Wiki Selling TSLA Options - Be the House

[vikings123]

Can you please explain further?

Sure. So let's say you sold a 2025 400 strike price call for 50$ today. TSLA solves L5 and the stock takes off to 600$ in 2024. The calls you sold are now deep in the red and you can buy them back for 200$ so you take a loss of 150$ so a 15K loss. Rolling doesn't mean you can roll the losses. You will essentially be closing your current open position and opening a new position.

So in the same example above if you want to offset the losses you will have to make sure you have enough gains for that tax year.

 

[thenewguy1979]

Macro and the imminent launch of Cybertrunk is fueling the pump. Cause a sense of not wanting to miss out. We can pump to 260 before dropping. Market maker is just thinning out the bear crowd and causing a bull trap at the sames times.

 

[Max Plaid]

Sure. So let's say you sold a 2025 400 strike price call for 50$ today. TSLA solves L5 and the stock takes off to 600$ in 2024. The calls you sold are now deep in the red and you can buy them back for 200$ so you take a loss of 150$ so a 15K loss. Rolling doesn't mean you can roll the losses. You will essentially be closing your current open position and opening a new position.

So in the same example above if you want to offset the losses you will have to make sure you have enough gains for that tax year.

This could be balanced by allowing some of the calls to exercise, and roll the rest - these are shares bought pre-pre-split, so a lot of profit can be unleashed if needed

Would that work with US tax rules??

 

[thenewguy1979]

Put are cheaper now. Added a couple $p200 for 10-27.

No analyst downgrade yet for q3 earning is fueling the SP

 

[UncaNed]

After 3 years of afraid to sell any calls, I finally did and this major shift of event destroyed space time continuum and we are going straight to 400.

Me too exactly.

Can you please explain further?

IMHO "Rolling" is just a fancy euphemism for taking your lumps closing a bad trade and starting another trade you have higher hopes for at the same time so you feel better about the whole mess.

In other words, you lose money buying back the $300 strikes you want avoid getting excercised because the stock price surprised you by rising, but you're buying $400 strikes, which you don't expect to get excercised. You could just as well do 2 separate transactions.

Correct me if I'm wrong.

 

[Knightshade]

Sure. So let's say you sold a 2025 400 strike price call for 50$ today. TSLA solves L5 and the stock takes off to 600$ in 2024. The calls you sold are now deep in the red and you can buy them back for 200$ so you take a loss of 150$ so a 15K loss. Rolling doesn't mean you can roll the losses. You will essentially be closing your current open position and opening a new position.

So in the same example above if you want to offset the losses you will have to make sure you have enough gains for that tax year.

In the US anyway losses carry over, so I'm not sure why you'd necessarily need to offset the losses in the same year- you can use them to offset future gains in future years... (they can even offset normal income, though only 3k/yr worth)

 

[EnzoXYZ]

After 3 years of afraid to sell any calls, I finally did and this major shift of event destroyed space time continuum and we are going straight to 400.

I hope you are the sacrificial lamb! In all seriousness there are some get out of jail tricks you can do if you are not happy with 400 SP in 1+ years.

 

[OrthoSurg]

Once again, this thread seems to be haunted by short memory and arrogance against TA. I made a bet, at 160 in May, that I would leave this board if we would not see 250 in 2023.

Now Im going to make another bet:

If we dont see 200 in the rest of 2023, I will leave this forum and never come back.

Who want to take me up on this bet?

My November 200 +puts will leave with you if we don’t see 200 in the rest of 2023

 

[vikings123]

This could be balanced by allowing some of the calls to exercise, and roll the rest - these are shares bought pre-pre-split, so a lot of profit can be unleashed if needed

Would that work with US tax rules??

Absolutely. I have used this same approach to reduce my tax bill.

 

[vikings123]

In the US anyway losses carry over, so I'm not sure why you'd necessarily need to offset the losses in the same year- you can use them to offset future gains in future years... (they can even offset normal income, though only 3k/yr worth)

Agreed. Just laying out all options and like you said you can only offset up to 3k losses which I'm sure is a tiny % of the people that participate in this thread.

 

[Max Plaid]

My November 200 +puts will leave with you if we don’t see 200 in the rest of 2023

That's why I took profits on my November +p200's and instead bought some March +p200's instead - covers a lot of potential macro downside and gives plenty of time to sell weeklies to take back the initial cost

Along the same lines I did this a few weeks back: BTO Dec 2025 +p270 -$67, STO Sep 2024 -p300 +$65, STO Sep 2024 -c300 +$45

 

[juanmedina]

Who is not liking this price action? If we finish here are we going to keep going up all the way to ER?

 

[Singuy]

Me too exactly.

IMHO "Rolling" is just a fancy euphemism for taking your lumps closing a bad trade and starting another trade you have higher hopes for at the same time so you feel better about the whole mess.

In other words, you lose money buying back the $300 strikes you want avoid getting excercised because the stock price surprised you by rising, but you're buying $400 strikes, which you don't expect to get excercised. You could just as well do 2 separate transactions.

Correct me if I'm wrong.

Yeah I see how this works now with 2 separate transitions.

Honestly with tax exempt bonds at 5% interest rates, I really don't mind if all my shares are exercised at 400+46 bucks in premium. It's my ticket to retirement and I ran out of things to buy anyways. The price of time is what is expensive. So yes at 46 cents a week it's not all that great but when rates are high and my shares are locked while gaining nothing in return, might as well take the 46 cents a week.

 

[Cherry Wine]

As I look at the two major trendlines from the last two years, I really wonder if we just go sideways from here into earnings before we breakout or break down. It's setting up perfectly, as these things somehow seem to do.

View attachment 979424

As a follow-up to this from yesterday, I would not be surprised by anything between $275-$245 going into earnings two weeks from now. In some ways, breaking down below the trendline in advance of earnings - without a significant catalyst - would surprise me.

FWIW, I did roll my 10/13 -c280s down to 10/13 -c270 this morning. If they end up ITM I am looking to roll them out to Jan '24 at 350+.

 

[ReddyLeaf]

Sold 2026 Jan leaps sp 400 @46 each. Excuted 93 contracts. 400 is the price I am okay if shares are called away. But if this thing drops to 200, then I'll close it in Jan.

Wow, that’s a big initial jump into options! I think my first trade was 1-2x contracts. Welcome to the dark side. Be careful. The emotions can go crazy. Don’t overdo things and let your emotions relax. Realize that you have just sold at $446 and you are happy with that result.

Question, do you get the money now or when contract is closed from CC?

yes, the $46/shr should show in your account soon, if not already. Options settle 1-day later, so it’s best to not do anything with the cash for a few days. Even better, keep the cash earning 5% in a brokerage money market and you will sleep better. FWIW, I made the mistake of using that cash on other trades, and it started further “gambling” with options. It’s hard to get off the merry go round, so be careful. One option, if you decide to go the way of additional options trading, would be to sell puts to hedge the risk (e.g, Jan2026 -p250s are $60 and, if I did the math correctly, you could sell 70x contracts of cash-secured puts, CSP, with that cash). This is called a strangle or straddle, and by definition one must win if the other loses.

Also, there are several older threads describing newbie to expert options trading, as well as several on the tax implications. Do yourself a big favor and search out that information.

For my part, today’s SP action is going against my positions. I bought back one CSP, and sold some -c265/+c275s for $0.85. Right now this is looking like a mistake. Hoping for a pullback

 

[Cherry Wine]

I think the possibility of a bullish scenario should be explored here also. Maybe a weak jobs report this Friday drops yields and sets the indices ripping, butting TSLA up against the descending trendline from Nov. 2021 into earnings, with a positive earnings surprise (no margin compression? surprise energy earnings? something else?) that breaks us out of a two-year downward trend that sends us back towards ATH? - seems unlikely, but who knows...

 

[ninpb]

Just eyeballed drawing this channel a while ago and I check it often. Playing the near term and 3Q earnings as most here are this morning. Waiting to sell the rest of my 2025 +LEAPS if it touches inside the channel before ER.

 

[BornToFly]

Bought back the Oct 27 220 Puts I had sold. Looking to sell them again with GTC order for an extra $1 if we drop from here in the next week.

 

[Jim Holder]

@Max Plaid what is your process for rolling short calls when NTM/ITM? I have a small -C260 practice position expiring this Friday and looking to learn the process of draining out premium before doing anything with it, and what to do.

 

[SpeedyEddy]

Bearflag is getting very big now, almost no volume left, so clearly FOMO-ing the bounce if you ask me. Who will throw in the low-EPS warning + downgrade as the first?