trading

[ReddyLeaf]

Anyone trading the Q4 financials? During this morning’s MMD, I bought one 690c and one 700c for late January just in case there’s a pop after the production numbers are revealed. Not a big play, just had some leftover cash from selling a short-term OTM put.

 

[ammulder]

Anyone trading the Q4 financials? During this morning’s MMD, I bought one 690c and one 700c for late January just in case there’s a pop after the production numbers are revealed. Not a big play, just had some leftover cash from selling a short-term OTM put.

I've been surprised before by the stock price not really responding much to better than expected quarterly numbers. So I'd personally be more inclined to go with the OTM puts than the OTM calls. Still, past performance is no guarantee of future behavior and all that... I wouldn't tell you NOT to give the calls a shot.

 

[Criscmt]

Selling LEAPS Vs shorter term calls, and avoiding assignment. Similarly selling LEAPS puts to have higher chances of getting assigned.

Assignment well before expiry

• I am assuming that assignment well before expiry (at least a few weeks before expiry) is very unlikely.
• This is a factor that's influencing me towards options with longer duration. Does this matter? In the case of calls, if the brokerage anyhow gives you several days to fulfill the assignment this perhaps doesn't matter?

Selling Calls (With calls, having the calls assigned is something I would like to avoid. I prefer taking loss on the calls than loosing shares)

• Did you guys consider selling LEAPS, say Sep-2021 C1000, rather than selling calls a few weeks or a couple of months out?
• Pros of selling LEAPS:
  • More time and lower chance of assignment : I have more time, so even if SP goes high, unless the SP suddenly spikes as we get near to the expiry, I likely will have more time to buy back the call. And I would rather buy back the call even paying 2x, 3x or higher than loosing shares.
  • More time means room for correction? Again more time means, the peak before expiry might be well before the expiry, so maybe room for correction to some extent well before expiry.
  • Psychological barrier price: For me $1000 seems to be a psychological barrier. Of course, a stock split make this a moot point.

Selling Puts on margin amount

• With puts I prefer selling puts which are more likely to get assigned, at the same time gives good premium.
• For example, Jan-2022 P900 are today at $336. If the SP doesn't move much given the run so far this year, I am happy to get assigned at $900 in Jan-2022.
• I am assuming the risk of assignment is low if SP goes down, even to $250 at some point of time well before the expiry, say in Sep-2021. Of course, I need to make sure I won't get margin call if SP goes that low.

@dl003 @Dancing Lemur Thanks for your strangle posts today on the round table thread.

@adiggs @MXWing

 

[MXWing]

Selling LEAPS Vs shorter term calls, and avoiding assignment. Similarly selling LEAPS puts to have higher chances of getting assigned.

Assignment well before expiry

• I am assuming that assignment well before expiry (at least a few weeks before expiry) is very unlikely.
• This is a factor that's influencing me towards options with longer duration. Does this matter? In the case of calls, if the brokerage anyhow gives you several days to fulfill the assignment this perhaps doesn't matter?

Selling Calls (With calls, having the calls assigned is something I would like to avoid. I prefer taking loss on the calls than loosing shares)

• Did you guys consider selling LEAPS, say Sep-2021 C1000, rather than selling calls a few weeks or a couple of months out?
• Pros of selling LEAPS:
  • More time and lower chance of assignment : I have more time, so even if SP goes high, unless the SP suddenly spikes as we get near to the expiry, I likely will have more time to buy back the call. And I would rather buy back the call even paying 2x, 3x or higher than loosing shares.
  • More time means room for correction? Again more time means, the peak before expiry might be well before the expiry, so maybe room for correction to some extent well before expiry.
  • Psychological barrier price: For me $1000 seems to be a psychological barrier. Of course, a stock split make this a moot point.

Selling Puts on margin amount

• With puts I prefer selling puts which are more likely to get assigned, at the same time gives good premium.
• For example, Jan-2022 P900 are today at $336. If the SP doesn't move much given the run so far this year, I am happy to get assigned at $900 in Jan-2022.
• I am assuming the risk of assignment is low if SP goes down, even to $250 at some point of time well before the expiry, say in Sep-2021. Of course, I need to make sure I won't get margin call if SP goes that low.

@dl003 @Dancing Lemur Thanks for your strangle posts today on the round table thread.

@adiggs @MXWing

I personally prefer to sell short term options and buy long term ones.

There's lots of people who have long leap options that are up 2000%. That mean's someone is gave up 2000% losses. You are unlikely to experience that potential of loss when selling into the short term.

I would also rather sell lots of put contracts closer in time than smaller ones farther out. Not impossible something catastrophic happens like March.

There is definite margin call potential and assignment potential if share price goes to 300 and a sold put is that much ITM.
ARKG had a rare red day because one of their top holdings got obliterated.

Most of us would survive even if this happened to TSLA. But man if you were overly levered in short puts...

 

[dl003]

Selling LEAPS Vs shorter term calls, and avoiding assignment. Similarly selling LEAPS puts to have higher chances of getting assigned.

Assignment well before expiry

• I am assuming that assignment well before expiry (at least a few weeks before expiry) is very unlikely.
• This is a factor that's influencing me towards options with longer duration. Does this matter? In the case of calls, if the brokerage anyhow gives you several days to fulfill the assignment this perhaps doesn't matter?

Selling Calls (With calls, having the calls assigned is something I would like to avoid. I prefer taking loss on the calls than loosing shares)

• Did you guys consider selling LEAPS, say Sep-2021 C1000, rather than selling calls a few weeks or a couple of months out?
• Pros of selling LEAPS:
  • More time and lower chance of assignment : I have more time, so even if SP goes high, unless the SP suddenly spikes as we get near to the expiry, I likely will have more time to buy back the call. And I would rather buy back the call even paying 2x, 3x or higher than loosing shares.
  • More time means room for correction? Again more time means, the peak before expiry might be well before the expiry, so maybe room for correction to some extent well before expiry.
  • Psychological barrier price: For me $1000 seems to be a psychological barrier. Of course, a stock split make this a moot point.

Selling Puts on margin amount

• With puts I prefer selling puts which are more likely to get assigned, at the same time gives good premium.
• For example, Jan-2022 P900 are today at $336. If the SP doesn't move much given the run so far this year, I am happy to get assigned at $900 in Jan-2022.
• I am assuming the risk of assignment is low if SP goes down, even to $250 at some point of time well before the expiry, say in Sep-2021. Of course, I need to make sure I won't get margin call if SP goes that low.

@dl003 @Dancing Lemur Thanks for your strangle posts today on the round table thread.

@adiggs @MXWing

I have some short June - September 2021 1200 calls that I opened around the inclusion peak. I also have short 350 puts expiring on the same dates. I fully expect to roll the calls up if TSLA gets to 900 within 3 months of any of the expiries. This would be funded by the put premium. Personally I would not sell DITM LEAP puts because there're not a lot of advantages over just buying shares.

Since I'm using a Portfolio Margin, the amount of margin I'm required to maintain is much less than in the traditional margin account. For example, in a margin account, selling a 900 puts with any expiry will lock up about $90k - the put premium collected. In the 1/2022 case, that would be about $56k of margin becoming unavailable to use.
As a rule of thumb, ATM/ITM put/call/combo, whether short dated or LEAP, always nets you a better premium / margin impact ratio. However, I still prefer the more OTM ones since they already give me good premium, if done in quantities, and help me sleep more soundly. With a portfolio margin account, however, OTM options becomes much more profitable.
In a portfolio margin account, selling a 350 put expiring on 6/21, 7/21, 9/21 (3 puts total) netted me around $5.4k but my margin requirement only went up $6k instead of ($35k x 3) - put premium (around $100k). So, there's a fair trade off between premium collected and margin impact. Doing a bit of quick math, if I sell 6 of these combos, I'll get about $32.4k and my margin would go up around $40-50k. Not that much different than selling a single 900 put for $33.6k. So, the question becomes which strategy I am more comfortable with. The 350 puts would help me sleep at night a lot better. Selling DITM LEAP just feels like giving up so much control over such a long duration for my taste. I continue to stick to selling FOTM LEAP strangles, just like I do with the weeklies.

 

[Criscmt]

I personally prefer to sell short term options and buy long term ones.

There's lots of people who have long leap options that are up 2000%. That mean's someone is gave up 2000% losses. You are unlikely to experience that potential of loss when selling into the short term.

I would also rather sell lots of put contracts closer in time than smaller ones farther out. Not impossible something catastrophic happens like March.

There is definite margin call potential and assignment potential if share price goes to 300 and a sold put is that much ITM.
ARKG had a rare red day because one of their top holdings got obliterated.

Most of us would survive even if this happened to TSLA. But man if you were overly levered in short puts...


View attachment 622345

Sure, they would’ve lost that much if they held the short position all the way through. Also, I am willing to risk/bet that we will likely not see 1000+85*20=2700 by Jan-2022, so to speak.
At a certain loss, SP level, say when loss is at 200%, the idea is to buy a hedge for the short call.

@adiggs In one of the posts we interacted over were you saying you sell DTE 90 days to reduce time needed to monitor the options sold?

 

[adiggs]

@adiggs In one of the posts we interacted over were you saying you sell DTE 90 days to reduce time needed to monitor the options sold?

My days to expiration has floated around over the ~10 months I've been selling options. The first 6 months or so was pretty much exclusively the 3-8 DTE range weeklies. That worked really well with the puts, and badly for the calls (where badly = break even or a bit better; really well = roughly 2x the taxes due for 2020 over 2019. Both significantly worse than simply holding shares with that cash).

The overall good results were, more importantly for me, educational as well. A lot of that education came from the large number of trades using this short DTE (over 100 trades in 5 or 6 months; it was a lot for me, whether it's a lot for others or not). That education has enabled the ability to make decisions about DTE that make sense for me.


To your question, I've taken two long dated positions; the sep '21 600 put when it was about 12 months to expiration, and the Sep '22 840 call when it was about 24 months to expiration. I'm finding these options to be both good and bad. The good is they each generated a whole pile of cash flow. The bad is that I find I want to trade those positions today, but they're locked in and not yet developed far enough for an early close. The 600 put is ahead about 50%, so I'm starting to think about an early close, though I expect both to go into the final month before an early close will capture enough of the time value to make a new position a good choice.


Beyond that though is what I think you're asking about. I've found that I WANT to move to monthlies for my sales, both puts and calls. Call it the 3-8 weeks to expiration as my target time range. Less than the 90 DTE you mention, but upwards of 1/2 of that time window. What's driving that is primarily a desire to reduce how closely I need to monitor my positions on a daily basis. I also want to get more distant strikes with a better premium, but that's not the primary driver.

My reading around this larger strategy also indicates that Theta is primarily a final ~60 day dynamic. I've seen how time decay has such a huge influence on the final week to expiration. These longer duration positions are looking for a balance between capturing as much time decay as possible, while also moderating my daily activity level on this.

I've found that these longer duration options are creating that dynamic (less daily effort). It's reasonable to check what's happened each day sometime after the market close and just not care about what happens during the day. I can also frequently manage the positions by entering orders after hours for execution tomorrow, so everything gets done at a more relaxed pace with more thought.

I also find that tracking and monitoring shorter dated puts yields better results at what I believe is a better risk profile (more frequent adjustments to the strike enables me to reset the risk on each position frequently). For this purpose, I've shifted from a 3-8 day DTE on sold puts, to a 8-13 DTE on sold puts. The calls though are still in that 3-8 week range.

(short question - long answer; par for the course for me )

 

[Davidzhao365]

Just checked that my return for the whole year is about 39x.

it has been an intense year and wish I can take a break soon. I am still at 50% call now so there is pressure. I am 100% in Tsla, half shares and half calls.

what a year. Wish I can contribute more to TMC and the world in the new year.

 

[Runarbt]

I have an admission/question:

I bought 2x $710 puts at yesterdays high, sold at a $1000 gain - does this make me a bad person?


Tried to make it up again afterwards, by selling 3x $690 puts for next week.

 

[Runarbt]

Looking for advice.

No pressure.

Sold 2x $800 CC 1/28 (?). Regretted it at once.. but figured Id still give it a try.

I also sold my $200 calls, to put back into stock.. but never got so far.

Have sold 3x $690 1/8 puts. But dont think these will get me any shares. Also sold 3x $650 feb puts.

I am kinda worried delivery number and China reservatios will make SP spike on monday, and put the CC itm and leave me behind..

I have $211k cash.. wanted to buy shares at around $690.. (where I sold my $200 calls).

Should I wait and see how the first weeks turn out? Or buy back CC, buy shares at whatever price is monday and get it over with?

All my own decission, but would like to know what you guys would have done if it were you.

(have 1360 shares at the moment, so still heavy hodl. )

 

[ammulder]

I have $211k cash.. wanted to buy shares at around $690.. (where I sold my $200 calls).

It would not surprise me at all if there was a dip below $700 on Monday, even if only briefly. For instance, there was speculation that some people who want to book a profit selling would have waited until the new year for tax purposes -- and I expect such people don't realize the quarterly numbers are coming or what they might mean. You could put in limit buy orders for the shares, and even a limit order to buy back your CCs if you like, so if there is a dip you can take advantage of it.

If the Q4 numbers are surprisingly high and the stock just takes off for the day, I think we'll know early, and you could cancel the limit orders and buy back the CCs before the damage gets any worse.

But at this point, either the delivery numbers could be priced in, or they could be well enough understood to produce a slow and steady type of rise that still features MMDs and so on. I don't think it's a given that it will reach $800 in January, but it's possible if the numbers are good enough.

If it was me, I'd buy back the CCs at some point Monday morning unless there's an obvious neutral or bad reaction to the delivery numbers -- just to avoid the stress. I could replace them with farther OTM ones which might be less profitable, but giving up sleep over it would not be worth the difference to me. If I didn't sell now, I'd definitely be paying attention to the financial forecasts and expectations, in case it looked like the earnings call would generate a rise in the stock price.

(Last month I sold a put and ended up buying it back I think the next day when the stock went the wrong way. In hindsight it would have expired worthless, but I'm not in this for the nail-biting adventure of it all, and I felt much better with a less-profitable put $25 farther out of the money.)

 

[Runarbt]

It would not surprise me at all if there was a dip below $700 on Monday, even if only briefly. For instance, there was speculation that some people who want to book a profit selling would have waited until the new year for tax purposes -- and I expect such people don't realize the quarterly numbers are coming or what they might mean. You could put in limit buy orders for the shares, and even a limit order to buy back your CCs if you like, so if there is a dip you can take advantage of it.

If the Q4 numbers are surprisingly high and the stock just takes off for the day, I think we'll know early, and you could cancel the limit orders and buy back the CCs before the damage gets any worse.

But at this point, either the delivery numbers could be priced in, or they could be well enough understood to produce a slow and steady type of rise that still features MMDs and so on. I don't think it's a given that it will reach $800 in January, but it's possible if the numbers are good enough.

If it was me, I'd buy back the CCs at some point Monday morning unless there's an obvious neutral or bad reaction to the delivery numbers -- just to avoid the stress. I could replace them with farther OTM ones which might be less profitable, but giving up sleep over it would not be worth the difference to me. If I didn't sell now, I'd definitely be paying attention to the financial forecasts and expectations, in case it looked like the earnings call would generate a rise in the stock price.

(Last month I sold a put and ended up buying it back I think the next day when the stock went the wrong way. In hindsight it would have expired worthless, but I'm not in this for the nail-biting adventure of it all, and I felt much better with a less-profitable put $25 farther out of the money.)

Thank you for the great reply.

With today's tiny miss on deliveries, I guess a dip Monday is just about certain. Will close CC, get my shares and maybe roll some naked puts. I will sleep a lot better the next couple of nights, waiting for market open on Monday.

However - I think I am coming down with a fever, and the only prescription is selling more naked puts.
Need to see if I have some room in my margin to sell some more puts on this dip. Future looking bright, extremely bright for Tesla.

 

[TheTalkingMule]

Did you guys consider selling LEAPS, say Sep-2021 C1000, rather than selling calls a few weeks or a couple of months out?

• Pros of selling LEAPS:
  • More time and lower chance of assignment : I have more time, so even if SP goes high, unless the SP suddenly spikes as we get near to the expiry, I likely will have more time to buy back the call. And I would rather buy back the call even paying 2x, 3x or higher than loosing shares.
  • More time means room for correction? Again more time means, the peak before expiry might be well before the expiry, so maybe room for correction to some extent well before expiry.
  • Psychological barrier price: For me $1000 seems to be a psychological barrier. Of course, a stock split make this a moot point.

I'm not a trader, so perhaps my perspective is different than most here. I only utilize options for leverage or sell LEAPs I consider to be free money. I think your logic above is sound, and would add on top of the psychological barrier at $1000 the simple logic of overall valuation. That's nearly a TRILLION dollars in valuation. Between now and 2024, exactly how far do people think TSLA can move above $1T valuation with P/E floating between 1400 and 300 to 1?

Needing cash for the new year and seeing a unique opportunity with inclusion, I've sold varying amounts of Jan 2023 C1200 and Jan 2023 C1300 plus a single Jan 2022 C900 contract. If SP goes to $1250 and I have to start selling shares......whoop-dee-doo. Corrections happen, mega-recessions happen. The chances of missing out on a run to $3T in the next two years to me is quite slim(feel free to bump ironically in 18 months!). Far more likely I either am forced to sell at peak only to rebuy cheaper down the road or they expire worthless and I keep $150k in premiums.

Other than needing money, I also need to disconnect from following this stock every day. Having that as a priority in my decision-making is likely pretty unique too! Selling LEAPs against nearly all my shares is like getting paid to stop watching the ticker(as much).

Good luck to all in 2021! I could see this coming week being a tough one, but we shall see. If $2k stimulus checks go out.....half of them will go into TSLA.

 

[Runarbt]

I'm not a trader, so perhaps my perspective is different than most here. I only utilize options for leverage or sell LEAPs I consider to be free money. I think your logic above is sound, and would add on top of the psychological barrier at $1000 the simple logic of overall valuation. That's nearly a TRILLION dollars in valuation. Between now and 2024, exactly how far do people think TSLA can move above $1T valuation with P/E floating between 1400 and 300 to 1?

Needing cash for the new year and seeing a unique opportunity with inclusion, I've sold varying amounts of Jan 2023 C1200 and Jan 2023 C1300 plus a single Jan 2022 C900 contract. If SP goes to $1250 and I have to start selling shares......whoop-dee-doo. Corrections happen, mega-recessions happen. The chances of missing out on a run to $3T in the next two years to me is quite slim(feel free to bump ironically in 18 months!). Far more likely I either am forced to sell at peak only to rebuy cheaper down the road or they expire worthless and I keep $150k in premiums.

Other than needing money, I also need to disconnect from following this stock every day. Having that as a priority in my decision-making is likely pretty unique too! Selling LEAPs against nearly all my shares is like getting paid to stop watching the ticker(as much).

Good luck to all in 2021! I could see this coming week being a tough one, but we shall see. If $2k stimulus checks go out.....half of them will go into TSLA.

SP will be 1000-1200 this year.
$2000+ by 2022 imho.


CC are for bearish bulls.

 

[ReddyLeaf]

Sold 2x $800 CC 1/28 (?).
Have sold 3x $690 1/8 puts.
Also sold 3x $650 feb puts.
I have $211k cash.. wanted to buy shares at around $690.
(have 1360 shares at the moment, so still heavy hodl. )

Actually, I think you’re in a very good position, especially given the 500k delivery miss. I would actually just hold tight, or maybe sell the 690p at open. Those puts will likely be in the money and you’ll get shares for $690-650, just like you were wanting. The 800c will expire worthless so no worries there.

Monday’s are typically an up morning because of all the MM covering of their Friday shorts to keep the SP below certain options levels. Given the crazy action last Friday, I expect a similar spike Monday, followed by a push down. Add to that: the typical January buying that comes with new funding IRAs, and the 500k delivery miss. This week will be a wild one. Definitely a good week to be patient and time your trades.

I’m still thinking about my position, but if the drop is large enough, I will probably buy some Mar-Oct 650-700c. I don’t have much cash or any margin, so I’m limited in my options. I’m holding 585p, 690c, 700c and short 850c various Jan-Mar dates that I might liquidate to fund call purchases. Good luck to all.

 

[Runarbt]

Actually, I think you’re in a very good position, especially given the 500k delivery miss. I would actually just hold tight, or maybe sell the 690p at open. Those puts will likely be in the money and you’ll get shares for $690-650, just like you were wanting. The 800c will expire worthless so no worries there.

Monday’s are typically an up morning because of all the MM covering of their Friday shorts to keep the SP below certain options levels. Given the crazy action last Friday, I expect a similar spike Monday, followed by a push down. Add to that: the typical January buying that comes with new funding IRAs, and the 500k delivery miss. This week will be a wild one. Definitely a good week to be patient and time your trades.

I’m still thinking about my position, but if the drop is large enough, I will probably buy some Mar-Oct 650-700c. I don’t have much cash or any margin, so I’m limited in my options. I’m holding 585p, 690c, 700c and short 850c various Jan-Mar dates that I might liquidate to fund call purchases. Good luck to all.

I agree with you on all of this. Will sit tight, and see what the week will bring. Can always roll to next week if needed.

I am learning how to just sit still and don't act on any and all worries. Way to easy to let emotions get the best of you. I have had quite a few panic sell/re-buy when SP ddin't do what I hoped for immediately after an order. Just for SP to jump again.. and my first order would have been the perfect one.

 

[ReddyLeaf]

I am learning how to just sit still and don't act on any and all worries. Way to easy to let emotions get the best of you. I have had quite a few panic sell/re-buy when SP ddin't do what I hoped for immediately after an order. Just for SP to jump again.. and my first order would have been the perfect one.

Yes, I hear you there. Before Christmas I sold a 700c for 12/31. Friday’s trading was a textbook example of the market makers shaking out everyone. They got me good, closed it out at the open for a loss, but better than watching it all day. Fortunately, it was a cheap lesson in what “they” can do.

 

[TheTalkingMule]

SP will be 1000-1200 this year.
$2000+ by 2022 imho.


CC are for bearish bulls.

Mayhaps. TSLA @ $1.8T is less crazy than a LOT of the $50-100B valuations I see around the market right now. But I think we've leveled off and a good bit of progress is baked in. We shall see.

 

[Runarbt]

Thank you for the great reply.

With today's tiny miss on deliveries, I guess a dip Monday is just about certain. Will close CC, get my shares and maybe roll some naked puts. I will sleep a lot better the next couple of nights, waiting for market open on Monday.

However - I think I am coming down with a fever, and the only prescription is selling more naked puts.
Need to see if I have some room in my margin to sell some more puts on this dip. Future looking bright, extremely bright for Tesla.

Well.. I didn't sit tight after all.. Closed all my open puts on the climb up.

Planning to wait for a dip towards the end of day, close my CCs and buy the shares I wanted.
Will see if I might finds some fresh puts to sell for next week.

 

[ReddyLeaf]

I’m still thinking about my position, but if the drop is large enough, I will probably buy some Mar-Oct 650-700c. I don’t have much cash or any margin, so I’m limited in my options. I’m holding 585p, 690c, 700c and short 850c various Jan-Mar dates that I might liquidate to fund call purchases. Good luck to all.

I enjoyed this AM spike so much that I decided to close my 690c & 700c for a nice 3x profit and also sold 2x 850c 3/19s for $53.81 (all pretty near the peak for an amateur like me). I’m planning to roll this cash into other calls, but my trading platform doesn’t allow this in a single trade, so I’m out in search of some good deals. Edit: Just so people don’t think I’m amazingly lucky, the QS 89p that I sold is killing me and will likely lose $10k on it.