Wiki Selling TSLA Options - Be the House

[jeewee3000]

from what i know now, leaps is a profit multiplier but not for newbies

LEAPS are indeed a profit multiplier if:
a) the share price increases after you bought them
AND b) fast enough, that is.

The LEAPS lose theta, which is slow at first but continuously increases in "speed". It's an exponential curve basically, where theta loss only materially kicks in the last year before expiration.

Therefore, when a trader wants to use LEAPS as a leveraged stock position, it is advised to buy at a dip on a maximum timeframe (2.5 years out generally) and get out within ~1.5 years on a local high, only to await a new dip and buy 2.5 years out again.

Holding a LEAP till expiration is a possibility as well, but then one must be quite convinced the SP will still rise a lot to make it worthwile (i.e. "We're not at the top yet", since at that time it is expensive to purchase new farther out LEAPS). For example if one was holding NVDA LEAPS a few months ago and confident in a decent rally, it was wise to HODL the LEAPS.

I got lucky with LEAPS in the 2019-2020 rally (like @Max Plaid for example) but now I'm not so keen on them since I don't expect us mooning soon (=ATH or more).

However, whenever we drop "really low" (160's and below IMO), I tend to catch a few LEAPS, hold them till we reach the 180's/190's again and unload them. This provides some upside with little risk: I can always HODL them for a year and catch some rally along the way. The latter is untrue when you bought at a local high and the stock then drops for an extended period of time.

TL;DR: entry selection is crucial for LEAPS. Patience is a virtue. I don't use them often, but I do whenever the main thread starts to speak of selling because TSLA is f*d.

 

[Yoona]

LEAPS are indeed a profit multiplier if:
a) the share price increases after you bought them
AND b) fast enough, that is.

The LEAPS lose theta, which is slow at first but continuously increases in "speed". It's an exponential curve basically, where theta loss only materially kicks in the last year before expiration.

Therefore, when a trader wants to use LEAPS as a leveraged stock position, it is advised to buy at a dip on a maximum timeframe (2.5 years out generally) and get out within ~1.5 years on a local high, only to await a new dip and buy 2.5 years out again.

Holding a LEAP till expiration is a possibility as well, but then one must be quite convinced the SP will still rise a lot to make it worthwile (i.e. "We're not at the top yet", since at that time it is expensive to purchase new farther out LEAPS). For example if one was holding NVDA LEAPS a few months ago and confident in a decent rally, it was wise to HODL the LEAPS.

I got lucky with LEAPS in the 2019-2020 rally (like @Max Plaid for example) but now I'm not so keen on them since I don't expect us mooning soon (=ATH or more).

However, whenever we drop "really low" (160's and below IMO), I tend to catch a few LEAPS, hold them till we reach the 180's/190's again and unload them. This provides some upside with little risk: I can always HODL them for a year and catch some rally along the way. The latter is untrue when you bought at a local high and the stock then drops for an extended period of time.

TL;DR: entry selection is crucial for LEAPS. Patience is a virtue. I don't use them often, but I do whenever the main thread starts to speak of selling because TSLA is f*d.

WOW! thank you

 

[Max Plaid]

Seems we have another physical recall! Wow, so retro

https://twitter.com/x/status/1805541890319679841

 

[Max Plaid]

LEAPS are indeed a profit multiplier if:
a) the share price increases after you bought them
AND b) fast enough, that is.

The LEAPS lose theta, which is slow at first but continuously increases in "speed". It's an exponential curve basically, where theta loss only materially kicks in the last year before expiration.

Therefore, when a trader wants to use LEAPS as a leveraged stock position, it is advised to buy at a dip on a maximum timeframe (2.5 years out generally) and get out within ~1.5 years on a local high, only to await a new dip and buy 2.5 years out again.

Holding a LEAP till expiration is a possibility as well, but then one must be quite convinced the SP will still rise a lot to make it worthwile (i.e. "We're not at the top yet", since at that time it is expensive to purchase new farther out LEAPS). For example if one was holding NVDA LEAPS a few months ago and confident in a decent rally, it was wise to HODL the LEAPS.

I got lucky with LEAPS in the 2019-2020 rally (like @Max Plaid for example) but now I'm not so keen on them since I don't expect us mooning soon (=ATH or more).

However, whenever we drop "really low" (160's and below IMO), I tend to catch a few LEAPS, hold them till we reach the 180's/190's again and unload them. This provides some upside with little risk: I can always HODL them for a year and catch some rally along the way. The latter is untrue when you bought at a local high and the stock then drops for an extended period of time.

TL;DR: entry selection is crucial for LEAPS. Patience is a virtue. I don't use them often, but I do whenever the main thread starts to speak of selling because TSLA is f*d.

But what you can also do with LEAPS is keep them alive, kick them down the road 12 months for a bit extra premium... for instance, my Dec 2025 +c200's are currently trading $44, the Dec 2026 $53, so for $9 you can buy 12 months more time right now... what's the advantage to that? Well I have 100x +c200's and I ate weeklies against them, they're share-proxies, and if I take $1 - $2 weekly that extra $9 is recuperated in a month or so...

And if you already hold the LEAPS, it's like buying Dec +c2026's for $9, which you'd jump at, given the chance

But worth noting that indeed, the real profit on my LEAPs always came buying them low, not selling short against them, waiting for the stock to pop and selling. Cheap LEAPS can 2x 3x in price when the stock rises 50%, and if it's a hard rally even faster as IV pops at the same time

 

[Max Plaid]

NVDA looking fun in pre-market, >3%... shorty bear-trap, going to squeeze back up today?

 

[Jim Holder]

In a good way or bad?

Not in a good way. If it’s campy and disorganized, how will it inspire people and excite investors?

 

[Yoona]

But what you can also do with LEAPS is keep them alive, kick them down the road 12 months for a bit extra premium... for instance, my Dec 2025 +c200's are currently trading $44, the Dec 2026 $53, so for $9 you can buy 12 months more time right now... what's the advantage to that? Well I have 100x +c200's and I ate weeklies against them, they're share-proxies, and if I take $1 - $2 weekly that extra $9 is recuperated in a month or so...

And if you already hold the LEAPS, it's like buying Dec +c2026's for $9, which you'd jump at, given the chance

But worth noting that indeed, the real profit on my LEAPs always came buying them low, not selling short against them, waiting for the stock to pop and selling. Cheap LEAPS can 2x 3x in price when the stock rises 50%, and if it's a hard rally even faster as IV pops at the same time

@Papafox 's tip on when/how to roll LEAPS: (bookmark it!)

@woodisgood said:

I'm in a similar situation but resolving it through no/low cost rolling on strong up or down trends during a day. First I had a sugarload of Sept 22 DITM leaps but I moved them all to Jan23 DITM leaps (most at same strikes) for very little. Now it's time to first move them to Mar23 and then to Jun23 while we wait to see a market recovery. I'll eventually will move them to Jan2030s if I have to wait for an excellent return. I can outlast the market's irrationality.


Timing leap rolling works best in an IRA or other tax-protected environment. If you are trading in a regular brokerage account, you might still benefit from doing so if the call price is approaching the price you paid for the call. There's little tax to pay if you sell your Jan23 leap for a little more than you paid. If it's worth less than you paid, you get into a wash-rule situation where you can't deduct the loss. Thus, selling the Jan23 for slightly more than you bought it is the sweet spot if you're not trading in an IRA/401K. In a brokerage account, consider long-term vs. short-term gains.

Let's say the stock price is going up (I know, a rather rare event these days). You first buy the later expiration leap (such as mar23 or jun23) and then you wait for TSLA to rise enough to sell your jan23 leap close in value to the newly purchased, later expiring leap. Voila, a no cost/low cost leap roll. Let's say your Jan22 leap has $180 value but a Mar23 leap of same strike is selling for $185. You need somewhat more than $5 stock price rise to bring about a zero-cost pseudo-roll. If the stock price is descending quickly, you first sell the Jan23 leap then wait to buy the later-expiring leap when it reaches approx. price parity with what you received for selling your Jan23.

Sometimes a strong run upwards or downwards runs out of steam and starts to reverse before you've reached your no-cost goal. In this case, it's essential that you have spare cash in the account to make up the difference. Also, it's important that your brokerage account has a margin component that allows you to use the funds from a just-sold transaction to immediately buy another transaction. Another alternative is to sell a $26.67 Jan23 call and buy a Jun23 $50 leap, provided you're not paying too much for change in time value. The new leap is worth less than the old, but you generate cash in the transaction, and if the cash increase is roughly the same as the decrease in leap value because of higher strike price, you have done a neutral trade. I did this exact trade on Thursday Oct13 and and it doesn't require much of a TSLA price change to be profitable.

You need to get comfortable with the process if you're going to move lots of calls and I strongly suggest trading only 1 call at a time until you have it wired. I try to keep the value of the purchasing and selling calls within about $5 of each other so that I don't need a huge rally or plunge to do the trade without overnight exposure. Overnight exposure in this environment can be dangerous. Nonetheless, I was trading 5 Jan23 166.67s for 5 Mar23 166.67s and was playing the downtrend by selling first and buying later. I took a chance by not completing the trade before market close, figuring there would be a least a few more dollars of drop before TSLA hits rock bottom (I was right) and completed the trade as TSLA bottomed out Thursday morning.

Use the volatility to your advantage.

 

[juanmedina]

What is good entry point on $SMCI? I am thinking $780 if it gets there before earnings.

 

[Yoona]

What is good entry point on $SMCI? I am thinking $780 if it gets there before earnings.

800 is possible but not guaranteed, 782 is weekly support

 

[Yoona]

can one of you degenerates pls pick me up from LA? i am too cheap to Uber

i will be easy to find: i have Farrah Fawcett's hair and i walk like Wonder Woman

in lieu of cash tip, i will give hot stock tip

in other news... i may buy AMZN, it looks ready to explode up on the Weekly

 

[Jim Holder]

 

[BornToFly]

Once again, could have made money selling shares 30 minutes before open and buying back after....

 

[thenewguy1979]

TSLA is making slow but steady gain so far.......

 

[Knightshade]

I'll probably resell again if we pop again in the morning.

Pop took a bit longer this morning, but sold buncha 6/28 CCs just now-- for bit less than I got on yesterdays pop, but still 2x what I BTCed em for yesterday afternoon.... some -195 and some -197.50

 

[Yoona]

SMCI ratio

at expiration: net 2,812 to 6,812 depending on close (sweet spot 826-866)

covered, nothing naked

not advice

 

[Jim Holder]

At the pop to 187 STC a bunch of calls bought at lows for scalp $$.
So far lower high than yesterday...

 

[ChiefRollo]

At the pop to 187 STC a bunch of calls bought at lows for scalp $$.
So far lower high than yesterday...

View attachment 1059572

Did the same...at ~mid 186 where MACD began reversing; just playing / practicing with timing...

 

[Jim Holder]

 

[Jim Holder]

https://twitter.com/x/status/1805607127970382244

 

[ChiefRollo]

LEAPS are indeed a profit multiplier if:
a) the share price increases after you bought them
AND b) fast enough, that is.

The LEAPS lose theta, which is slow at first but continuously increases in "speed". It's an exponential curve basically, where theta loss only materially kicks in the last year before expiration.

Therefore, when a trader wants to use LEAPS as a leveraged stock position, it is advised to buy at a dip on a maximum timeframe (2.5 years out generally) and get out within ~1.5 years on a local high, only to await a new dip and buy 2.5 years out again.

Holding a LEAP till expiration is a possibility as well, but then one must be quite convinced the SP will still rise a lot to make it worthwile (i.e. "We're not at the top yet", since at that time it is expensive to purchase new farther out LEAPS). For example if one was holding NVDA LEAPS a few months ago and confident in a decent rally, it was wise to HODL the LEAPS.

I got lucky with LEAPS in the 2019-2020 rally (like @Max Plaid for example) but now I'm not so keen on them since I don't expect us mooning soon (=ATH or more).

However, whenever we drop "really low" (160's and below IMO), I tend to catch a few LEAPS, hold them till we reach the 180's/190's again and unload them. This provides some upside with little risk: I can always HODL them for a year and catch some rally along the way. The latter is untrue when you bought at a local high and the stock then drops for an extended period of time.

TL;DR: entry selection is crucial for LEAPS. Patience is a virtue. I don't use them often, but I do whenever the main thread starts to speak of selling because TSLA is f*d.

This is how I have sometimes ended up with unintended long LEAPS straddles / strangles...buying LEAPS calls at (I thought) low entry points that turned out to be local highs with further room to fall leading to eventual purchases of LEAPS puts to minimize / neutralize bleeding. Benefit of bad LEAPS plays is time...allowing for correction of bad timing...I think.