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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Haven’t done the math on this yet, at what point does this work out better than just selling longs. Wouldn't it just be neutral if ATM and if above lose on the -C and +P?
If you had sold your longs, you technically sell but don't receive any premiums for the sell. Here you receive a premium and then in turn use the premium to buy some downside protection, worst case, stock moves up and you lose your shares and the +P goes to 0. But you now have a 50% probability of the stock moving down and you benefitting, not only with a IV crush but also your ATM +P now being ITM. There is a risk of the stock just being flat, in that case you end up net 0, but you still keep your shares. If you had sold your shares at what point do you consider it safe to move back into the stock? What if the stock moves up after earnings? So the question is are you willing to take a 50% probability of success that the stock moves lower post earnings? If the stock moves up your -C can just be rolled out to a later in time expiry, you cut your +P at a loss (insurance), and you still possibly collect a little bit more premium by going our further in time. By selling your shares outright you are 100% sure that the stock price will be lower.
EVNow
Well-Known Member
Reminds me of Q1 ‘19 … and that’s scary.
Between the low P&D numbers and high AI infrastructure spend I feel like the FCF number will shock everyone. I don’t think the street cares about EPS for this quarter.
i decided to change SMCI into NVDAThe love affair with SMCI continues.
Seriously though why bother going naked on a volatile stock like SMCI which trades with 4-5 dollar spread. Your strategy works except if there is some news after market hours.
A stock split or some pre announcement of earnings or something else could catch the shorts off guard. I would not go naked especially the 785 strike that’s for sure, at least look to limit downside by buying a 875 call or something like that. This is one case where using a spread actually makes perfect sense.
STO DITM NVDA CC 735, 40 credit, buy stock 760, cost basis=720
at expiration:
if stock > 735, net = 1500 (rinse repeat the DITM again)
if stock between 720 and 735, net = stock minus 720 (rinse repeat the DITM again)
if stock < 720, round 2 another DITM CC
thoughts, anyone?
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Short term, this increases my expectation that the numbers this week will be quite low, and Tesla is trying the various levers in order to generate some anecdotal short-term data points to provide some support. Anything they will be able to share by the earnings call this week r.e. FSD take rate (subscription or purchase) will help.
Longer term, this increases my hopes that the rest of 2024 will be significantly better than Q1, as the more realistic FSD pricing will both contribute to margin for the take rate as well as potentially drive more sales of the underlying vehicles.
<Note: Spoken by someone who has repeatedly paid more than $8k for FSD, but I do understand that not all vehicle purchasers / drivers place as high a value on it as I do.>
Elon says we're gonna 5x but left out about first going -3x
Thank you.
So to make sure I understand the formula correctly, if I was planning to anyway sell 3,000 longs at/near $150, instead:
STO 30x -C150 4/26 @5.75
BTO 30x +P147 4/26 @7.00
Is the ratio + date correct?
Go a bit further out for DTE maybe?
TIA
No change to the price here in Europe, it's €3700 to upgrade from EAP
If they dropped it to €2000 I'd buy it on the gamble that it will a) come to Europe, b) allow future transfer/linked to account not car
ChiefRollo
Member
Yoona,
FWIW, I would consider (study the numbers & consequences of potential outcomes) (1) selling aggressive puts or (2) cover the calls with +C’s…versus buying shares. The trick for me with doing these vertical (or horizontal or diagonal) spreads is their timing; at the risk of overstating the obvious, doing a (longer term) spread does not necessarily mean both components have to be implemented at the same time. Proper timing of when to buy or sell calls for instance would optimize premiums. Implementing both legs at the same time means at that very moment, one has no idea or conviction which direction SP will take over the time period over which one makes a bet; if that is true, one should not be making bets. I sense you’re at least longer term bullish on NVDA (as am I); buying LEAP call(s) as the first move may be a decent option (not a pun). You can then add to it -CC as needed…and evolve your position over time.
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thx and u r absolutely right, i had the same conclusion just now after researching this the whole day - it's a very bad idea buying NVDA/SMCI shares just for the sake of income, even if just B/W
XLK is getting hammered by this sector rotation and there is no point in DITM CC coz there's no bottom yet
weekly SPY/SPX both touching 20sma below means there's a big possibility of DCB which means rug pull for all late bears coming in (that would be me)
lose-lose
if i really insist on income, perhaps the best short-term bet would be legged-in BCS, or go to energy and utilities (follow the money)
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There is also heavy whale accumulation in TSLQ (red bars, 93%, vs TSLA that has almost zero whale participation (see TSLA solid green bars=retail only). Both daily and weekly TSLQ charts are bullish.
Continuing to close above $41.41 would sustain bullish momentum, while closing below $39.28 would invalidate it.
Both MACD and RSI lean bullish.
I don’t follow this ticker or know its personality. Anyone who does can share more thoughts.
TSLQ - D
AFAIK, Im one of the very few here that have been selling naked calls (theres no such thing as a naked CC - CC implies you have shares to back the call while naked means you dont). I have done risk assessment to death on this topic.
1. A BW is simply a CSP. If you buy shares at 765 and sell calls at 740, with some discrepancy in premium due to interest rate, its the exact equivalence of selling a 740 CSP, only your head is tricked into thinking its not by the 2 separate transaction. So, keep it simple and think in term of CSP. If you are willimg to sell a 740 CSP, then proceed with the BW and vice versa.
2. Treat naked short calls as you would BCS, only with a longer leash if your aim is income. Naked calls mean you dont cover it with anything to maximize returns and reduce risk. The more net premium you receive, the less risk you have to take.
What do I mean by treating it like you would a BCS? Do I mean always sell FOTM naked calls? No. It depends on your strategy.
If you normally sell BCS as a directional bet, like some of my friends do, then sell slightly ITM or ATM naked calls instead. They would, for example, sell 715/720 NVDA BCS right now if they think it will go down more. Slight ITM because you want to have some theta built in for income. If you get into the DITM territory, it becomes more like shorting common, no longer BCS mentality. However, if you are not into directional bets, like I deduce from your posts, then sell FOTM naked calls, same as your BCS. The difference is: further OTM than BCS. If you normally go with 6 SD on the BCS, then go with 7 or 8 SD on the naked call. Same entry (sell at resistance) as a BCS for maximizing R:R.
TL;DR:
Naked calls = BCS
Covered calls (even if DITM) + long shares = CSP
Keep it simple and know what
you want to get into. Directional or nondirectional? Up or down? Capital in cash to earn interest or deployed in shares for higher premium?
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