Knightshade
Well-Known Member
I think it's far more likely than not margins and EPS are disappointing--- but as we've seen it's anybodys guess how the market actually reacts to that data.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
I think it's far more likely than not margins and EPS are disappointing--- but as we've seen it's anybodys guess how the market actually reacts to that data.
Any update you can share with us as we’re heading into the final two weeks of June?
Definitely has been a wild ride, not just for TSLA but also for many others like SPY, QQQ, NVDA, AAPL, etc.
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So in the end I had to settle for +10x 6/26 -p260, I went with the extra contracts as it facilitated the roll of another -c200 to -c300, 123x remaining...
Now holding 30x -c260 for next Friday, short week so Theta will drain faster, but more chance of shenanigans, having bought 50x 7/21 -p200 certainly gives a bit of a safety net with the puts
Still 5 weeks until expiry of the -c200 and I'm starting to see what would work. It's +$10 for a quarterly roll now tothe same strike in October, this in itself would reduce the contracts to 106x, now given that I would then rewrite 16x Dec -c300's for $28.50, that brings in enough to buy back another 8x -c200, which I would then sell 8x more Dec -c300, etc.,
To cut to the chase, right now 123x 7/21 -c200 (current value $781k) rolls to 96x 10/23 -c200 (value $706k) + 27x 12/15 -c300 (value $76k), obviously waiting a bit will wash out some extrinsic from the July calls, but his that the SP rises too, or maybe it pulls-back and they all expire; Who knows?!
Often we see a SP rise going into the EOQ, anticipation of the P/D numbers, then a long, slow drop in SP before the financials are released. Lots of FUD articles, coordinated attack pieces, etc. seem to come out of the woodwork. Perhaps this is the hedgies preparing for the attack. Also perfect setup because July 21st is a monthly and lots of the biggest traders seem to gravitate towards monthlies, while the day traders (and us options sellers) seem to gravitate towards weeklies. I’m always nervous about the monthlies because it’s harder to discern the MaxPain patterns, and try to trade farther OTM.
Even with the huge SP rise the past few weeks, today my ICs were closed for pennies (could have let them expire, but decided to get out early). They were sufficiently OTM, so no worries (mostly +p230/-p240/-c280/+c290 and a few +p245/-p250/-c280/+c285). Cleared enough premiums to realize a month’s living expenses, so really need to review my overall options strategy.
Also, decided to roll that lone -c260 to 6/23 -c255 ($8 or $10 credit, I can’t remember right now) rather than risk exercise. I really want the cash back, but thought one more week should be ok. Remember, this is from an early exercise of a 6/30 -p260, where I then immediately sold the 6/16 -c260. I’m almost $20 ahead on this one, so willing to push it down and out another week B/W-style.
Because of the past massive May/June run up, I have a large number of problematic 6/30 & 7/14 Iron Butterflies (centered at $280 & $260, respectively) that need lots of cash for future buyback and rolling. These will take lots of cash and diligence, like @Max Plaid is doing with his dITM CCs. I’m not really sure if I’ll be able to get out of these without significant losses, but will try, buying back a few at a time with the premiums that I generate from expired weekly ICs. Worst case, I will roll some of my near-term CCs back out to 2025 ATM to generate more cash. Once again, digging out of the hole that I jumped into. As always, enjoy the holiday weekend and GLTA.
LOL! I don't think they are too risky. We would have to go up $100 in 4 days. If we do start to get a crazy run, and they go up to $1, I can close them out for a $9k loss, but I think I probably made a pretty safe $1k.
Can you elaborate on this strategy. Isn’t that making the hole bigger by moving ATM ($260-$265) all the way to 2025 where TSLA can be $400+?
Yes, unfortunately. I don’t want to do it, again worst case, but will if I need to raise cash to deal with the other, shorter term ICs/IBs. Also, unfortunately, these CCs are not ATM, they are deep ITM. I have CCs in the $190-$220 range. Stupid, yes, in hindsight. The only way out of this pickle is cash, time, and/or drop in SP. Unfortunately, we can only have a guarantee on one of those.
I might just let them get exercised. Still waiting, thinking, and analyzing.
Exactly. I’m in the same position, and had to make several sub-optimal rolls the last few days to hold on to shares and some of recent appreciation:Yes, unfortunately. I don’t want to do it, again worst case, but will if I need to raise cash to deal with the other, shorter term ICs/IBs. Also, unfortunately, these CCs are not ATM, they are deep ITM. I have CCs in the $190-$220 range. Stupid, yes, in hindsight. The only way out of this pickle is cash, time, and/or drop in SP. Unfortunately, we can only have a guarantee on one of those.
- 16Jun$180 —> 17Nov$210: $10.75 debit
- 16Jun$185 —> 17Nov$210: $6.51 debit
- 16Jun$200 —> 21Jul$205: $1.60 debit (b-w just above cost)
- 14Jul$310: $5.00 credit on super-cautious allocation I only do when SP is high ($50 OTM, 30% of total CC) to level at which I will take some profits a la ARKK
- had to spend 20% of strike improvement to get it, but whittled down 1/3 of total paper loss vs. market
- CC up to 65% of shares during rescue mode, hope to whittle that down
Could be. Keep in mind people bet NVDA ER would be bad, and see what happened.
Yes, unfortunately. I don’t want to do it, again worst case, but will if I need to raise cash to deal with the other, shorter term ICs/IBs. Also, unfortunately, these CCs are not ATM, they are deep ITM. I have CCs in the $190-$220 range. Stupid, yes, in hindsight. The only way out of this pickle is cash, time, and/or drop in SP. Unfortunately, we can only have a guarantee on one of those.
I have the same dilemma with $210-220cc. I already rolled 1/3rd of my shares to Jan 24 $300 for a healthy debit and I am not happy with that or the strike. On the 2/3rd I am doing the same thing waiting for that -10% day that will get me out of this mess. An option that I am looking at is to sacrifice one contract by rolling it to December 2025 and moving 3x contract close to ATM by a adding some debit two weeks out and manage those hopefully having them expire. Or doing the same with the cash that I have and selling a 2025 out to finance good rolls. I am not sure if is a good idea to tight up the money for that long.
I agree. If earning is good I will buy short term options and roll them as we go up. I have zero upside right now because of my underwater CC's and if top that I closed all my LEAPs for a small profit
.
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Do you not have the possibility to sell some puts and buy the calls back gradually as I'm doing? OK, I'm rolling mine to Dec -c300's, sure, capping the gains again, but the profits on the SP >300 are huge anyway, so much that I'd want to roll them just to avoid a huge tax bill...Yes, unfortunately. I don’t want to do it, again worst case, but will if I need to raise cash to deal with the other, shorter term ICs/IBs. Also, unfortunately, these CCs are not ATM, they are deep ITM. I have CCs in the $190-$220 range. Stupid, yes, in hindsight. The only way out of this pickle is cash, time, and/or drop in SP. Unfortunately, we can only have a guarantee on one of those.
Yes, but not enough CSPs to generate enough cash back to buy many CCs, some of which are nearly $100. I’m now mostly focusing on BPS, adding way OTM BCS to form ICs. It’s definitely time to let at least one CC go, hence last Friday roll down from -c260 to 6/23 -c255. That $26k can only safely generate about $500-$600/wk with a CSP or CC, but closer to $2500/wk with an appropriate BCS-IC combo.
I like this idea and will have a look at the options chain this weekend.
Edit: If we break the golden cross next week, things could get crazy, possibly like the 2019-2021 run, and all these DITM CCs are lost.
I snipped and collected together some pearls of advice posted here over the past few weeks by members so I could review them when needed, especially when in panic mode. Posting them here in case it's helpful to others as well. These are not financial advice, but good to keep in mind.
Feel free to add (and eventually can post a Wiki under "Panic Mode"?)
When short calls are threatened:
1) Roll every week and try to strike improve until rolling isn't giving you enough premium anymore. Consider selling for premium and not strike improvement since any strike improvement is gone when the SP tanks and your contract expires worthless, but rolling for premium nets your gains whatever happens to the SP and your contract (and can use gains for closing endangered contracts).
2) Use any gains eked out by buying/selling other weekly calls/puts to buy back endangered CC's.
3) Sell some ATM weekly puts to fund buying back a few short calls call (be careful not to overextend with +P).
4) Buy some October +P200's with your first Put sell, then you have a safety-net on those in case of a pull-back, and a drop below $200 would save all your calls too.
5) A more nuclear approach could be to roll to a 10x October $260 straddle, that pays $33 for each side, cuts your expose down to 10x calls and puts, ATM. Obviously, a big move in either direction needs to be dealt with, but you essentially halve your risk
Additional notes:
- If you find yourself too desperate for the stock to go up or down, leverage up or down the other way accordingly. Look into getting toward being delta neutral.
- Can rescue ITM short calls by flipping some to Puts using $$ from exercised short calls. That would then shift your risk to the downside, but you might be able to roll the puts back down a bit if that were to happen.
- I would either roll out weekly or accept assignment and then sell weekly puts at the same/similar strikes (again rolling weekly if wrong).
- Watch out flipping calls to puts
- Don't overreact by rolling sold puts higher to finance rolling sold calls higher
- To cover short calls which are ITM I would consider buying 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.
-You could sell farther OTM puts to raise the strike on your calls without buying them back completely.
-If your shares are called away, you will have a lot of cash to sell puts.
-You have equal chance of getting it wrong or right whatever you do.
-I try to stay away from making quick adjustments to my original position for a few reasons: 1) The psychological regret is more if you adjusted the position and then you were wrong. I’d rather be patient with my original position that I entered into and be wrong then to panic BTC at a loss and be wrong. 2) If you always buy back when it goes against you, you will be taking a lot of losses you don’t need to and then you still have the anxiety of when to resell. 3) If you’re OTM you have >50% chance of staying OTM, all things being equal. 4) You were okay with being exercised when you sold. That’s the only advantage I know of when selling options - to be okay with either outcome is really liberating. If you take a loss just because the market went against you, it means you weren’t really okay with being exercised. Ultimately, I’ve come to a place where I just try to psychologically balance my positions - if I find myself too desperate for the stock to go up or down, I leverage up or down the other way accordingly. I have a large long position, so selling weekly calls balances it out in that I either make a weekly income or my net worth goes up. At the end of the day, the mental stress is not worth it to make a few bucks, especially when you never know what’s going to happen, anyway.
-How to play catch up with a bullish channel: Roll for $0 or a small debit. If an ATM weekly roll is not affordable maybe it's worth exploring longer dated options and bet on an eventual reversal to the mean, which means there has to be something on the calendar that will compel the market to take a more cautious stand: Maybe a 1st quarterly GDP reading, a FOMC meeting, a monthly CPI release, the P&D report, etc... use these events as a potential temporary downward magnet for the SP and roll your calls to just before them. This is what you should do if something like a November 2020 or November 2021 happens again.
-If you're caught dead with a slightly ITM call, roll it out a few months or so.
- If you're caught with an ITM call within a bullish channel, identify its slope, then you will have an idea of how ITM you can afford to be and still be able to play catch-up.
- Be VERY careful with selling puts along these rallies. Don't assume it will go on forever. Once it reverses, it can reverse hard and you won't have time to react. Do still sell them as you should never fight the trend, but be conscious of the channel which will act as a magnet pulling the SP back down.
- Bullish channels have a limited shelf-life and the stock tends to gravitate toward the bottom of the channel overtime before eventually falling out of it and it takes a tremendous amount of energy to touch the top. Every time it touches the top, ask yourself what happened. Did something fundamentally change, like a massive ER beat, or is it something else? If TSLA rallies to the top all by itself then pls, for the love of God, don't stand in front of it. On the other hand, if it is simply responding to unexpected developments that don't really have a long-term impact to the fundamentals, then it's more of a flash than a freight train. This is when one should expect a reversal to the mean. Can TSLA break out of a bullish channel? It sure can, but the market doesn't like it. Every time that happened in the past, the stock would eventually fall back to earth after a spectacular breakout. For example, the first time was inclusion in the S&P 500 followed by a gamma squeeze into Q4 2020 ER. The second time was a massive Q3-2021 ER beat followed by a massive short squeeze. But, eventually, the stock couldn't survive the high altitude and crashed back to earth weeks/months later.
- When TSLA is acting irrationally, especially after a fundamental change, get out of the way.
Feel free to add (and eventually can post a Wiki under "Panic Mode"?)
When short calls are threatened:
1) Roll every week and try to strike improve until rolling isn't giving you enough premium anymore. Consider selling for premium and not strike improvement since any strike improvement is gone when the SP tanks and your contract expires worthless, but rolling for premium nets your gains whatever happens to the SP and your contract (and can use gains for closing endangered contracts).
2) Use any gains eked out by buying/selling other weekly calls/puts to buy back endangered CC's.
3) Sell some ATM weekly puts to fund buying back a few short calls call (be careful not to overextend with +P).
4) Buy some October +P200's with your first Put sell, then you have a safety-net on those in case of a pull-back, and a drop below $200 would save all your calls too.
5) A more nuclear approach could be to roll to a 10x October $260 straddle, that pays $33 for each side, cuts your expose down to 10x calls and puts, ATM. Obviously, a big move in either direction needs to be dealt with, but you essentially halve your risk
Additional notes:
- If you find yourself too desperate for the stock to go up or down, leverage up or down the other way accordingly. Look into getting toward being delta neutral.
- Can rescue ITM short calls by flipping some to Puts using $$ from exercised short calls. That would then shift your risk to the downside, but you might be able to roll the puts back down a bit if that were to happen.
- I would either roll out weekly or accept assignment and then sell weekly puts at the same/similar strikes (again rolling weekly if wrong).
- Watch out flipping calls to puts
- Don't overreact by rolling sold puts higher to finance rolling sold calls higher
- To cover short calls which are ITM I would consider buying 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.
-You could sell farther OTM puts to raise the strike on your calls without buying them back completely.
-If your shares are called away, you will have a lot of cash to sell puts.
-You have equal chance of getting it wrong or right whatever you do.
-I try to stay away from making quick adjustments to my original position for a few reasons: 1) The psychological regret is more if you adjusted the position and then you were wrong. I’d rather be patient with my original position that I entered into and be wrong then to panic BTC at a loss and be wrong. 2) If you always buy back when it goes against you, you will be taking a lot of losses you don’t need to and then you still have the anxiety of when to resell. 3) If you’re OTM you have >50% chance of staying OTM, all things being equal. 4) You were okay with being exercised when you sold. That’s the only advantage I know of when selling options - to be okay with either outcome is really liberating. If you take a loss just because the market went against you, it means you weren’t really okay with being exercised. Ultimately, I’ve come to a place where I just try to psychologically balance my positions - if I find myself too desperate for the stock to go up or down, I leverage up or down the other way accordingly. I have a large long position, so selling weekly calls balances it out in that I either make a weekly income or my net worth goes up. At the end of the day, the mental stress is not worth it to make a few bucks, especially when you never know what’s going to happen, anyway.
-How to play catch up with a bullish channel: Roll for $0 or a small debit. If an ATM weekly roll is not affordable maybe it's worth exploring longer dated options and bet on an eventual reversal to the mean, which means there has to be something on the calendar that will compel the market to take a more cautious stand: Maybe a 1st quarterly GDP reading, a FOMC meeting, a monthly CPI release, the P&D report, etc... use these events as a potential temporary downward magnet for the SP and roll your calls to just before them. This is what you should do if something like a November 2020 or November 2021 happens again.
-If you're caught dead with a slightly ITM call, roll it out a few months or so.
- If you're caught with an ITM call within a bullish channel, identify its slope, then you will have an idea of how ITM you can afford to be and still be able to play catch-up.
- Be VERY careful with selling puts along these rallies. Don't assume it will go on forever. Once it reverses, it can reverse hard and you won't have time to react. Do still sell them as you should never fight the trend, but be conscious of the channel which will act as a magnet pulling the SP back down.
- Bullish channels have a limited shelf-life and the stock tends to gravitate toward the bottom of the channel overtime before eventually falling out of it and it takes a tremendous amount of energy to touch the top. Every time it touches the top, ask yourself what happened. Did something fundamentally change, like a massive ER beat, or is it something else? If TSLA rallies to the top all by itself then pls, for the love of God, don't stand in front of it. On the other hand, if it is simply responding to unexpected developments that don't really have a long-term impact to the fundamentals, then it's more of a flash than a freight train. This is when one should expect a reversal to the mean. Can TSLA break out of a bullish channel? It sure can, but the market doesn't like it. Every time that happened in the past, the stock would eventually fall back to earth after a spectacular breakout. For example, the first time was inclusion in the S&P 500 followed by a gamma squeeze into Q4 2020 ER. The second time was a massive Q3-2021 ER beat followed by a massive short squeeze. But, eventually, the stock couldn't survive the high altitude and crashed back to earth weeks/months later.
- When TSLA is acting irrationally, especially after a fundamental change, get out of the way.
See time-stamp 32:35:
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He’s saying $298 might be target
but might retrace down first. Unknown.
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He’s saying $298 might be target
but might retrace down first. Unknown.
268 is the big test even though tsla can go all the way to 320 and this entire run up from 102 may still be a dead cat bounce. So far nothing has changed.
I have flipped from selling DITM puts to ATM puts, as mentioned earlier in the week. We are seeing momentum kind of stalling here above 260 as it begins to face this big test. My plan if it clears 270 is going back to selling aggressive DITM puts all the way up to 320.
Even if this is a new bull market in TSLA, this cannot go on forever even if 360 or 400 is the final target of the first leg up. Once there, it will retrace back to 230-250 in the first 6 months of 2024 before going up again. That will be your opportunity to fix it if all hell breaks loose now.
If we pull back into the 240s before P&D, then I'll stay slightly OTM on my short puts. If we don't, then I'll take the risk and sell $10 ITM puts exp the week of 7/7, in reduced number of contract. If we don't pull back properly before P&D then I doubt P&D will provide any reason for a pullback.
Thank you.
Is your goal selling the DITM/ATM puts to collect shares or just premium, and if for some reason you are assigned, do you just wheel them by selling ATM CC’s against them for the same week?
I sell them as the equivalence to a BW strategy. Taking assignment or not is not important to me. To me, a play has main 2 components: delta and theta. Depending on where I think the stock is headed, I will come up with a play that has the desirable mix. If I think the stock has cleared a major resistance, I will be looking for a primarily delta play, hence DITM puts.
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