it’s been a lot of juggling/trading to get even. It’s my own fault, trading ATM puts and calls around earnings is always very risky, but I got CC-heavy on the wrong earnings quarter. FWIW, many CCs had to be rolled to January 2025, and I’m still slowly buying them back.
If you are confident that the SP will rise, then selling puts, put spreads, or buying calls and call spreads is the correct options trading behavior. Unfortunately, there is absolutely no way to know for certain which way the SP will go on any given day/week, given news or even no news.
My methods have morphed, from only selling CCs (and trying to HODL my shares), into more straddles, tight strangles, and iron condors. I try to keep all trades to 3 DTE or less, only rolling when necessary. This method is more agnostic to SP direction and benefits the most when the SP stays within a tight range and close to MaxPain by Friday. Furthermore, one side ALWAYS wins (sometimes even both sides) for half the premium, while the losing side gets rolled. I also look at my overall options portfolio as a hedge for SP movement, either up or down, to augment my total share count and free cash balance. Yes, I still want to hold a specific number of shares, but not to the detriment of earning options premiums in all SP environments.
I hope this post helps a bit. The best advice is to read the entire thread from start to finish, there are years of golden information.
SpaceXaddict
Member
Alas, can't look at that profile to see posts as its restricted.
I started out being %50 in cash and %50 in TSLA and selling strangles... with 45 DTE and managing them in when the stock would move. It didn't play out as I had hoped. So, I adjusted to selling about 8 days out and that would net around %26 ROI annualized, but there weren't a lot of weeks in my data set.
EVNow
Well-Known Member
It definitely is not. TA is useless in the face of major news. TA is useful only when enough people believe in it to make it self-fulfilling.
Another issue is there are so many different TA methods that don't yield the same results.
I'm writing this not to start an argument but to make sure different perspectives are represented.
My last post on this subject.
I haven't updated it in a while but this is the sort of graph you want to study showing weekly % moves for TSLA. This covers 2 years and shows that TSLA rarely gains more than 17% and loses more than 12%. This is for Monday Open to Friday Close within the same week. I've done back-tests previously that show these ranges have remained profitable overall (including rolls/losses etc) over the last few years. For CC's typically the higher % gain weeks are during a significant run so it pays to monitor the stock and close early when at risk. However don't take this as advice, I recommend you do your own analysis and pick strikes accordingly.
Of course this doesn't have the January rally, where I think we got 30% in the one week, but that was indeed a sharp reversal from a fake drop to $100, the current drop is more organic and based on poor earnings, so a massive weekly rise is less likely right now, but also not impossible - CyberTruck order page with good specs and prices, for instance, could spike the stock a bit
Bottom line, is either don't write CC's at strikes where you're not prepared to sell the shares, or don't overcommit on the number of contracts so you have some wiggle-room to roll. And ensure you have sufficient cash on hand to roll
I've updated the graph above for the last 2 years. The big 30% jump for 27th Jan really stands out, as do the big drops preceding it on 16th and 23rd Dec'22. All of these weeks were in the midths of big multi-week runs and are hopefully periods where people aren't selling options to the danger side.
Yesterday before close (5 minutes before) got a fill on next week straddles -
-$160P
-$160C
$9.25 each
Slightly more for the call side $4.75 / $4.50 put side
Plenty of room for either side to gain or lose but looking at Max Pain for next week at $162.50 I think this is a good set up - this is on core shares that I am willing to let go somewhere to convert to more leaps and the Puts are cash backed.
Changed to these instead of the Collars since earnings seems to have re-rated us to this level or higher, but if they were coming for blood and the Gap everyone is screaming about at $14X - it would have been done - IMO
Cheers
-$160P
-$160C
$9.25 each
Slightly more for the call side $4.75 / $4.50 put side
Plenty of room for either side to gain or lose but looking at Max Pain for next week at $162.50 I think this is a good set up - this is on core shares that I am willing to let go somewhere to convert to more leaps and the Puts are cash backed.
Changed to these instead of the Collars since earnings seems to have re-rated us to this level or higher, but if they were coming for blood and the Gap everyone is screaming about at $14X - it would have been done - IMO
Cheers
Can you expand on this? What number of contracts is "too many" to easily roll? Is the lack of wiggle room trying to find buyers of your contracts if strikes are not liquid enough? Thanks.
EVNow
Well-Known Member
Basically you are betting this (ps: actually next) week the SP doesn't move more than 5%.
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These are for next week - and kinda - don't mind buying the shares and don't mind selling them for more leaps.
Don't see anything crazy happening and plan to be out for the AGM the following week.
So it's a good premium to either buy at $150.75 or sell at $169.25 or close after theta drains next week on a big up (close puts) and big down (close calls)
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