Wiki Selling TSLA Options - Be the House

[EVNow]

As a for-instance, these Jan 270s are 9.60 options. So a 2/3rds close would be for 3.20. Thing is that I only have a 2.00 credit in there. A 2/3rds close is really when the option price is down around .70 (2/3rds of the 2.00).

I wonder whether it would be a good idea to roll to higher and longer duration CC to get double the premium. In that case we can still close when the premium drops by 50%. Will have to check the option chain when I'm back home.

 

[EVNow]

Yes, my analysis also concludes that it could go UP, or it could go DOWN from here. Great minds....

Great minds think alike and fools seldom differ

I use Wicked Stocks mainly for resistance and support levels.

Up or down depends on so many things it's basically a coin toss.

 

[OrthoSurg]

I went long on common at 239 last night and 242 this morning. This is a very reliable setup. I'll sell at the next major bearish divergence.

I have

It's always the same.
299 -> 212. Retails piled on the short train. Now let's pump it back up.
212 -> 242. Big scary triple top. Retails piled on the short train again. Out came Adam Jonas with his 400 target.
242 -> 279. Institutions got their exit liquidity
Rinse and repeat till 194 where stupid retail shorts piled on again
Now they're being squeezed out for what? Exit liquidity.
The goal is to make sure there are the least number of people who can benefit from every major move, be it up or down.
My job is to tell when these fleecing operations begin and end.

I swear when you call the next top I liquidate all my longs, no questions asked.

 

[Jim Holder]

I’m trying to understand if I’m missing something, is the only fear of having a covered short call (not on margin) going ITM is that we missed out on more gains?

So for example, if I let my 30x -235 11/17 @$3.14 premium run out and do nothing and the shares get called away next Friday and I get paid for them, the max I get for the shares are $238.14 vs whatever the stock might be at next Friday, which could be let’s say $250 or so, =$12 more per share = $36k left on the table (IF we stay over $250 all next week and not waterfall). It’s not like I’m losing money, just less gains. True if I buy back in with the cash after they’re called away I won’t have the same amount of shares (because they are more expensive if we are above $238), but I could also wait for a dip to get back in which may or may not come.

BTC the contracts now at $11.50 will cost me around the same “loss” (30x11.50=$34.5k) and actually lock it in.

So better to just let them run out and sell ATM puts for the following week 12/1 after they’re called away (pays around $10) to get them back to help recapture some of the gains left on the table, BTC, or roll somewhere else?

(I also have 15x -C240 11/24 @$1, now $8.21, and 10x -C250 11/24 @$2, now $3.77).

@dl003 suggested a couple days ago to leave them alone for now, but still good to have a backup plan.

 

[MikeC]

I’m trying to understand if I’m missing something, is the only fear of having a covered short call (not on margin) going ITM is that we missed out on more gains?

So for example, if I let my 30x -235 11/17 @$3.14 premium run out and do nothing and the shares get called away next Friday and I get paid for them, the max I get for the shares are $238.14 vs whatever the stock might be at next Friday, which could be let’s say $250 or so, =$12 more per share = $36k left on the table (IF we stay over $250 all next week and not waterfall). It’s not like I’m losing money, just less gains. True if I buy back in with the cash after they’re called away I won’t have the same amount of shares (because they are more expensive if we are above $238), but I could also wait for a dip to get back in which may or may not come.

BTC the contracts now at $11.50 will cost me around the same “loss” (30x11.50=$34.5k) and actually lock it in.

So better to just let them run out and sell ATM puts for the following week 12/1 after they’re called away (pays around $10) to get them back to help recapture some of the gains left on the table, BTC, or roll somewhere else?

(I also have 15x -C240 11/24 @$1, now $8.21, and 10x -C250 11/24 @$2, now $3.77).

@dl003 suggested a couple days ago to leave them alone for now, but still good to have a backup plan.

Yes, it’s just selling off upside if you have the shares to back them.

I’m still comfortable with my 220CCs, just plan to roll them straight every Thursday/Friday for small credit, which with enough contracts is pretty much the income I’m looking to gain week to week. It’s more than I make off the shares just sitting there uncovered. As long as we stay in this range.

I’m avoiding puts here because I’ve been reversed on too many times. I’m coming to realize short puts don’t really fit my portfolio goals - it doesn’t make sense to add additional downside risk to my already concentrated long position, for just a small premium.

 

[Right_Said_Fred]

Two days ago, with the SP around 215, I sold CCs for only 0.2 premium at the 242.5 strike. That is usually not close to the sun at all....

With ‘too close to the sun’ I meant positions which are risky not because of the strikes but because of the volumes. Several times I’ve seen you sell huge amounts of calls for pennies, but this stock can sometimes take-off like a rocket (or drop like a brick). Are those pennies worth the potential risk of losing so many shares at those strikes?

 

[Max Plaid]

Two days ago, with the SP around 215, I sold CCs for only 0.2 premium at the 242.5 strike. That is usually not close to the sun at all....

Yeah, when TSLA moves it can move fast and keep going, in both directions, and then when you finally de-risk your positions it flips and goes the other way...

That's why I'm planning to a) to stop trying to guess the direction b) stop writing ATM, c) start writing against shorter term long positions with the intent to sell them off if the shorts go too far ITM

So I'm looking to move mostly into cash, to buy some calls and puts to sell against, but to have enough money to cover the margin requirements for both. Along the way I'll try to collect some TSLA to rebuild my long term position

I think it's also important to be OK with the underlying long being sold off to cover the ITM, even if it means giving up potential profits

And that's also a key point, "potential profits" - the number of times I had winning positions that I left in play waiting for more profits, which then deteriorated into losses... TBH if I had close every position with +10% I'd be retired by now

I'm also always looking for the "killer trade", the one that will propel my portfolio back to where it was at TSLA ATH in Oct/Nov 2021, some weeks I make steps towards that, the next week I give it all back, and yet somehow manage to end up with more realised gains even though my portfolio value shrank

And then the final point is that I've actively avoided taking huge profits, trying to wait them out until the next fiscal year, to "avoid paying too many taxes". I realise this is a fools approach, those profits would need to be taken at some point and the taxes due, so from now on I'm not going to take that into consideration

 

[Max Plaid]

This was posted in the "other" thread overnight, but I don't see any news of anything, any ideas?

 

[Nick-m]

Maybe Biden meeting Xi.

 

[Max Plaid]

Maybe Biden meeting Xi.
View attachment 991124

IMO the whole thing seemed to go pretty well, and Elon got Xi's support, the mere fact that Xi and Biden met is positive and re-establishing exchange of military information is very important

Sure, TSLA is down 1% in PM, but on anaemic volume

 

[Patrick66]

I’m trying to understand if I’m missing something, is the only fear of having a covered short call (not on margin) going ITM is that we missed out on more gains?

I look at it more on the risk:reward spectrum. If your strategy reward offers $1-2/share/week gains, but your risk might be $20/month at particular price or market conditions. I generally try to avoid selling options in those conditions (but I am significantly more conservative in my strategy than most here). I use option sales more for trading around a position for cash flow.

 

[thenewguy1979]

I’m trying to understand if I’m missing something, is the only fear of having a covered short call (not on margin) going ITM is that we missed out on more gains?

So for example, if I let my 30x -235 11/17 @$3.14 premium run out and do nothing and the shares get called away next Friday and I get paid for them, the max I get for the shares are $238.14 vs whatever the stock might be at next Friday, which could be let’s say $250 or so, =$12 more per share = $36k left on the table (IF we stay over $250 all next week and not waterfall). It’s not like I’m losing money, just less gains. True if I buy back in with the cash after they’re called away I won’t have the same amount of shares (because they are more expensive if we are above $238), but I could also wait for a dip to get back in which may or may not come.

BTC the contracts now at $11.50 will cost me around the same “loss” (30x11.50=$34.5k) and actually lock it in.

So better to just let them run out and sell ATM puts for the following week 12/1 after they’re called away (pays around $10) to get them back to help recapture some of the gains left on the table, BTC, or roll somewhere else?

(I also have 15x -C240 11/24 @$1, now $8.21, and 10x -C250 11/24 @$2, now $3.77).

@dl003 suggested a couple days ago to leave them alone for now, but still good to have a backup plan.

Seem to be a good move. Close now pay now.

This was posted in the "other" thread overnight, but I don't see any news of anything, any ideas?

View attachment 991123

macro doing a pullback. Expected due to crazy pump. Nothing extremes so far. Either that or there some unknown Tesla new?

 

[thenewguy1979]

Been seeing some heavy 50-100 x contract option selling. Was wondering is that based on a % of equities/stock or everyone betting the house?

Would be good to know the team de-risking plan. Dumb dog me been burned so many times.

 

[Tachyon]

Yes, it’s just selling off upside if you have the shares to back them.

I’m still comfortable with my 220CCs, just plan to roll them straight every Thursday/Friday for small credit, which with enough contracts is pretty much the income I’m looking to gain week to week. It’s more than I make off the shares just sitting there uncovered. As long as we stay in this range.

I’m avoiding puts here because I’ve been reversed on too many times. I’m coming to realize short puts don’t really fit my portfolio goals - it doesn’t make sense to add additional downside risk to my already concentrated long position, for just a small premium.

With all due respect, no one seems to mention the short term capital gains tax on the profits and the negative effect of Wash sale rules on all these trades/ rolling over contracts. The profits you see today may not actually be profits when the tax man comes calling. Just beware of the Wash sale rules- specially when rolling contracts.

 

[Max Plaid]

Seem to be a good move. Close now pay now.

macro doing a pullback. Expected due to crazy pump. Nothing extremes so far. Either that or there some unknown Tesla new?

NVDA looking the same, so perhaps just macro taking a break, hardly surprising if TSLA pulls back a bit after the crazy run

I'm still not seeing any negative news either specifically for TSLA or macro, so perhaps SPY and QQQ being over-extended, etc.

 

[Tachyon]

This was posted in the "other" thread overnight, but I don't see any news of anything, any ideas?

View attachment 991123

Related to Elons musings (bordering on antisemitism according to some )on the site we cannot mention here. Nothing more.

 

[Max Plaid]

Related to Elons musings (bordering on antisemitism according to some )on the site we cannot mention here. Nothing more.

Well I unfollowed Musk on Twitter as his posts were becoming plain offensive, and it does make me nervous and another reason why I want to get out of my overpriced LEAPS if possible...

But TBH I think his Twitter persona has become a bit normalised, everyone knows he's nuts and other than the usual detractors nobody cares

As for the PM drop, I note that pretty much all the EV stocks are down: XPEV -5%, NIO -4%; LI -4%, etc., so more sector I would say, although most of the stocks on my broader watchlist are down too

 

[Max Plaid]

A load of FEDiots speaking again today, and a few economic indicators just released, with more jobless and import/export prices dropping much more than expected, should be positive for the markets...

 

[Jim Holder]

Needs it to drop and close around 240 for a shot at a blow off top tomorrow - Friday.

Good morning. Does the premarket drop below $240 count toward the shot at a blowoff top today/tomorrow?

 

[BornToFly]

I’m trying to understand if I’m missing something, is the only fear of having a covered short call (not on margin) going ITM is that we missed out on more gains?

TAXES! If my shares were in an IRA I wouldn't care. But I bought my shares in 2013. The capital gains will be massive when I sell. That makes CC selling more difficult, because mentally they are like naked calls.

I have debated between two strategies - A) Fewer contracts closer to the money, and use other contracts to rescue. B)All the contract for pennies, and hopefully have them never go ITM. Generally B works better for me. The mistake I made this time was not waiting until CPI after the ridiculous drop end of last week to sell my CCs. Basically the first 10% gain didn't count. Last week I was so convinced we were going lower that I sold the 230CCs for 0.4 (twice my normal premium). I survived that one, but I'm going to stick to smaller gains.

This morning we are down in pre-market. This could be a bear trap. Or we could finally take a breather.... Hard to know. I could sell Jan 2025 300CCs at the open, and buy them back after a drop, and use the profits to close my 247.5CCs for next week.... Of course I would regret that if today turns out to be a trap and climb.