Wiki Selling TSLA Options - Be the House

[buttershrimp]

Ok, where is that $#&&$*+*-&& shrimp and that crazy lawyer? Thankfully, you won’t be joining neuralink anytime soon.

Well, in all seriousness, I actually did sell some p720s (@$45) but then rolled them during a MMD down and out to 7/9 for a nice $5 profit. I also bought/sold p670s, p680s, p690s, p710s, p715s and finally ended up selling some c700s, c705s, c720s (let expire worthless). Though it doesn’t make up for last week’s fiasco, I did manage to clear $14K this week, mostly on puts. I’m currently about 50:50 puts:calls, but expecting to pick up some more shares and allow a couple of puts to get exercised, to get to 30:70 next Friday.

This week was all about timing, not perfectly, but close enough. I bought back puts right after a morning peak, waited a bit to resell, often at a lower strike and a higher premium. Stayed close to ATM, or even ITM, thus picking up lots of premium, especially with the elevated IV before the P/S report. Rinse and repeated nearly everyday. This is something that I rarely, if ever, would consider on the call side. I was literally daring the MMs to put me the shares. In the end, I decided to roll everything out to 7/9: p670 at $14.20, p680 at $23.00, p700 at $24.20. While I don’t expect a huge SP bump next week, I will likely buyback those puts on AM peaks and resell after the MMD, again daring the MMs to put me those shares. As for selling calls, I might try c730s at a GTC price above $6.00.

Good luck to all and have a great weekend. Another two weeks above 100F in my future and the surrounding forest fires have started. Air quality is still acceptable, nothing like last fall (yet). It’s difficult to get much gardening done in this heat, just a few hours in the early AM, then it’s inside until it’s time to spot water all the almost crispy plants.

Oh did I say 7/2? II meant 7/9! Silly me . @adiggs has you covered though. He’s been dealing with heat wave so he’s probably delirious and just handing out blank checks.

 

[adiggs]

Good luck to all and have a great weekend. Another two weeks above 100F in my future and the surrounding forest fires have started. Air quality is still acceptable, nothing like last fall (yet). It’s difficult to get much gardening done in this heat, just a few hours in the early AM, then it’s inside until it’s time to spot water all the almost crispy plants.

Yeah - that heat is crushing us here as well (Portland OR area). Though heck - we're cooled back down to merely normal but hot for us this time of the year (as opposed to all time high, ever, any day of the week / month / year). I think I saw that Portland and Phoenix had the same high for the day earlier in the week. Portland, Phoenix, and daily high don't go together in the same sentence.

The forest fires are what we're worried about and the bad air quality that come along for the ride. Something we've read about and are gearing up to try this year - take a furnace filter (I like the 20x20's from Costco - definitely the 13+ MERV over the 12 MERV) and tape it to the intake side of a box fan. A lot of the smoke particulates will be collected by that combo. We'll have something like this in most every room in the house. They'll do the heavy lifting to start keeping the air clean. The fancy and purpose built air cleaners (we have many of these as well, that didn't keep up last summer) will also be running to further filter the air. And heck - we might even be able to breath all summer long.

 

[adiggs]

I mostly closed but also had some CC and put spreads expire worthless today. I also decided to not open anything new for 7/9. Ordinarily I would have done so, for the 3 days of time decay over the long weekend if nothing else, but the IV is low and the premiums didn't grab me. I'll be looking next week and decide then.

I think that I'll be divvying up my lcc (thanks for the acronym @Lycanthrope ) between some that are more aggressive / higher delta and the rest that are more typical for me. Something like .25 on the aggressive side, and .10 on the rest. My thinking is that I'll be rolling early and often as needed and the higher aggression creates some relatively large incremental income possibilities.


That higher aggression idea is tied up in an addendum to my personal rules and guidance for rolls.

NOT-ADVICE and I'm looking for income, not capital growth.

1) roll for net credit
2) improve the strike
3) minimize the additional time, but I'll be looking at everything up to 6 weeks (bias to 4 weeks and under)
4) consider whether its just better to take assignment instead of roll
5) [NEW] take a smaller strike improvement for a larger net credit. Aim for my personal hurdle rate.

For #5 I'm looking for roughly $3/week for my net credit. On many of the rolls I've done recently I could have taken 1 fewer strike improvements and get that $3 / week credit. At $3 for each additional week I reach my own hurdle rate then I'm likely to take the roll and once I can't, then just wait it out to assignment (or for the shares to return to my strike).

Its clear to me how this will work on the call side. Steadily increasing strikes will translate into steadily improving premiums on the long calls that back my sold calls, so I can take assignment by closing these in pairs, knowing that I'll be improving my income for sure.


The put side - I'm still working this out. I know that I don't want to buy long dated puts in order to sell lcp. My longer term bias is upwards, so buying longer dated puts doesn't fit with that at all.

I'm doing put spreads with really large spreads. This week was $100 spreads (490/590 for instance was one that expired today). As these spread sizes get larger the position behaves more and more like a naked put. I looked at $130 spreads next week (though didn't end up acting on the position). Bigger and bigger spreads to reduce the magnitude of the leverage, with a mindset that each of these put spreads is really a naked put with a low margin / cash reservation.

The problem with these spreads is that I can't just take assignment when these start going ITM - the put spread isn't setup that way. If it were a fully cash secured put (or margin secured), then I would take delivery on the shares and start selling covered calls in the wheel.

I think that the equivalent in how I'm thinking about this right now is to take accumulated losses (early!) on the put spread AND use the relatively low share price I've been rolling down with to buy some more long dated calls for lcc. I would use the roll dynamics above (roll for the net credits and strike improvements, and be early to take the losses).

When I "take assignment" (take the loss, buy a long dated call to replace the "position") I would shrink the number of put spreads I'm selling and increase the # of lcc. Not thrilled with this answer yet but its best I've got for the time being.

 

[adiggs]

No idea how repeatable this is, but I was actively closing some put spreads today (instead of allowing them to go to expiration worthless). I would have been better off by pennies per position by letting theme expire worthless.

That being said I also didn't want any after hours surprises. I had it in my head we were likely to see p/d numbers after close today instead of this morning. Whatever


What I found was that when the spread was down into the low pennies range I was having difficulty getting the spread to fill, even when I offered the top of the bid/ask range for the spread. It was weird.

So I just BTC the short put, assuming that the long put would go out worthless. I went ahead entered a .01 sell order on the long puts as well. End result was that they all filled and the net fill was a penny better than the spread offer I'd made. Woot! A whole penny of incremental value. That was like $20 (total)!! Before commissions so I really only kept like $15. But still - that's like sushi for 1 at our local track / revolving sushi joint!

 

[ReddyLeaf]

Yeah - that heat is crushing us here as well (Portland OR area). Though heck - we're cooled back down to merely normal but hot for us this time of the year (as opposed to all time high, ever, any day of the week / month / year). I think I saw that Portland and Phoenix had the same high for the day earlier in the week. Portland, Phoenix, and daily high don't go together in the same sentence.

The forest fires are what we're worried about and the bad air quality that come along for the ride. Something we've read about and are gearing up to try this year - take a furnace filter (I like the 20x20's from Costco - definitely the 13+ MERV over the 12 MERV) and tape it to the intake side of a box fan. A lot of the smoke particulates will be collected by that combo. We'll have something like this in most every room in the house. They'll do the heavy lifting to start keeping the air clean. The fancy and purpose built air cleaners (we have many of these as well, that didn't keep up last summer) will also be running to further filter the air. And heck - we might even be able to breath all summer long.

I’ve got two P100 masks that I used in the garden last fall when AQI exceeded 150. Had a new Carrier heat pump installed in January (a/c absolutely required in Eastern WA) and bought a couple of years worth of MERV filters, so should be much better this year. However, I should buy some 20x20s before the stores run out, just in case. Thanks for the reminder.

 

[juanmedina]

Ok, where is that $#&&$*+*-&& shrimp and that crazy lawyer? Thankfully, you won’t be joining neuralink anytime soon.

Well, in all seriousness, I actually did sell some p720s (@$45) but then rolled them during a MMD down and out to 7/9 for a nice $5 profit. I also bought/sold p670s, p680s, p690s, p710s, p715s and finally ended up selling some c700s, c705s, c720s (let expire worthless). Though it doesn’t make up for last week’s fiasco, I did manage to clear $14K this week, mostly on puts. I’m currently about 50:50 puts:calls, but expecting to pick up some more shares and allow a couple of puts to get exercised, to get to 30:70 next Friday.

This week was all about timing, not perfectly, but close enough. I bought back puts right after a morning peak, waited a bit to resell, often at a lower strike and a higher premium. Stayed close to ATM, or even ITM, thus picking up lots of premium, especially with the elevated IV before the P/S report. Rinse and repeated nearly everyday. This is something that I rarely, if ever, would consider on the call side. I was literally daring the MMs to put me the shares. In the end, I decided to roll everything out to 7/9: p670 at $14.20, p680 at $23.00, p700 at $24.20. While I don’t expect a huge SP bump next week, I will likely buyback those puts on AM peaks and resell after the MMD, again daring the MMs to put me those shares. As for selling calls, I might try c730s at a GTC price above $6.00.

Good luck to all and have a great weekend. Another two weeks above 100F in my future and the surrounding forest fires have started. Air quality is still acceptable, nothing like last fall (yet). It’s difficult to get much gardening done in this heat, just a few hours in the early AM, then it’s inside until it’s time to spot water all the almost crispy plants.

$14k for the week that's nice. About how many calls and puts are you selling?

 

[buttershrimp]

I’ve got two P100 masks that I used in the garden last fall when AQI exceeded 150. Had a new Carrier heat pump installed in January (a/c absolutely required in Eastern WA) and bought a couple of years worth of MERV filters, so should be much better this year. However, I should buy some 20x20s before the stores run out, just in case. Thanks for the reminder.

I can’t imagine how much it must suck in the northwest heatwave. we routinely deal with extreme heat in texas, but it’s not the same… it’s the unexpected extremes in a city that will break you…. The winter freeze was totally debilitating here in Austn without electricity… even the Powerwalls weren’t useful beyond 8 hours because it triggered at night and we burned through the power rather while we slept! (rather than conserving it). But that’s why solar panels are good as well. Stay cool!

 

[samppa]

Sold a bunch -p695/+p660 put bull spreads for 7/17. Nice $15/spread credit, and they only required less than 2k margin each.

 

[MrMoo]

I'm also in Australia trading on a coupe of accounts with IB. I used to sell a lot of margin backed Puts but have since moved to Iron Condors as I seem to get much more premium and flexibility. For example on Monday in my SMSF account I sold 50 x 620/650 750/780 IC's for just under $5 each. These are currently sitting around 50% profit and have a maintenance margin impact of just under $50k. Possibly an option to consider?

Thanks for the tip buddy! I'll look into exploring this option, as it is something I have been thinking of doing just haven't really had the guts to start hah.

If deliveries total 240k, 750 instantly, if not 780.
For the stock to hits 710 we only need 210k

I know this is with hindsight but, 210k was not enough to break 700. We didn't quite get to 210k but that few % Points more in deliveries wouldn't of done it. The MM's just didn't want it to happen this Friday. I think Q1 was over a 10% Beat and it still didn't get us over 700

I ended up selling a 665 Put on the Friday when the stock went back down sub 680 for a quick hundred. I know it's like picking up pennies on a steam roller but pennies are pennies. Not bad for a 0DTE. Also sold some 800 CC expiring next Friday on the pop up above 690. I'm up a few hundred on those. I'm unwilling to sell any lower strikes just because I do feel like there is a chance we pop off.

I'm actually not too sure what will happen next week. If the MM's were seriously keeping the stock down this week, then we will most likely see a pop above 700 on Tuesday or Wednesday. If we keep going down well then we have a serious problem because Nasdaq is at ATH and we need to not sell the news on this or we are seriously lagging the indexes.

 

[Yoona]

Sold a bunch -p695/+p660 put bull spreads for 7/17. Nice $15/spread credit, and they only required less than 2k margin each.

my BPS is more gun-shy, so it's at 7/9 +p610/-p640, 20Δ

 

[ReddyLeaf]

Ok, this post over in the perpetual investment thread got me thinking about a +10-20% move before the Q2 financials are reported in a week or two. Therefore, I set a GTC $9.80 price on some -c805s for 7/9. While I highly doubt that the SP will hit 800 next week, touching 750 is possible before the Friday push down. More likely, the SP will reach 720 next week and 750 the following week. I should probably set that trade for -c750s instead, but I’m an infernal eternal optimist. So, there you have it, my cc trading plan for next week.

 

[buttershrimp]

Ok, this post over in the perpetual investment thread got me thinking about a +10-20% move before the Q2 financials are reported in a week or two. Therefore, I set a GTC $9.80 price on some -c805s for 7/9. While I highly doubt that the SP will hit 800 next week, touching 750 is possible before the Friday push down. More likely, the SP will reach 720 next week and 750 the following week. I should probably set that trade for -c750s instead, but I’m an infernal eternal optimist. So, there you have it, my cc trading plan for next week.

I’m begging that you are correct. I neeeeed you to be correct, HRH, black magic, I don’t care… please god, I am sorry for being a bad Buttershrimp in 6th grade…. Just make us touch 720 or 750 next week. Please god. Hope isn’t a strategy but spontaneous prayer strategy! SPS…. All in! I’m trading accordingly… if you are right… I’m going to buy you Tesla paraphernalia.

 

[buttershrimp]

I’m begging that you are correct. I neeeeed you to be correct, HRH, black magic, I don’t care… please god, I am sorry for being a bad Buttershrimp in 6th grade…. Just make us touch 720 or 750 next week. Please god. Hope isn’t a strategy but spontaneous prayer strategy! SPS…. All in! I’m trading accordingly… if you are right… I’m going to buy you Tesla paraphernalia.

My price prediction is 715-721. I was really off last week but not because my analysis is wrong. It’s the timing of the quarterly surge. The question in my mind is whether the slight beat on deliveries will cause the bearish price targets to go up. So far I see one increase up 50 to 600s… I would love to see PMs position themselves for a good second half of the year next week. The fire story will continue to get pushed but it makes me think that FUD is most dangerous on earnings week and just after earnings week.

 

[ReddyLeaf]

The fire story will continue to get pushed but it makes me think that FUD is most dangerous on earnings week and just after earnings week.

Targeted FUD is much more effective. So much is sloshing around 24/7 that they have to really kick it up a notch at specific times.

 

[buttershrimp]

So we are all in agreement the stock touches 710 this week?

 

[juanmedina]

So we are all in agreement the stock touches 710 this week?

no because I have 710cc's open

 

[buttershrimp]

no because I have 710cc's open

You sir, can roll with pride knowing that you’re underlying has increased nicely. 710s? That’s just asking for a roll the week after production numbers!

 

[MrMoo]

So we are all in agreement the stock touches 710 this week?

No I'm going to have to disagree here. If we break 700 and hold it, it is highly unlikely we only go up another 1.5%. Usually a break of a resistance sees us rocket quite far above it. Case in point, when we broke 630 2 weeks ago and Q1 earnings when we broke 700 we went to 780 a couple of days later, then fell back down.

There is a reason why the IV on this stock is so high. Selling covered calls or puts is good money until you get owned by a huge up or down momentum swing.

Unless you mean we touch 710 while getting our faces ripped off by a face ripping rally up to 750? In which case I think there is a chance of it. You'll know by Wednesday, or even Tuesday close of day.

 

[buttershrimp]

No I'm going to have to disagree here. If we break 700 and hold it, it is highly unlikely we only go up another 1.5%. Usually a break of a resistance sees us rocket quite far above it. Case in point, when we broke 630 2 weeks ago and Q1 earnings when we broke 700 we went to 780 a couple of days later, then fell back down.

There is a reason why the IV on this stock is so high. Selling covered calls or puts is good money until you get owned by a huge up or down momentum swing.

Unless you mean we touch 710 while getting our faces ripped off by a face ripping rally up to 750? In which case I think there is a chance of it. You'll know by Wednesday, or even Tuesday close of day.

i would LOVE having my face ripped off this coming week. I have no covered calls and a staggeringly unhealthy amount of near the money 685 call options that I’m holding. I consider these week after production to be the sweetest in the quarter… so yes… rip my face off.

how high do you think we will go this week?

I predict 720s… but all my analysis has been historical trends. If we get above 695, I’m profitable, but if we get above 720, I’m going to walk around with an “o” face for 4 months.

 

[MrMoo]

i would LOVE having my face ripped off this coming week. I have no covered calls and a staggeringly unhealthy amount of near the money 685 call options that I’m holding. I consider these week after production to be the sweetest in the quarter… so yes… rip my face off.

how high do you think we will go this week?

I predict 720s… but all my analysis has been historical trends. If we get above 695, I’m profitable, but if we get above 720, I’m going to walk around with an “o” face for 4 months.

This is hard to say. It'll really depend on the price action on the first 1-2 days of trading. What happened last time when we beat Q1 expectations was it was a blowout and MM's spent an entire week fixing up their options positions. You can see the price action from Monday 5 April where it gapped up (The P and D numbers were on Friday on a public holiday) then proceeded to trade flat for a week (Sub 700). Once the MM's repositioned themselves properly they just let the stock do it's thing and the week after (on no news by the way) The stock just broke 700 and shot up all the up to 780 premarket before going back down.

This time around the numbers are as expected. The MM's would of done their best to keep it under 700 for last week to collect that last juicy bit of premium. The MM's don't really have much to gain to push the stock down now, so it'll all come down to how the market reacts this week. If we go up on Tuesday we could very well hit 700 on the close Tuesday and break on Wednesday. If we break I would not be surprised to see 750-780 (Where we got to last time). Expect to see a drop down on Friday manipulated by the MM's.

On the flip side if we do not go up this week, you can probably see a bit of a flat trade or even downwards price movement as people sell the news (or if macros drop, we are literally at ATH on the indexes and S and P has been green 7 days in a row lol). We are 3 weeks away from Quarter report so we'll probably stay in this 600 price channel until Q2 figures come out.

The only one thing I could guarantee this week (And i've already sold calls for it) is we will not break 800 this week.