Wiki Selling TSLA Options - Be the House

[Max Plaid]

$9 premium right now would be ~$180 for next Friday.... $1 would be ~202.50 for next Friday-- just as reference

Yeah, but I can go a bit aggressive right now given that I have 300x long calls and shares, so if I did write 100x ATM then I can just roll them way out and still have the possibility to write weeklies, to add more contracts to roll out further, but closer, etc.

It's when go all-in close to the money, that's when the trouble starts...

 

[OrthoSurg]

I am afraid to touch Tesla. I am so traumatized about trading but I am glad I got out somewhat early. I sold a few $165 March 1st puts for $4. Will it go that low?

My question is can we go as low as December 28th 2022

 

[DaBooster]

closed out my Mar 15 200p x50 for $6.00

Yeah I know, nobody was holding a gun to my head but these are worth $22 today

 

[Jim Holder]

In general buy-write is actually buying stock and writing calls against it.

When you buy calls and write calls against it - it is basically a spread (with different strike dates). The shorter duration call (at a lower strike) will always raise faster than the longer duration one, if SP goes up. So, only limited protection ...

Thank you. So buying the calls beforehand to write against is not really making the sold calls “covered,” so perhaps the point is solely to use income from the shorter dated, lower strike calls to pay for the longer dated one. That makes sense.

 

[Max Plaid]

If I follow:
Buy FOTM calls
Sell calls against shares
If they expire OTM, repeat
If they go ITM, roll up and out for credit until bought call expiry.

Edit: and you updated your post

OK, a lot depends on share count, cash reserves, distance to the long and broker rules, but essentially you're forming a calendar/diagonal spread, like 120 wide, so you need some margin to be able to do that... but let's say you have 10000 TSLA, then they'd be underwriting the weekly sell, so margin is required, but the long +c300 calls are still there to limit an upside loss

So yes, see it like writing -c185/+c300 weekly, except if you get caught in a move upwards it's way easier to roll

The risk is that the SP dumps and you end up so far from the long leg that you can write anything, although I suppose you can move down to 25cent premiums, in fact over a year, not including broker fees, 20c per week will get the initial premium back. So make $$$ when the opportunity is there and pennies when it's not, no need to take risk...

For my part I with these "burner calls" I will do an initial ATM sell to claw back a decent amount of the premium. If you buy the longs for $10 and already take back $5 on the first sell, then you've recuperate half the initial cost and can relax a bit on future short sells

I've been doing this for a while now, trying to get a feel for it. Seems the best approach is to sell a little more aggressively against half the positions, so 50x $2 if you have the 100x +c300, then you need half the margin and can either double-up the contracts to row, or roll up and our on the losing positions, but still have 50x free to write the next week

The ideal is to keep it fairly OTM, then if the longs go into profit you can easily get out of the shorts and sell off the position for more profits

Anyway, not advice, of course!

 

[MikeC]

a week out, SAME STRIKE, is only .20 of added extrinsic ... I rolled mine out to 2/23 for closer to $2 added, but that too is evaporating as SP heads south.

True, but he expects a bounce tomorrow. Rolling out a week would probably prevent assignment tonight and if we do bounce tomorrow then he’s in better shape.

 

[thenewguy1979]

OK, a lot depends on share count, cash reserves, distance to the long and broker rules, but essentially you're forming a calendar/diagonal spread, like 120 wide, so you need some margin to be able to do that... but let's say you have 10000 TSLA, then they'd be underwriting the weekly sell, so margin is required, but the long +c300 calls are still there to limit an upside loss

So yes, see it like writing -c185/+c300 weekly, except if you get caught in a move upwards it's way easier to roll

The risk is that the SP dumps and you end up so far from the long leg that you can write anything, although I suppose you can move down to 25cent premiums, in fact over a year, not including broker fees, 20c per week will get the initial premium back. So make $$$ when the opportunity is there and pennies when it's not, no need to take risk...

For my part I with these "burner calls" I will do an initial ATM sell to claw back a decent amount of the premium. If you buy the longs for $10 and already take back $5 on the first sell, then you've recuperate half the initial cost and can relax a bit on future short sells

I've been doing this for a while now, trying to get a feel for it. Seems the best approach is to sell a little more aggressively against half the positions, so 50x $2 if you have the 100x +c300, then you need half the margin and can either double-up the contracts to row, or roll up and our on the losing positions, but still have 50x free to write the next week

The ideal is to keep it fairly OTM, then if the longs go into profit you can easily get out of the shorts and sell off the position for more profits

Anyway, not advice, of course!

Max,

Why not buy staggered call @ 240, 250, 270 etc instead of 1 big bucket of 300C?

Wouldnt that lowered the upfront cost of the Calls and Margin as the written C wont be too far from the Long?

 

[BornToFly]

OK, rolled my -210P for tomorrow out 2 weeks for 0.5 credit.
Now have Feb 2 -210P paired with March +200P
Also have -180/+185P for next week. So I can wait and see if I get full profit on the protective spread next week to help manage the calendar BPS the week after.

 

[Yoona]

bounced at dark pool and Order Block, 1st green candle today

 

[thenewguy1979]

Yeah I know, nobody was holding a gun to my head but these are worth $22 today

Guess you missed my post about growing bigger balls?

I sold my +182p Long at opening. Guess my balls was not as big as I touted them to be

JK aside, we all make the same mistakes. Sometimes just need to pause and give our decision 30 more minutes before making them in a hurry. If unsure - we can always ask for the team feedbacks then weight our own decision.

 

[Max Plaid]

$1 calls are currently 15 delta - so expect them to go ITM 7 or 8 times in the next year. How many times you will have to roll each time ? I sold 30 cent calls and had to roll for 6 months.

Well my method isn't scientific, that's for sure,I'm approaching it from a very simplistic perspective

Indeed there will be times with TSLA when it will go ballistic in one direction to another - like now, from 265 one month back to 180 today, that can't be allowed for in any system and almost any trade will get caught up in that

So rather than $1 per week, you can use TA and Max Pain, whatever to pick a strike that's you believe will not go ITM, some weeks will bring $2, others 20c

Anyway, I don't see it any different from selling against shares, you've just got less capital at stake, getting a better ROIC and of it the short really goes ITM, then perhaps the long calls become very profitable too and you sell those off

It all depends, eh?

 

[Arul]

somewhere in there is a line: "i believe the trick is to roll BEFORE you go ITM"

That is a great statement but i never followed. Always latefor rolling, including this week. Thanks for reminding.

 

[elasalle]

I think odds are good of a bounce tomorrow. The problem is I have to close my Jan 26 -210P today (to avoid assignment), along with the March +200P (so that it doesn't lose value on a bounce tomorrow), so I will be forced to lock in the loss.

I wanna get assigned today, so i can wheel tomorrow why wait till Monday
Will wait and likely roll tomorrow ...(end's up being kinda the same, except no assignment, but must minimize extrinsic )

 

[Max Plaid]

If you own C300 you can only sell higher strike against them correct? If that is the case how do you expect to get 1$ every week.

Depends on your broker rules. But it's the same as BPS, you need margin to cover the width and volume, or shares underlying the whole lot

 

[intelligator]

Guess you missed my post about growing bigger balls?

I sold my +182p Long at opening. Guess my balls was not as big as I touted them to be

JK aside, we all make the same mistakes. Sometimes just need to pause and give our decision 30 more minutes before making them in a hurry. If unsure - we can always ask for the team feedbacks then weight our own decision.

+1 on the wait , and ask.

I've switched to watching for consecutive 15 minute candles before making any directional adjustment, which typically is an hour buffer. That's help smooth the jerky decision making, some. Also, the team here has been incredibly helpful, asking usually yields a bunch of options that I personally would not have thought of on my own.

 

[elasalle]

Curious, but is there any one selling PUTS/Calls that is coming out unscatched on days like this ? What's the secret sauce? Selling even 0.1 Delta etc still incurs losses.
So there must be some other strategy like delta neutral etc etc?

+ I go on a short vacay tomorrow .. one time when I landed in hawaii, Elon tweeted going private ... so watch out guys/gals ...

 

[Max Plaid]

I think odds are good of a bounce tomorrow. The problem is I have to close my Jan 26 -210P today (to avoid assignment), along with the March +200P (so that it doesn't lose value on a bounce tomorrow), so I will be forced to lock in the loss.

I rolled my -c205's down to -c200 for next week, these against March +p200's, so at least I can't lose any more on those from here, will probably just keep rolling the -c200's, but if we went back close to 200 I would now offload the lot

 

[Max Plaid]

For the buy-write CALLS gang, I'd like to try this out.

I have 10x +C255 9/20/24 that I can try this with. What protection does it gives us to write against it say the @Max Plaid $1.00 weekly special, which would currently be -C197.50 2/2/24. Forgive me if the answer is obvious.

In principle that's a -197.50/+255 spread, so you'll need to cover the width with margin, but as you're likely holding 1000 shares anyway that are not written against then these would be effectively underwriting the trade, you're just using the +255's to cap losses to the upside, like a normal spread

 

[DaBooster]

Guess you missed my post about growing bigger balls?

I sold my +182p Long at opening. Guess my balls was not as big as I touted them to be

JK aside, we all make the same mistakes. Sometimes just need to pause and give our decision 30 more minutes before making them in a hurry. If unsure - we can always ask for the team feedbacks then weight our own decision.

yes, post was from Jan 3. I earned that I should layer out & not be so gungho to take the profits & run

 

[intelligator]

Curious, but is there any one selling PUTS/Calls that is coming out unscatched on days like this ? What's the secret sauce? Selling even 0.1 Delta etc still incurs losses.
So there must be some other strategy like delta neutral etc etc?

+ I go on a short vacay tomorrow .. one time when I landed in hawaii, Elon tweeted going private ... so watch out guys/gals ...

yesterday i opened a NFLX IC , .06 delta each side , should expire but may close it by end of day , already at 75%
today i opened a NVDA IC , .06 on the short call side, .04 on the put side , that too faring well

.1 got me into trouble with TSLA spreads ... even .06 is tough 2dte , YMMV