Wiki Selling TSLA Options - Be the House

[elasalle]

FUN TIMES!!

What a day I chose to sell 30 DEC 25 310 Calls for ~ $60 (thought a local top was in play ..) ..against all my shares in personal account. No worries needed the money and ~ 370 is good exit point for me.
Sold 5 jan 24 280 PUTS and 2 Jan 24 250 PUTS with the proceeds ... so either 700 shares assigned or 190K this Jan.

have patiently waited 6+ months for 85 Jan 25 250 calls (in IRA) to recover and recover they have .... from $79 to low 20's to $ ~ 65 now ....

cheers to all TSLA longs ...

 

[Jim Holder]

What will be next? F/GM uses FSD in their EVs in 2024

Lol.

It’s definitely emotional buying going on IMO because the income is not accretive to Tesla until sometime late 2025 when GM implements it (and if people buy their cars).

 

[Vova]

My short call triage plan:

6/9
-C230 (x7) - Covered shares
-C245 (x18) - Covered shares

6/16
-C225 (x6) - Covered by rebuying shares if called away 6/9, possibly at loss if have to buy at higher cost
-C230 (x2) - Same
-C243.33 (x19) - Same

6/30
-C215 (x6) - Covered by rebuying shares if called away 6/16, but will be at decent loss if have to buy at 240+
-C220 (x15) - Covered by rebuying shares if called away 6/16, but will be at loss if have to buy at 240+
-C300 (x25) - Not worried

7/21
-C240 (x15) - Covered by rebuying shares if called away 6/30, but will be at loss if have to buy at higher cost
-C245 (x4) — Same

9/15
-C240 (x19) — This one is likely most dangerous. Will likely roll or BTC with -P money.

——

Does this plan make sense? I’m not doing this long enough to know.

Difficult to advice since I don't know for which price you bought the shares which you say cover some short calls.

First, don't bother on short calls which are not ITM yet. It's just premium. Second, to cover short calls which are ITM I would consider sell shares and buy ATM calls on the short term. In this case you need to consider delta. You need to sell 100 shares in order to obtain 2 ATM calls. 100 shares is 100 delta and 2 ATM calls is also 100 delta.

If you do this you trade gamma. If stock price goes up your 2 ATM calls will run faster than 100 shares. If stock price goes down your loss will run slower than 100 shares.

 

[Jim Holder]

Difficult to advice since I don't know for which price you bought the shares which you say cover some short calls.

First, don't bother on short calls which are not ITM yet. It's just premium. Second, to cover short calls which are ITM I would consider sell shares and buy ATM calls on the short term. In this case you need to consider delta. You need to sell 100 shares in order to obtain 2 ATM calls. 100 shares is 100 delta and 2 ATM calls is also 100 delta.

If you do this you trade gamma. If stock price goes up your 2 ATM calls will run faster than 100 shares. If stock price goes down your loss will run slower than 100 shares.

All the short calls were against actual groups of shares at their cost basis strike or slightly above, plus together with the premium there is some profit built-in. My mistake was likely a rookie one, selling calls on the same lots a few weeks in advance counting on re-buying shares in between if they get called away, while expecting the share price to act within a certain cadence.

I’ll look into your idea.

 

[MikeC]

My short call triage plan:

6/9
-C230 (x7) - Covered shares
-C245 (x18) - Covered shares

6/16
-C225 (x6) - Covered by rebuying shares if called away 6/9, possibly at loss if have to buy at higher cost
-C230 (x2) - Same
-C243.33 (x19) - Same

6/30
-C215 (x6) - Covered by rebuying shares if called away 6/16, but will be at decent loss if have to buy at 240+
-C220 (x15) - Covered by rebuying shares if called away 6/16, but will be at loss if have to buy at 240+
-C300 (x25) - Not worried

7/21
-C240 (x15) - Covered by rebuying shares if called away 6/30, but will be at loss if have to buy at higher cost
-C245 (x4) — Same

9/15
-C240 (x19) — This one is likely most dangerous. Will likely roll or BTC with -P money.

——

Does this plan make sense? I’m not doing this long enough to know.

Buying back shares at a loss isn’t really being “covered” because you don’t know where the stock will be when you need to do that - it’s just accepting the loss. These contracts are all backed by shares or long calls, right?

To cover multiple short calls in case we keep going up, you could think about selling some shares and buying multiple LEAPS (at a lower strike than your short calls) with the proceeds.

 

[BornToFly]

I didn't close my Friday 252.5CCs this morning because I didn't think there was any way they would go ITM. Definitely a possibility now, and my 280CCs for next week are looking suspect now too. Just wow.

 

[Jim Holder]

Buying back shares at a loss isn’t really being “covered” because you don’t know where the stock will be when you need to do that - it’s just accepting the loss. These contracts are all backed by shares or long calls, right?

To cover multiple short calls in case we keep going up, you could think about selling some shares and buying multiple LEAPS (at a lower strike than your short calls) with the proceeds.

I sold the short calls against the same lots a week apart, with some thought about the strikes (next week CPI/FOMOC softness; 6/30 de-risking for P&D, overall correction, etc). I realize in hindsight this requires too much prophecy and I won’t do it again. So for the next few months I just need to untangle the web smartly and carefully.

Here’s a bit more detail:

Lots available:
700 @$215.11 CB
1,900 @$243.02 CB
400 @$269.97 CB
500 @$294.25 CB
3,000 @$358.79 CB

6/9
-C230 (x7) + $4.24 premium ($234.24) are against 215CB
-C245 (x18) + $0.49 premium () are against 243CB

6/16 - CPI/FOMOC week
-C225 (x6) + $3.80 premium (=$228.30), were to be against the same $215 because I didn’t expect $230 to hit 6/9. So I’ll have to rebuy or roll or do something else.
-C230 (x2) + $2.35 premium (=$232.25), same
-C243.33 (x19) + $1.45 premium (=$244.78), same

6/23
-C220 (x7) + $15.69 premium (=$235.69), against the shares I’d buy back if 6/16 got called away.

6/30 - Week before P&D
-C215 (x6) + $4.59 premium (=$219.59), same
-C220 (x15) + $4.93 premium (=$224.93), expected not to be ITM but now it likely will.
-C300 (x25) +$0.41 premium. Not worried (yet)

7/21
-C240 (x15) + $2.34 premium (=$242.34), using the shares I’ll buy back with proceeds from called away shares (plus any extra, or roll up and out, whichever is less cost)
-C245 (x4) + $2.04 premium (=$247.04), same

9/15
-C240 (x19) +$5.62 premium (=$245.62), same. This one is likely most dangerous. Will likely roll or BTC with -P money or delta hedge with calls.

I see once I factor in the premium it is not that terrible, unless 7/21 TSLA is at $300+.

Maybe I should buy a bunch of shares now using some margin in anticipation, or like Vova recommended, use the proceeds from the premium/sell some shares to buy calls. Maybe also CSP’s to raise cash to make up the difference in strikes until I undo the knot.

If I were to buy calls to Delta hedge, what date and strike make sense for this purpose, the DTE of the last one (9/15), for each set, or something else?

Also is it terrible practice selling short calls against the same lots of shares for 2-3 consecutive weeks laddering up price along the way (although then they are not technically covered calls then…), with the intention of immediately buying back the shares for the coming week (possibly on a dip for bonus)?

 

[Chenkers]

Shaping up for a potential gamma squeeze tomorrow? I don't have any active CC but may load up on some OTM C+ at the open.

Could at least be similar to Friday 26th May, the day after Ford announced they would use NACS. That day the share price rose sharply through the day before a steep sell off into the close.

 

[MikeC]

I sold the short calls against the same lots a week apart, with some thought about the strikes (next week CPI/FOMOC softness; 6/30 de-risking for P&D, overall correction, etc). I realize in hindsight this requires too much prophecy and I won’t do it again. So for the next few months I just need to untangle the web smartly and carefully.

Here’s a bit more detail:

6/9
-C230 (x7) + $4.24 premium ($234.24) are against 215CB
-C245 (x18) + $0.49 premium () are against 243CB

6/16 - CPI/FOMOC week
-C225 (x6) + $3.80 premium (=$228.30), were to be against the same $215 because I didn’t expect $230 to hit 6/9.
-C230 (x2) + $2.35 premium (=$232.25), same
-C243.33 (x19) + $1.45 premium (=$244.78), same

6/23
-C220 (x7) + $15.69 premium (=$235.69), against the shares I’d buy back if 6/16 got called away.

6/30 - Week before P&D
-C215 (x6) + $4.59 premium (=$219.59), same
-C220 (x15) + $4.93 premium (=$224.93), expected not to be ITM but now it likely will.
-C300 (x25) +$0.41 premium. Not worried (yet)

7/21
-C240 (x15) + $2.34 premium (=$242.34), using the shares I bought back with proceeds from called away shares (plus any extra, or roll up and out, whichever is less cost)
-C245 (x4) + $2.04 premium (=$247.04), same

9/15
-C240 (x19) +$5.62 premium (=$245.62), same. This one is likely most dangerous. Will likely roll or BTC with -P money or delta hedge with calls.

I see once I factor in the premium it is not that terrible, unless 7/21 TSLA is at $300+.

Maybe I should buy a bunch of shares now using some margin in anticipation, or like Vova recommended, use the proceeds from the premium/sell some shares to buy calls. Maybe also CSP’s to raise cash to make up the difference in strikes until I undo the knot.

If I were to buy calls to Delta hedge, what date and strike make sense for this purpose, the DTE of the last one (9/15), for each set, or something else?

Also is it terrible practice selling short calls against the same lots of shares for 2-3 consecutive weeks laddering up (although then they are not technically covered calls…), with the intention of immediately buying back the shares for the coming week (possibly on a dip for bonus)?

Yes - it’s terrible practice to have any naked short calls on this stock, which is what you have right now. I would do whatever it takes to minimize exposure at this point. We could go down from here but if we keep going up it will be catastrophic for your account.

Any combination of buying shares or calls will help, or just take the loss and buy back the sold calls. You could even buy a higher strike call and turn your naked calls into BPS.

I wouldn’t sell puts unless you’re flipping calls to them, as you’d be better off using that cash collateral to buy calls to offset multiple naked short calls.

 

[vikings123]

Lol.

It’s definitely emotional buying going on IMO because the income is not accretive to Tesla until sometime late 2025 when GM implements it (and if people buy their cars).

Haha I will take Tesla’s accretive earning potential over the market believing and essentially giving NVDA all the AI income.

Don’t over think. Just go with the flow, right now TSLA is a runaway train and it would be prudent to scale down expectations of CC income. Sure we will have a correction at some point but I’m not trying to get in front of this train. I took losses before market close on a bunch of CCs so feeling like a genius. I wish I had done the same in my retirement accounts but any dips tomorrow and I will be looking to close those too. If I do sell CCs I will be day trading them.

Every time Tesla goes on a run like this and ends at daily highs it’s a recipe for a big gap up. The news helped obviously as investors realize legacy is basically throwing the towel.

 

[Jim Holder]

Yes - it’s terrible practice to have any naked short calls on this stock, which is what you have right now. I would do whatever it takes to minimize exposure at this point. We could go down from here but if we keep going up it will be catastrophic for your account.

Any combination of buying shares or calls will help, or just take the loss and buy back the sold calls. You could even buy a higher strike call and turn your naked calls into BPS.

I wouldn’t sell puts unless you’re flipping calls to them, as you’d be better off using that cash collateral to buy calls to offset multiple naked short calls.

Thanks.

If I buy a higher strike call (I’ll check if it might be cheaper than closing for a loss), is it the same DTE and qty to match the sold calls, and how wide?

Also does it pay to wait as we get nearer to each expiration to do that?

 

[Jim Holder]

For naked calls that go ITM, do they “buy shares for me” at the closing price of the DTE, whatever it is? So a $245 call with a market closing price of $250 will cost me $5 extra dollars per share per contract.

 

[MikeC]

For naked calls that go ITM, do they “buy shares for me” at the closing price of the DTE, whatever it is? So a $245 call with a market closing price of $250 will cost me $5 extra dollars per share per contract.

In a case like that, your broker might close them out for you early to protect themselves from a loss you may not be able to cover. If nothing happens though, you’ll find yourself short 100 shares on Monday and possibly facing a margin call.

 

[MikeC]

Thanks.

If I buy a higher strike call (I’ll check if it might be cheaper than closing for a loss), is it the same DTE and qty to match the sold calls, and how wide?

Also does it pay to wait as we get nearer to each expiration to do that?

Quantity you want at least enough contracts and share lots that you’re not naked anymore.

You can pick any date that’s same DTE or more to be covered. Farther out will be more expensive but give you more flexibility and options - like if your short calls do end up expiring, you’ll still have some time left on the long call to play with.

As far as strikes, it will of course be cheaper to buy higher strikes if you’re making a BPS, but you’ll still be on the hook to pay the difference between the strikes if your BPS is fully ITM. You just won’t be facing the risk of infinite loss anymore.

 

[intelligator]

Well, I get the loser award for this and last week. I had two spreads that I decided to roll near end of day to avoid taking a loss for the full width of we rocket... and we did. I did give back 100% of the credit to roll up and wide, to only get stepped on the short legs of each a few hours later.

I now have to deal with these tomorrow or next week. Last week I ended up closing a run-over spread at a loss and thought I'd be safe with what I had to roll out of today. Nope, not a chance.

6/16 -c237.50/+c257.50
6/16 -c242.50/+c262.50

The problem with these is they aren't making a nickel and will cost me dearly to close or roll out. The after hours steep climb will not make things easier.

Careful out there, call spreads, spreads in general bite hard.

 

[dropgems]

Jul $330 possible?
Frothy party mode market….

 

[EVNow]

News >>>> TA.

Hertz redux.

I’ve never got caught in CCs till now. Let’s see what happens I’ll try to keep rolling 205 Calls.

 

[Jim Holder]

Yes - it’s terrible practice to have any naked short calls on this stock, which is what you have right now. I would do whatever it takes to minimize exposure at this point. We could go down from here but if we keep going up it will be catastrophic for your account.

Any combination of buying shares or calls will help, or just take the loss and buy back the sold calls. You could even buy a higher strike call and turn your naked calls into BPS.

I wouldn’t sell puts unless you’re flipping calls to them, as you’d be better off using that cash collateral to buy calls to offset multiple naked short calls.

I spent some time in the TOS analyze tab to review my options and saw that TD automatically assigned shares to different strangles and as covered calls, with only 35 being naked, and if I buy 35x 9/15 $360 I’m safe from exposure (capped the infinite loss).

Also today at close the 6/9 7x -C230 and 18x -C245 contracts should fall away either exercised or not. If they’re called away I’ll be buying the shares back on Monday with the proceeds (on any dip if we get one) to further help cover other naked calls.

I think I’ll be alright.

Now if we get the correction everyone’s been saying “will come” I’ll be in even better shape.

Thanks for the heads up and suggestion!

 

[Jim Holder]

Something to consider, there are a lot of people under water trapped from the $250 area from months ago and we’ll likely see heavy selling as TSLA gets close to that. I don’t know if/how it will affect momentum, would be interesting to see.

Some may also hold over $250 until reversal seems to start, wherever it will be.

 

[Jim Holder]

Interesting analysis: