Wiki Selling TSLA Options - Be the House

[vikings123]

I’m not familiar with Peter’s story! If possible, could you share? Either here or privately. Thank you…

An active member of this thread took his own life after he lost millions. I believe this happened in December. Sad .

I don’t think BPS/BCS are necessarily bad if you follow some basic rules. The problem imo is letting those positions get into deep red and rolling in the hope that the stock will do what you want it to do.

Set stop losses and while an MMD or a Gap up or a gap down can instantly trigger those stop loss orders at least you don’t risk your income for 6 months by rolling them out. There are many ways to set stop loss orders and as day traders we are doing a disservice to ourselves by not using this tool.

 

[ReddyLeaf]

If it helps, I'll share what I did. When my 130CC's started getting ITM back in Jan, I rolled them into the next week. And when it looked like a bull run, I rolled all, but one, out to April 185cc and left them there while I dealt with the one underwater CC (by turning it into a straddle - ITM put, OTM call). Made very little income for the next few weeks as I "fixed" one CC at a time. On Friday, when it looked like MM's was going to keep TSLA around 200, I rolled the Apr 185cc (except for 2) to Sep '24 290cc.

Thanks everyone for their support and suggestions. I will be cogitating over all this today and tomorrow, along with taxes. But first, a nice nature hike to feed my spirit.

I certainly understand the concept of rolling the ITM CCs out, even to 2025, to gain time, increase strike and save them from early assignment. However, that is probably not a good financial strategy: selling LEAPS for a company growing earnings exponentially at half the ATH. I didn’t want to sell at 400 in 2021, so why is a 300 strike 2025 better? Let’s just admit the lunacy and close them (or get them OTM for the week as quickly as possible).

Unfortunately, @Oil4AsphaultOnly I’m not sure how to flip an ITM CC into a CSP in my non-margin IRA account. The CSPs require cash backing and buying back the CCs requires cash, of which I don’t have enough.

In one account, all shares are CC’d and there are no CSPs (or much cash) left. I’ve committed most of the remaining cash into a small number of BPS spreads (allowed in this IRA). Since the BPSs are diametrically opposed to the CCs, one or the other must lose value. The CCs have such a large negative value that my overall account balance will actually improve if the BPSs are challenged. There are CSPs in the other account, but in a 1:2 ratio to the CCs. Enough cash to buyback and close the CCs, but not much will be left after those transactions. As with what @BornToFly has done in the past, I will probably “do half”: buyback 1/2, roll 1/2 to OTM, and sell OTM puts or ICs with any remaining cash.

Ultimately, if the SP continues on the current trend to $300, it would be best to close all CCs as early as possible. Unless the rise is less than $5/week (2-3%), selling even OTM CCs makes for very little premium and lots of risk. In an uptrend it’s better to sell BPS or buy ATM CCs. There is very little theta decay at $50 ITM, and there certainly won’t be any at $100-$150 ITM. Unfortunately, the best I can hope for is a small SP pullback and oscillation around $200+/-$10.

 

[Max Plaid]

The learning for me is to stick to the plan - not to sell options around ER or delivery reports. I broke it this time when I saw so many selling options ... bad idea. Hope I don't have to pay dearly for that .... and @dl003 is correct and the SP comes down at least once before going up again.

ps : I had not sold options around ER/delivery for 3 years when I wasn't following this thread closely! Ofcourse, I made other mistakes and caught out a couple of times ...

Have mentioned before, but after a few years of this, the two recurring themes for me when I get big losses are:

a) assumptions
b) over committing

By assumptions, I mean the absolute certainty that the stock price is going up, down or sideways. This often then leads to going all-in, so you have 10000 shares and write 100 contracts that you are sure will stay OTM, but hey-presto, they go DITM, and you've go no wiggle-room to get out of it, no spare contacts to double-up for a better strike, etc.

This is compounded by the fact that most of us here know Tesla & TSLA way better than anyone on WS, and we tend to use this knowledge to make trading decisions, and are then exasperated when the stock inexplicably goes the opposite direction...

Anyway, the take-away is, keep the trades manageable and always have an escape-plan for when it goes against you

 

[dc_h]

Are people still of the view that at some point we will fill the gap around $145-$155?

I had been hoping, but not feeling like it is going to happen. I'll keep rolling up my deep ITM. If we drop below 200, I'll be buying.

This post from the other thread implies were ready for a breakout

Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

And boom. Could be an option play. Call premiums are so cheap in a bear market that we see many of these BS announcements popping up all ends up being a lie. Last one was Saudi buying Lucid.

teslamotorsclub.com

 

[juanmedina]

I had been hoping, but not feeling like it is going to happen. I'll keep rolling up my deep ITM. If we drop below 200, I'll be buying.

This post from the other thread implies were ready for a breakout

Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

And boom. Could be an option play. Call premiums are so cheap in a bear market that we see many of these BS announcements popping up all ends up being a lie. Last one was Saudi buying Lucid.

teslamotorsclub.com

TT007 almost lost it all at some point because he was super leveraged. He was begging Elon on Twitter to stop posting IIRC his tweet was something like "If you keep tweeting I am going to lose everything" but he ended making an insane amount money. He is super bullish right now but I am skeptical. Until we figure out the mess with the FED and recession thing I will get super bullish .

 

[Oil4AsphaultOnly]

Thanks everyone for their support and suggestions. I will be cogitating over all this today and tomorrow, along with taxes. But first, a nice nature hike to feed my spirit.

I certainly understand the concept of rolling the ITM CCs out, even to 2025, to gain time, increase strike and save them from early assignment. However, that is probably not a good financial strategy: selling LEAPS for a company growing earnings exponentially at half the ATH. I didn’t want to sell at 400 in 2021, so why is a 300 strike 2025 better? Let’s just admit the lunacy and close them (or get them OTM for the week as quickly as possible).

Unfortunately, @Oil4AsphaultOnly I’m not sure how to flip an ITM CC into a CSP in my non-margin IRA account. The CSPs require cash backing and buying back the CCs requires cash, of which I don’t have enough.

In one account, all shares are CC’d and there are no CSPs (or much cash) left. I’ve committed most of the remaining cash into a small number of BPS spreads (allowed in this IRA). Since the BPSs are diametrically opposed to the CCs, one or the other must lose value. The CCs have such a large negative value that my overall account balance will actually improve if the BPSs are challenged. There are CSPs in the other account, but in a 1:2 ratio to the CCs. Enough cash to buyback and close the CCs, but not much will be left after those transactions. As with what @BornToFly has done in the past, I will probably “do half”: buyback 1/2, roll 1/2 to OTM, and sell OTM puts or ICs with any remaining cash.

Ultimately, if the SP continues on the current trend to $300, it would be best to close all CCs as early as possible. Unless the rise is less than $5/week (2-3%), selling even OTM CCs makes for very little premium and lots of risk. In an uptrend it’s better to sell BPS or buy ATM CCs. There is very little theta decay at $50 ITM, and there certainly won’t be any at $100-$150 ITM. Unfortunately, the best I can hope for is a small SP pullback and oscillation around $200+/-$10.

Sorry to hear this. But one thing to remember is that you're not choosing between selling at 400 in 2021 vs. 300 in 2025. That time had passed. You're now choosing between 180 this year versus 300 in 2025. Sunk costs and all that.

One lesson I also forgot to share was to always leave room to navigate (enough cash buffer for just one more CSP, or room for just one or two more covered calls).

Lastly, not sure how "stuck" your non-margin IRA is, but perhaps a reverse of the "fix a little bit a time"? On a down day, close 2 ITM cc's and sell a 2024 DITM cc. Then on a high, split that DITM cc back into 2 ITM cc's - hopefully at a higher strike price. The basis for this is that options are about leverage. When wrong (and deep enough ITM), every cc is moving a dollar for every dollar of stock price movement. So by combining 2 to one, only one cc is losing a dollar, instead of two. The problem with this method is there's less theta available, so the chances of being early exercised is higher. AND the bid-ask spread might be so wide that there's nothing to be gained from using it. But yeah, this is all contingent on the SP oscillating around $200+/-$10.

 

[EVNow]

Anyway, the take-away is, keep the trades manageable and always have an escape-plan for when it goes against you

Funny thing is - this time I had both an escape plan and I've not committed all my shares !

My escape plan was spread - that I back tested. But that works only if SP falls down for a correction. And I'm waiting to deploy my other shares

 

[Jim Holder]

Cary Artac posted an update tonight, saying given last week’s action TSLA is not far away from reaching its $251.06 longer-term channel top, at which point it may top out. If it punches through then higher it is.

A close above $221.25, and certainly $224.90, presents a good sign to go long to ride until the channel top, he said.

He also said a close in the lower to mid $220’s should yield $251.06, and if we close such this Tuesday, it will accelerate reaching the target by the end of next week (!). That level can contain buying pressure into the 2nd quarter and then we could fall off from there in a meaningful way. However if we close above it, that could be another significant buy signal.

If we open Tuesday above $209, then $221 is within reach same day up to $224.90, which can absorb weekly buying pressures.

For downside, if we break below $199.79 the $187.66-$191.26 region is in reach and presents a good zone to buy for swing up. But if we close below $187.67 then momentum reverses over 2-3 week timeframe to the $150-$144.80 area.

Breaking under $187.67 may present opportunity to buy puts that don’t expire for a few weeks. If we stay above $187.67 that may present opportunity to buy 220 calls that don’t expire for at least a week or two.

 

[dl003]

Although 197-210 was certainly weaker than 218 - 197, the bounce still took the form of a 5 wave sequence. As the result, I think once we get down to 200, another leg up with take place up to 212-215 area. After that, we should go down to 192.5 to complete wave A. Then we'll go up for Investor's Day.

 

[Jim Holder]

Although 197-210 was certainly weaker than 218 - 197, the bounce still took the form of a 5 wave sequence. As the result, I think once we get down to 200, another leg up with take place up to 212-215 area. After that, we should go down to 192.5 to complete wave A. Then we'll go up for Investor's Day.
View attachment 909652

Thank you.

Still holding the 192.50 CSPs expiring this Friday (2/24)?

Any CC’s or other option plays in your sights today?

 

[dl003]

Thank you.

Still holding the 192.50 CSPs expiring this Friday (2/24)?

Any CC’s or other option plays in your sights today?

anything above 230 should be ok I think. I'm still holding the puts. They're still not up by a lot due to theta.

 

[intelligator]

Took profit on CC sold last week for this Friday at 60%, freeing shares to rewrite when we pop up above 210. Sold -187.5/+177.5 BPS for Friday at 1.25 to be used as funding the adjustment of rolled out 3/31 -187.5 CC to a nearer and higher strike. I may give a try the approach mentioned by @Oil4AsphaultOnly , roll 4 , work on 1... I have 5 contracts total.

 

[UltradoomY]

IV is looking solid for next week at 85 -

Looking to load up on some synthetics -

STO - $200 P - 03/03 - $10.90 each
BTO - $205 C - 03/03 - $10.75 each

Net credit - $0.15 each

Will close a ratio of calls to puts if the opportunity presents itself.

Closed out the bought side of my synthetic from last week this morning for a "loss" of $3 each.
I say "Loss" because I could have closed them with the ratio used to close the put side on Friday for $12 each but chose to wait for a bounce up this morning and closed for $9 each.
So Net profit was $9 each for each synthetic contract written Friday on the dip and puts closed on the pop into close.

Will be looking at more of these as long as the trend is up.

 

[dl003]

Since a few people asked me about my read on the general market, I see SPY making a local bottom today near 400. A rally to 411 followed by another leg down to 381 is next.

 

[scubastevo80]

I had been hoping, but not feeling like it is going to happen. I'll keep rolling up my deep ITM. If we drop below 200, I'll be buying.

This post from the other thread implies were ready for a breakout

Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

And boom. Could be an option play. Call premiums are so cheap in a bear market that we see many of these BS announcements popping up all ends up being a lie. Last one was Saudi buying Lucid.

teslamotorsclub.com

A breakout from a breakout - what percentage off the lows will folks "take profits"? Remember, its not just TMC investors in the stock.

I am still rolling my DITM covered calls, with an aim to roll up $5 every two weeks paid for by selling some puts about 10% OTM.

 

[ReddyLeaf]

Took profit on CC sold last week for this Friday at 60%, freeing shares to rewrite when we pop up above 210. Sold -187.5/+177.5 BPS for Friday at 1.25 to be used as funding the adjustment of rolled out 3/31 -187.5 CC to a nearer and higher strike. I may give a try the approach mentioned by @Oil4AsphaultOnly , roll 4 , work on 1... I have 5 contracts total.

Quick update on my changes today. I decided to take everyone’s advice. At the deep dip (aka @Oil4AsphaultOnly ), I was able to roll out the worst DITM CCs to Jan24 ATM (or slightly above today’s SP). In the best account, I also rolled the CSPs down and out to Jan24, to form a nice tight strangle (aka @Max Plaid). Generated a LOT on that trade, so was able to buyout some CCs, and buy shares to fill out another lot. Furthermore, at the dip, sold some more 180/190 BPSs for Friday. Waiting on the bounce to sell 240/250 BCSs to form ICs. In general, though not perfect, I’m fairly happy with the results. I now have uncovered shares (yippee), near-term OTM CCs, Jan24 ATM CCs/CSPs, and Friday OTM BPSs. The only near-term problem is a bunch of March ICs that are biased too high (205/215-250/260). I will adjust and roll until the BPS side is OTM. Now it’s theta’s turn, but as Tom Petty said, waiting is the hardest part.

Edit: oops, we just broke 200 and now those BPSs are in trouble.

 

[dl003]

My line in the sand today and tomorrow is 198. If we break 198, it means that we're done bouncing and will headed down to 192.5 to complete wave A. Holding above 198 means 210+ is still in play. If 198 is broken I'll roll my short puts to next week.

 

[BornToFly]

Timing sucks. I wanted to stop with the weeklies and sell Jan 2024 400 strike CC today against the rest of my shares. I was looking for $13-14. I'm not willing to sell them for $10. Hopefully we get a bounce in the next week. Obviously if the SP keeps going down this week the premiums will get worse.

 

[ReddyLeaf]

Timing sucks. I wanted to stop with the weeklies and sell Jan 2024 400 strike CC today against the rest of my shares. I was looking for $13-14. I'm not willing to sell them for $10. Hopefully we get a bounce in the next week. Obviously if the SP keeps going down this week the premiums will get worse.

Sorry, we’re dropping from here, guaranteed. I just bought a single June 2025 +c100 for $125. My luck with buying LEAPS is atrocious.

 

[dl003]

Last update before close:

I still think we'll have another leg up to hit 210+ this week. However, apparently 200 is no longer the intraday bottom. Since the first leg of the bounce is still best counted as a 5 wave sequence, 197.5 most likely will be the bottom, reached early tomorrow morning before a big bounce to 210+.

192.5P is a bit too close for my taste for holding overnight, especially since we're not bouncing today yet. Rolled them to 177.5P 3/3 for 0.4 credit. Pretty good I must say.