Wiki Selling TSLA Options - Be the House

[Jim Holder]

Attaching a PDF version of @dl003's excellent post above for safekeeping and review for those that want.

 

[dl003]

Fabulous write up and lots of good insight, I'm printing and saving this!

A couple of questions so I can understand better, as you said you invite discourse on your posts:

1) "Bullish divergence on the daily, which should trump bearish divergence on the hourly." Don't changes on the daily stem from the hourly, so a bearish divergence on the hourly is the most recent fact and it'll take some time to reflect on the daily and may be too late by then to take action?

2) Does $209.03 resistance replace the $206.86 strong resistance mentioned earlier on Friday?

Thank you.

Yes you always want to look at the latest readings to decide what to do next, which is why I entered hedges at 194. However, the extent of the damage was well contained as not enough time has passed for the hourly divergence to escape from the influence of the daily bullish divergence.

For the stock to get out of and reverse from the steep sell off, one of 3 things must have happened: the big sellers found 175 to too low to continue selling, big buyers found 175 too low to not buy, or both. These forces wont easily reverse just after a $20 bounce. Not only will they find $195 too low to stage another sell off, but they will also punish all the retail shorts that are trapped in this zone, and finally they wont stop until they have sucked in enough new bulls to make the next sell off worth their effort. So the key is to figure out what kind of buying/selling power is involved at every pivot and anticipate their goal. Keep in mind this way of thinking only works if the underlying fundamentals have not drastically changed from 175. If Elon starts selling or Tesla reduces model 3 and Y by $3000, all bets are off.

 

[Jim Holder]

Yes you always want to look at the latest readings to decide what to do next, which is why I entered hedges at 194. However, the extent of the damage was well contained as not enough time has passed for the hourly divergence to escape from the influence of the daily bullish divergence.

For the stock to get out of and reverse from the steep sell off, one of 3 things must have happened: the big sellers found 175 to be too low to continue selling, big buyers found 175 too low to not buy, or both. These forces wont easily reverse just after a $20 bounce. Not only will they find $195 too low to stage another sell off, but they will also punish all the retail shorts that are trapped in this zone, and finally they wont stop until they have sucked in enough new bulls to make the next sell off worth their effort. So the key is to figure out what kind of buying/selling power is involved at every pivot and anticipate their goal.

Thanks. I guess in sum we are in the wait-and-see zone. We are also apparently entering the historically worst two weeks for the markets which are the last 2 weeks of February (I don’t know if this is true). TSLA might have chosen the wrong time to break out OR money may rotate from other profits into TSLA.

What about question two:

2) Does $209.03 resistance replace the $206.86 strong resistance mentioned earlier on Friday?

 

[dl003]

Thanks. I guess in sum we are in the wait-and-see zone. We are also apparently entering the historically worst two weeks for the markets which are the last 2 weeks of February (I don’t know if this is true). TSLA might have chosen the wrong time to break out OR money may rotate from other profits into TSLA.

What about question two:

2) Does $209.03 resistance replace the $206.86 strong resistance mentioned earlier on Friday?

206.86 is more definitive as it requires not only a break, but a daily close. 206.86 will act as both a resistance and an (at least) one-time-use magnet once broken. I dont see why you cant keep both on the radar.

 

[Jim Holder]

206.86 is more definitive as it requires not only a break, but a daily close. 206.86 will act as both a resistance and an (at least) one-time-use magnet once broken. I dont see why you cant keep both on the radar.

Thanks. Yes, keeping both on my chart. Was just curious if there has been a shift.

Interesting week ahead, not just for TSLA seems!

 

[Jim Holder]

Looking ahead GEX wise, the next two weeks appear decent green GEX, but 3/8 looks interesting on both sides, with decent puts all the way down to $150

2/23

3/1

3/8

 

[ChiefRollo]

Attaching a PDF version of @dl003's excellent post above for safekeeping and review for those that want.

Very nice!

 

[Jim Holder]

One viewpoint: Tap $206 and fall with a market correction over the next two weeks if we get one.

If so, at least we fall from a high of $206 to $170 instead of $170 to $140

 

[Jim Holder]

@OptionsGrinder thank you for the tip about Elliott Wave Trader with Avi Gilburt.

I finished the free 2-week trial and found it so helpful that I subscribed to three of the services: StockWaves for their great EW analysis on TSLA, other beta stocks, and indices; Avi Gilburt’s general market analysis; and Caroline’s daily Fibonacci analysis.

It’s exactly as you described, a great and knowledgeable team with excellent information flowing throughout the day, plus morning charts and video, and summaries and updated charts after close, plus weekly educational webinars on EW and the market as a whole, and more.

It’s also reasonably priced at about $10/day ($950/qtr) for those three services and well worth it to me. I’ve already made a year’s worth of the cost in one day.

Great find!

 

[thenewguy1979]

One viewpoint: Tap $206 and fall with the market correction over the next two weeks.
If so, at least we fall from a high of $206 to $170 instead of $170 to $140

View attachment 1019464

Going time to buy some cheap +185p/-180p 2 weeks exp and sell some -220c for friday

Bail if we hit 215 got it

Thanks dl003 and Jim for the educational discussion

With loves,
The Dog

 

[Max Plaid]

For those stressing about extrinsic value, of course it's a pure function of IV, so you need to watch it daily if you think it's getting tight

Just use Options Profit Calculator with Optimizer and Flow | OptionStrat or Options profit calculator to look at the projected value of the option over time and you'll see quite clearly at which SP you'll need to consider taking action

 

[Jim Holder]

For those stressing about extrinsic value, of course it's a pure function of IV, so you need to watch it daily if you think it's getting tight

Just use Options Profit Calculator with Optimizer and Flow | OptionStrat or Options profit calculator to look at the projected value of the option over time and you'll see quite clearly at which SP you'll need to consider taking action

Thanks. Is this about right how to do that. Shows danger zone around $166-$167 @ IV 46.3:

Strike: $280.00; IV 46.3

SP: $200.00
Intrinsic: $80.00
Premium: $86.80
Extrinsic: $6.80

SP: $170.00
Intrinsic: $110.00
Premium: $110.60
Extrinsic: $0.60

SP: $167.00
Intrinsic: $113.00
Premium: $113.23
Extrinsic: $0.23

SP: $165.00
Intrinsic: $115.00
Premium: $115.00
Extrinsic: $0.00

SP: $156.00
Intrinsic: $124.00
Premium: $124.00
Extrinsic: $0.00

 

[ChiefRollo]

Going time to buy some cheap +185p/-180p 2 weeks exp and sell some -220c for friday

Bail if we hit 215 got it

Thanks dl003 and Jim for the educational discussion

With loves,
The Dog

I will do the same except for the -180p. As the hypothesis is SP will reverse to around that area (slightly lower) with enough conviction to act upon with +185p and -220c, can you help me to understand the dilutive component of -180p of your plan? If the prediction turns out to be right, wouldn’t the -180p sold at that time amount to higher premium?

Please keep in mind I’m new to this type of play; I believe it is me that’s missing something.

 

[ChiefRollo]

I will do the same except for the -180p. As the hypothesis is SP will reverse to around that area (slightly lower) with enough conviction to act upon with +185p and -220c, can you help me to understand the dilutive component of -180p of your plan? If the prediction turns out to be right, wouldn’t the -180p sold at that time amount to higher premium?

Please keep in mind I’m new to this type of play; I believe it is me that’s missing something.

Perhaps the combination of +185p & -180p is a type of option play and it is that combination play that you referred to as “cheap”.

 

[intelligator]

Perhaps the combination of +185p & -180p is a type of option play and it is that combination play that you referred to as “cheap”.

True that the short put would be worth more sold at ground level ...
doggy is lowering cost of buying the long put

 

[intelligator]

Thanks. Is this about right how to do that. Shows danger zone around $166-$167 @ IV 46.3:




View attachment 1019521

This question or chat is more about making use of these calculators to estimate option value. Assume closing the position, say ATM, it's 52k. That releases 168k of cash (CSP) , leaves 115K cash. Projecting out to the same expiry, deploying 102k and selling at about SP = 176, is $15.5k credit. Look right to you? Although it's about 15% return on the cash, is there a better use of the 102k? Buying shares at SP = 176 and assuming that SP can get to 225 by Jan 25, that's about 28k... and the opportunity to write 5 calls a week agains the additional shares (which I didn't calculate or set a fair expectation of what is reasonably safe) ... but also has no guarantee.

It's the options thread, thoughts?

 

[dl003]

Going time to buy some cheap +185p/-180p 2 weeks exp and sell some -220c for friday

Bail if we hit 215 got it

Thanks dl003 and Jim for the educational discussion

With loves,
The Dog

actually no. no bail if 215 gets hit. if 215 gets hit and the stock can keep and hold a 70 rsi on the 4h to 1 candle close, stay in. Price is not the only dimension.

Although Im acknowledging the bounce can fizzle out soon and under what condition, my ultimate goal for this bounce, and maybe I shouldnt tell you this prematurely, is 235.

Considering the rapid market we are in, maybe me giving "if,then" 's too far into the future can do more harms than good.

 

[thenewguy1979]

actually no. no bail if 215 gets hit. if 215 gets hit and the stock can keep and hold a 70 rsi on the 4h to 1 candle close, stay in. Price is not the only dimension.

Although Im acknowledging the bounce can fizzle out soon and under what condition, my ultimate goal for this bounce, and maybe I shouldnt tell you this prematurely, is 235.

Considering the rapid market we are in, maybe me giving "if,then" 's too far into the future can do more harms than good.

Thanks dl003. As always we stand by to listen in when thing change.

Still remember - don't be a bear till dl003 say he is

 

[thenewguy1979]

True that the short put would be worth more sold at ground level ...
doggy is lowering cost of buying the long put

Difference in cost mitigation but also cap earning max.

With a spread

Without a spread. Of course you can gain lot more if the dip go beyond.

Now if you think 175 is base. Here one with a little more cost but more gain. Essentially at expiration the short 175 if not hit would expired worthless and you getting discount on the long.

 

[Jim Holder]

If $215 gets hit and the stock can keep and hold a 70 rsi on the 4h to 1 candle close, stay in. Price is not the only dimension.

Although I'm acknowledging the bounce can fizzle out soon and under what condition, my ultimate goal for this bounce, and maybe I shouldn't tell you this prematurely, is $235.

Considering the rapid market we are in, maybe me giving "if/then"'s too far into the future can do more harm than good.

This round kindly let us know when you turn bearish before dropping off the radar if you find you need to again ;- )