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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
LBM4
Tesla Fealty
Oh crap. Forgot it's Good Friday. Thanks for the reminder. I'll have to buy on Thursday.
EVNow
Well-Known Member
A lot of people have the main resistance around 185/186. If SP closes below 185 they will consider that as a "sell" signal.
I've buy limit set at 147 .... I doubt we'll get there before ER. Ofcourse ER can go either way .... so I'll probably buy before ER at some level.
This week has emphasized how poorly my trading has been, and how badly my brokerage skims off MY profits by changing the bid/ask/mid spread as soon as I type in numbers and hit enter, before hitting submit. With this brokerage, there is an extra step before submitting, compared to my previous brokerage, and that’s where they skim. I’m not mad enough about it to move, but will try to accept the skimming as an additional cost of using spreads.
All week, I kept missing the open due to sleeping in. Today, set the alarm, started to trade and kept getting booted off the platform, then a friend texted about dog walking at 6:30 am. Seriously, come on, dog walking, who does that during the market open? I was trying to sell CCs and BCS at open, so missed out on lots of premiums. Anyway, got back and by that time the big dump had happened, so closed all 170/180/210/220 ICs, and 175/185 BPS (loss). Decided to buyback a few Jan 2025 CCs just to harvest some of today’s drop. Then opened 4/14 ICs at 170/180/210/220, plus some lower 4/06 ICs at 165/175/195/205 and -c190s. Then, just to piss off the market, sold a couple 4/06 ICs 170/180/190/200 at $1.50 (15% yield). Go ahead, make me roll them. The only “good” trade was yesterday when I put in a BCS 210/220 limit order before open at $0.60, which hit, and then decayed to $0.03 today. Unfortunately, in another account, set the order for $0.65, and it didn’t hit. Really need to pick better targets in the pre market hours. Definitely the hedgies are pushing an agenda at the AM opening bell. More push down coming until the FOMO rise right before earnings, then probably another crash and IV crush.
All week, I kept missing the open due to sleeping in. Today, set the alarm, started to trade and kept getting booted off the platform, then a friend texted about dog walking at 6:30 am. Seriously, come on, dog walking, who does that during the market open?
I was trying to sell CCs and BCS at open, so missed out on lots of premiums. Anyway, got back and by that time the big dump had happened, so closed all 170/180/210/220 ICs, and 175/185 BPS (loss). Decided to buyback a few Jan 2025 CCs just to harvest some of today’s drop. Then opened 4/14 ICs at 170/180/210/220, plus some lower 4/06 ICs at 165/175/195/205 and -c190s. Then, just to piss off the market, sold a couple 4/06 ICs 170/180/190/200 at $1.50 (15% yield). Go ahead, make me roll them. The only “good” trade was yesterday when I put in a BCS 210/220 limit order before open at $0.60, which hit, and then decayed to $0.03 today. Unfortunately, in another account, set the order for $0.65, and it didn’t hit. Really need to pick better targets in the pre market hours. Definitely the hedgies are pushing an agenda at the AM opening bell. More push down coming until the FOMO rise right before earnings, then probably another crash and IV crush.
This week has emphasized how poorly my trading has been, and how badly my brokerage skims off MY profits by changing the bid/ask/mid spread as soon as I type in numbers and hit enter, before hitting submit. With this brokerage, there is an extra step before submitting, compared to my previous brokerage, and that’s where they skim. I’m not mad enough about it to move, but will try to accept the skimming as an additional cost of using spreads.
All week, I kept missing the open due to sleeping in. Today, set the alarm, started to trade and kept getting booted off the platform, then a friend texted about dog walking at 6:30 am. Seriously, come on, dog walking, who does that during the market open?
I am always reluctant to buy back longer term short calls when the stock price is going down. You pay volatility.
On the other hand, I recognize your frustration
EVNow
Well-Known Member
My theory is that - since now there is a pattern of SP raising at open and then crashing - traders buy calls right in the beginning and once the SP is up they close the calls and start buying puts, which crashes the SP.
EVNow
Well-Known Member
I'd assumed IV doesn't change much on long term calls during a day. I'll have to check that .... bid/ask spread might be a problem, though.
During a day not, you're right.
But the days ahead it will. So if stock price will go up you earn some volatility, if stock price will remain at the current level you earn theta and vola. If stock price goes down you earn on delta.
EVNow
Well-Known Member
Yes, there will be a difference in IV as the difference between SP & strike changes. As you can see below for given SP, IV changes as strike changes. The same thing happens for a given strike as SP changes. For eg. IV is 56.14% for strike 190. If SP goes up by 10, IV will go up to 61.65% (for strike 180 now).
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With the day winding down I decided to close my 180/175 BPS expiring tomorrow for .34. These are losses as I entered at .20 a couple of days ago. I suspect they would have expired fully profitable tomorrow. With such a narrow spread width, a repeat of today will put these quickly into danger territory though, and I can close at this moment for roughly a single trade loss.
As I'm in this for income, a occasional loss on the scale of 1 week of income is accounted for and expected. I'll sleep a lot better after hours and tonight, not worrying about either news or the market's reaction to the news or lack thereof. I could roll, but I've had similar situations in the past where my thought process was sort of "I could exit now for a small loss, but I don't want to do that and surely things will turn around now". Followed quickly by the share price falling through the price I previously thought was too low.
In this circumstance, in case this is the start of a significant leg down, I'll be out of the way.
As I'm in this for income, a occasional loss on the scale of 1 week of income is accounted for and expected. I'll sleep a lot better after hours and tonight, not worrying about either news or the market's reaction to the news or lack thereof. I could roll, but I've had similar situations in the past where my thought process was sort of "I could exit now for a small loss, but I don't want to do that and surely things will turn around now". Followed quickly by the share price falling through the price I previously thought was too low.
In this circumstance, in case this is the start of a significant leg down, I'll be out of the way.
Yesterday and today turned busy for me, so had to step away. I have all 4/6 expiry, a -p160/+p130, a -p180/+175, and the -C190 (cc). Yesterday I was doubting whether we could close below 190, now more concerned that we breach 180. Gamma started about neutral Monday, stuck Tuesday, flipped strong negative today...
NTA: I'm going to close my short puts if and when we bounce a bit from here, probably as soon as 190. I think we can see 160 next week. Sorry for changing my tune so frequently but I think I've found where everything went so wrong in the first place.
Thank you. Could you please explain what went wrong in the first place and what leads you to think that we could see 160 next week? Obviously NTA, but it would be good to understand your thought process.
It will be interesting to see what MaxPain is tomorrow 7am, but here’s my Friday forecast: $182.50 +/- $0.10. Not real scientific, just guessing really, but expecting the shorts to push hard to keep the SP below several technical levels (2/3 speed line, 0.618 Fibonacci). Similar to levels described by The Daily Trader and Wicked Stocks. Unfortunately, if we close that low, a bunch of TA folks will likely be pushing the SP lower. Filling that gap at $150 looks more and more likely. Time to buy puts and roll down those CCs. Ouch.
TSLA is tricky. Nothing about it is conventional. What went wrong was I assumed at first the top of the rally was on Feb 16th, before pulling it back to Feb 9th. I didn't even entertain the possibility of Feb 28th being the top because conventionally it wasn't. Feb 16th peak was 217 so there's that. Feb 9th peak was only 214 but in a bullish consolidation phase, the correction can overshoot the rally peak a little bit so later on I counted 214 as the top, as the sideway consolidation leading up to it fits the guidelines better. I'm talking about blue 3-4.
The problem with counting Feb 9th or 16th as the top of the rally was the subsequent correction that ended at 164 on March 13th appeared much longer than it really was. In EWT, the correction should only take 38% - 62%, or 100% in rare cases, of the duration of the rally. So if we take Feb 9th or Feb 16th as top of the rally, then Feb 9th - March 13th and Feb 16th - March 13th would appear to have fallen into the appropriate time window. That and 164 being only $4 shy of the 50% retracement mark (160) put the possibility of it being the bottom on the table. Later on when TSLA broke out of 206 last Friday I was certain that 164 was the bottom.
Another guideline that would be ignored if we counted Feb 9th and Feb 16th as the top is this: Wave 4 & 5 should take approximately the same amount of time as wave 1-3. We can see that wave 1-3 took about a month to complete. Between Feb 2nd when TSLA reached 197 and Feb 9th/16th there isn't enough time to satisfy this requirement but I thought what the heck. If 214 and 217 wasn't the top, then what is? Maybe *sugar* just got crazy as we rallied 110% you know?
I was wrong. The top actually was on Feb 28th at 212. In EWT this is called an ending diagonal where wave 5 would take on the form of a 5 overlapping waves. MOST OF THE TIME, it should make higher highs all the way up to the top. But there can be exceptions. In this case, since wave 3 ran up so high so quickly, there just isn't enough room for wave 5 to keep making higher highs so just a day before Investor's Day, it ran as high as it could before giving out at 212. See the red wedge shape? That's an ending diagonal's signature. That whole thing is just the stock burning time, for shares to change hand from the early dip buyers to Johnny Come Lately.
From there, everything else looks clean. We got a steep zig zag correction from 212 - 164 which only took 7 trading days. That left too much time on the table for the correction to look legit. So now we draw a time Fibonacci extension from Feb 28th and what do we get? The 62% extension, the conventional deadline for the correction, ended last Friday. What happened on Sunday? P&D report. So instead of carving out a bottom last week, the stock hit 164 on March 13th after an ok Investor's Day presentation. Honestly, anyone felt FOMO leading up to it? Anyone bought calls hoping for Elon to pump it hard? Nope. That's why the $50 drop in 7 days was fishy as heck, but they gotta do it. They gotta drop it hard and fast in order to pump it back up for P&D. So, instead of carving out a bottom, a dead cat bounce top was created instead. There isn't much time left for the 2nd leg down. The 100% time fib extension ends just before ER on 4/19th. They gonna drop it just as hard as they did last month around this time. In fact, they're doing it right now as we speak. 422k wasn't a bad number by any mean, just like how Investor's Day wasn't a disaster.
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Tesla master plan part 3 was released today: Master Plan Part 3 | Tesla
I'm flipping a coin to see if things don't suddenly head back to max-pain tomorrow!
Thank
Thank you so much for the detailed explanation! As of now, you think we could bounce up to 190 before falling to 160 by the end of next week (4/14) and then bounce again going in to ER on 4/19 and then most likely go down again to 146 ish unless there is any surprising good news that can turn around the stock? Did I understand correctly? How low do you think the stock might go tomorrow? I sold some 185 puts that I need to roll.
We have three dogs that need walking 18:00ish each day (US markets open 15:30 CET here) , so yeah, me! Has cost me $thousands some daysSeriously, come on, dog walking, who does that during the market open?
Was out at a gig last night, so catching-up, but saw the SP was held down around 185, which looks a strong candidate for today's close
I closed out 20x -p200's yesterday and wrote 20x -185 straddle for $2.6 on each side, looking to write -p185's for next week, not sure about the call side yet, might go for the straddle again and take the put assignment if necessary to get some trading shares, then sell 40x weekly calls going forwards - at least that's the plan...
Those 40x -c197.50's I wrote on Tuesday look likely to expire
Keeping an eye on the July -p250's, which have lost quite a bit of Theta in the last days, might roll them down to 230 with a 2:1 ration on calls, just to reduce the risk a bit
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