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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
@dl003 It’s ironic (or maybe typical for TSLA) to be back at $230 where it was expected TSLA to retreat to by June 30 ahead of Q2 earnings. One MAJOR lesson I learned from this was to wait as much as possible until a few days before short calls are due to expire before making costly rolls. Had I sat on my hands mid-June for the July and September-Cs that appeared to be in peril, they would have been closable in due time for a few grand vs. a debit of -$250k by rolling them then. I realize this is also not a firm rule since there are always exceptions, but definitely something to give high preference to. I believe @EVNow does this.
It is hard to wait and you never know in which direction the stock is going to go. I thought we would be in 400's right now. Why don't you leave your December $500 alone? If you end up losing your shares you would still do really well I imagine.
I was actually patient this time and I did close
my $220's yesterday for $16. With the sideways rolls that I did it probably cost me $13 out of pocket which still sucks but $13 should be easily recoverable. I still have a handful of $215's and my January $300 I will leave alone and I will only close them if they go down to a few hundred bucks. I am thinking about swapping a few shares for LEAPs for a 1.5x leverage to help me recover some of the cash quicker but not yet. I really like @dl003 strategy of trading long term leaps when it makes sense at a price that your are willing to part away with your shares; I am due for a good trade because being aggressive at $217.5 didn't really worked out.
There are two certainties with TSLA:
- When it’s high it will come down again.
- When it’s down the drain it will go up again.
The problem is that in order to make money you have to trade contrarian at a moment when it feels like it can only go up more or go down more, which is hard for most of us.
100%
I've made peace with the 60x -C500 12/2025 and it may turn out for the best anyhow as you say. It's not like it's a terrible position. My point is only that I try to learn from every hap and mishap, and one lesson from this one is to try to wait until closer to expiration before taking drastic actions. Yes it could get worse the longer one waits to cure a bad position, so of course need to be prudent in applying this rule.
As @adiggs perfectly summed it up earlier: "There isn't a right and wrong way to take of those positions - there are only choices and consequences. There is timing of realized gains and losses; timing of cash flow; ability to forecast the future. A whole bunch of stuff is all wrapped together in here, and this is stuff that you are consciously or unconsciously making tradeoffs as you work through these positions."
Re your selling ATM calls on Friday + buying 10% OTM puts a week in advance, are they correlated 1:1 (i.e., buying one put for each sold call) or separate?
Also are the short calls covered by shares with a higher CB than ATM (i.e., risky)?
SpeedyEddy
Active Member
As stated before (learned late 2022 and now acting on that) sell calls if we go down and puts if we go up.
So based on my estimations last week I sold C 225 for this week and this week sold C 217.50 for next week to (more than...) cover EXPECTED loss on SP and I use @dl003 's earlier boundaries, some guys's timing tips (which are: next week (having gotten rid of monthly options) is always the worst week in a pre-election year, but after that we will rise above earlier tops in the year. But (as @dl003 stated as well,) look out for the last bounce, that could be big and unexpectedly fast (like jan 2023!!!) so be ready to shrug off your -C in time to switch to -P. For this week these guys (Maverick of WS an FX Evolution) were right on timing too: Monday strong, after that more bad news could trigger first continuation of downfall. Friday no news and bounce up. Next week BAD (but then I count on 217 to hold and will get out of most options when reached, I hope that to be the bounce-level) NO ADVICE, just my strategy! Might we fall straight through 217, then I let options expire and stand on the side, maybe some LEAP-buying along the way. Today I panicked a bit on NVDA's jump while still being short, later on getting back in short from a higher level. Still don't believe in their out of the blue projections for Q2 or any of the irrational PE or presumed DCF-calculations. Next week will tell. -C 440's at the moment.
[EDIT Bottom maybe is 200, exactly at the 50% fib 102-298. /edit]
So based on my estimations last week I sold C 225 for this week and this week sold C 217.50 for next week to (more than...) cover EXPECTED loss on SP and I use @dl003 's earlier boundaries, some guys's timing tips (which are: next week (having gotten rid of monthly options) is always the worst week in a pre-election year, but after that we will rise above earlier tops in the year. But (as @dl003 stated as well,) look out for the last bounce, that could be big and unexpectedly fast (like jan 2023!!!) so be ready to shrug off your -C in time to switch to -P. For this week these guys (Maverick of WS an FX Evolution) were right on timing too: Monday strong, after that more bad news could trigger first continuation of downfall. Friday no news and bounce up. Next week BAD (but then I count on 217 to hold and will get out of most options when reached, I hope that to be the bounce-level) NO ADVICE, just my strategy! Might we fall straight through 217, then I let options expire and stand on the side, maybe some LEAP-buying along the way. Today I panicked a bit on NVDA's jump while still being short, later on getting back in short from a higher level. Still don't believe in their out of the blue projections for Q2 or any of the irrational PE or presumed DCF-calculations. Next week will tell. -C 440's at the moment.
[EDIT Bottom maybe is 200, exactly at the 50% fib 102-298. /edit]
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Are these covered with shares with a CB above or below the strikes?
Is the reason for DITM strike risk is because you expect the share price to close below the strike (i.e., below 217 next Friday)?
SpeedyEddy
Active Member
Partly covered by shares but in fact it is a gamble for the rest!! Don’t ever copy me on these stupid bets,but this time I am on the good side since placing the bets. 217.5 is for Next week friday. This week I count on 225 (-C)
Sold some shares for a 12/25 250c. Sure feels like it’s going to keep going down short-term, but I decided I don’t want to try to predict the exact week it will bounce. Will add to them as it drops more. I have some -c240 but I really hate selling calls down here after a drop.
August doesn’t look so exciting for the stock but I’m thinking we could bounce in September as we get closer to the delivery report and Cybertruck hype starts to build.
August doesn’t look so exciting for the stock but I’m thinking we could bounce in September as we get closer to the delivery report and Cybertruck hype starts to build.
Yes. I normally target about $0.50 net premium on each side (BPS, BCS), the adjust strike up or down, often on a whim, but try to get round strikes. I’ve seen that mid-strikes (e.g., 232.50, 237.50) often have wider bid-ask spread and don’t trade as quickly, or I give up more to the MMs. Example using overnight numbers from MaxPain: +p210/-p220s are $0.14/$0.58 ($0.44 net) and -c245/+c255s are $0.67/$0.18 ($0.49 net). Since I still think the SP is trending down, to get more premium I might sell a -c240/+c250s instead, or even go riskier at -c235/+c245s. Obviously, the spread tightens the closer we get to Friday.
So what happened today? I’m out on the road and you guys dropped the ball here. Damn, I wasn’t expecting $230 until next week. Now some of my BPS are fully ITM. Oh well, I’ll take the loss tomorrow and roll everything down and out. Those -c225s LEAPS are much happier. Definitely wish I had bought puts last week, last month.
I'm assuming the delta at .67 was the driver for this strike, in exchange for the sale of $10000 worth of shares? Learning and curious what drove this selection for sold shares mid-230s.
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.Just trying to increase leverage when the stock is down a bit and IV is low. The 250c was only $72 so I sold 30 shares and added a little premium from weekly CCs. Only have 1 right now but looking to grab 5-10 contracts on the way down at successively cheaper prices. Then I plan to either sell CCs against them, or on a big rise I'd close them out and use the proceeds to buy a few more shares than I sold to get them.
The risk of course is what happened in 2022 - I buy at successively cheaper prices and it just keeps getting cheaper, and cheaper, and cheaper, ad nauseum. But 2+ years is hopefully enough time to ride out any rough patch. Before Q2 ER, I was able to get out of a chunk of LEAPS I'd bought from 2022 that were down 80+% at one point and still came back in the green, although the ones I'm unfortunately still holding are back in the red and getting redder.
As the week (and month) develops, my 2nd scenario seems more and more likely, meaning the 240-298 run was a dead cat bounce and we are on the final leg down. Reasons:
1/ The rule of alternation that applies to corrections states that if the first leg down is a simple zig zag, the immediate bounce can stretch out in an intricate fashion to achieve a kind of alternation. The 2nd leg down can be even more intricate. This doesn't usually happen in reverse order. The current leg down from 298 (red) is simply taking too long and too intricate looking to be the first leg down. It is looking more and more like the yellow zig zag was wave A, green zig zag was wave B and now we are in wave C.
2/ If we draw fib retracement going from 278 to 153, we can see a clear flip from support to resistance at the 0.786 level (250) before going lower. We are approaching the buy zone now (230-215) but the top of wave 1 at 218 will offer one hell of a support first.
3/ Time is running out for a gap fill, which is only mandatory if the current leg down is leg down #1. It is taking too long to be #1. We're almost at the lower boundary of the bullish channel.
Therefore, I'm looking for a bottom around 220 on Tuesday - Wednesday next week.
TSLA already pushed down AH yesterday and continuing in PM, time to go a bit aggressive, although nor nuclear with calls...
As of today, holding 60x -c250, 30x -c240 and 30x -p250 for Friday, just about scraping a profit on those... obviously the -c250's can be closed for pennies already, thinking to redeploy those 30x -c230 for this week and -c220 already for next, roll the puts down to the same strike to salvage some Theta, then next week wait until the push down before selling puts BELOW the call strike...
Yeah, maybe not selling puts at all is the best strategy, but I'm still wary of a sudden reversal, been there enough times, hence just deploying 30x calls at a time, keeping some in my pocket...
Edit: I meant to add that I see a non-TSLA macro risk next week with Nvidia earnings on the 25th. Q1ER they guided for 4x revenue in 2023 and the current EPS consensus is around $2 versus $1.13 in Q1. Given the rip NVDA has been on, if they don't hit this, it could dump hard and bring down the tech sector with it... of course they might beat that and macro rallies, I have no idea, but I feel it's a pivotal moment
As of today, holding 60x -c250, 30x -c240 and 30x -p250 for Friday, just about scraping a profit on those... obviously the -c250's can be closed for pennies already, thinking to redeploy those 30x -c230 for this week and -c220 already for next, roll the puts down to the same strike to salvage some Theta, then next week wait until the push down before selling puts BELOW the call strike...
Yeah, maybe not selling puts at all is the best strategy, but I'm still wary of a sudden reversal, been there enough times, hence just deploying 30x calls at a time, keeping some in my pocket...
Edit: I meant to add that I see a non-TSLA macro risk next week with Nvidia earnings on the 25th. Q1ER they guided for 4x revenue in 2023 and the current EPS consensus is around $2 versus $1.13 in Q1. Given the rip NVDA has been on, if they don't hit this, it could dump hard and bring down the tech sector with it... of course they might beat that and macro rallies, I have no idea, but I feel it's a pivotal moment
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Hi everyone! I’m new here. Great forum and clearly lots of impressive knowledge on trading Tesla. I write weekly CCs and CSPs myself. I do have a few Jan ‘25 leaps at 300 strike that I need the stock to be 350 to make money. Anyone still holding leaps like this? Or are you rolling to Dec. ‘25 for example? I got underwater fast on these…
The Calls fund the Put purchases - so whatever that gets me - usually 10% OTM +P is somewhere in the $2 range and the ATM -C is somewhere around $5.
So I am able to get a little more than 2 for 1 Bought Puts to Sold Calls.
Yes - the Underlying shares have a CB well below where we are now.
In one of my retirement accounts my wife had a 401k rollover and we have a lot of shares in there with a CB of $265 and $288 - For those shares I only sell 90 day calls for 30% OTM to scrape.
Right now we have October $315 CC's on those shares written right after earnings - I think (without logging in) that I got $13 each for those and they are trading at around $2.25 each right now.
We use the CC proceeds to buy SCHD in that account, so not looking to close out early.
Will Sell January Calls when the Octobers expire - hopefully back on the upswing.
Premarket is fickle - but looking like my +$230 Puts are doing well - Will close out the -$250C's for pennies.
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