Wiki Selling TSLA Options - Be the House

[dl003]

I’m back with @MaxPain seeing risk to the downside. Volume has dried up again and other than that post-ER surge it doesn’t seem like much has changed in the short-term.

I’m expecting Q2 to be down, per Troy, and I think the market will start to reflect that as we get closer to P&D next month. I’m feeling pretty comfortable with my ITM calls for this week and bought a few puts for tomorrow and next week.

Volume drying up on pullback is actually a good sign. Means people are not as willing to sell or short it compared to how much they bought during the spike, aka consolidation - not reversal.
I'm not guaranteeing we will go back to 185-190, but price action is simply saying that digestion is under going. We're going "cheap" on a higher and higher timeframe. Last "cheap" buy was on the 1h and got us $10 bounce from 176 to 187. Before that was on the 30m, 180 to 185. Next is the 2h, but it's not here yet. The bounce should be bigger than $10. Bounce from where, I don't know yet.

 

[Jim Holder]

Price will stay weak for a few more days to a week, before some "good news" comes out and take us back to 185-190. Then, the 2nd leg down begins.

2nd leg stops @$159?

 

[dl003]

2nd leg stops @$159?

low 160s minimum. It will feel painful but I'll be there calling bottom when I see it.

 

[Jim Holder]

Volume drying up on pullback is actually a good sign. Means people are not as willing to sell or short it compared to how much they bought during the spike.
I'm not guaranteeing we will go back to 185-190, but price action is simply saying that digestion is under going. We're going "cheap" to a higher and higher timeframe. Last "cheap" buy was on the 1h and got us $10 bounce from 176 to 187. Before that was on the 3m, 180 to 185. Next is the 2h, but it's not here yet. The bounce should be bigger than $10. Bounce from where, I don't know yet.

Thank you.

Will you sell calls into the next pop, say -C200 6/21 or 7/19, and BTC at $160?

 

[dl003]

Thank you.

Will you sell calls into the next pop, say -C200 6/21 or 7/19, and BTC at $160?

I've adopted a new selling style. 20% of my income goal everyday . I call the top everyday and sell into it. So, while I may not get the best strike possible, the goal is my sell always turns green after I execute it. In fact, my strike has gone down everyday since I started. But, I'm having to adjust my philosophy a bit here. As sellers, we're exposed to the risk of overnight news. The problem with finding the "best" strike and unload 100% or even 50% of firepower right then and there is we get married to the trade, leaving little room for daily development. Therefore, I'm using levels as mid-term guidelines only and relying more on intraday momentum to sell. When the momentum gets close to a pivot on a higher timeframe, then I'll do something like a 20 DTE ATM CC. So, please don't ask me for a rigid strike ahead of time; I'm not a good source for that, at least until, as I've mentioned last week, the daily momentum starts fizzling out. If you caught 200 last week, that's great. But right now, I'm doing short term sells only. The strategy seems easy now as we're in a short term downtrend. However, when we reach "cheap" on the 2H, either through time, price or a bit of both, I will be sitting on my hand and let the spike happen, before calling the daily tops again.

I expect the next bounce to be bigger than $10 and there will be some news to make it feel legit. So, I'm eating the lower strike everyday as we're chopping down in exchange for the ability to stay out of that $10+ bounce. Maybe in a few months I'll become more in tune but right now I'm taking it slow. Using my new approach, the spike from 140 to 200 would have been so clearly telegraphed.

 

[Yoona]

Would selling another OTM put (i.e. 1x700p) not help the repair process?
Or are we just taking on unwarranted extra risk?

i wouldn't do that, definitely NO (that is advice)

the strategy doesn't risk capital and has zero downside risk because everything below the highest leg expires worthless

the reason you want to use it is because you think the stock is going nowhere and may even fall some more, which is why you want to lower your breakeven

the worst that could happen is stock falls some more, but you were already in that boat anyway

the best that could happen is you break even and there is no lost capital

by introducing a -p, the neutral hedging strategy becomes a directional bet

if a black swan happens, you will double down on your losses (ie buy some more when stock is falling to average cost = definite no-no)

suddenly, capital is at risk

 

[Yoona]

when sp drops, credit becomes larger and chances of breaking even gets bigger

so i rolled 5/17 +c835 x1 -c870 x2 into 5/24 +c800 x1 -c850 x2 (978.25 credit), lowering cost basis from 901.66 to 865 to 850

per contract, there is even an 812 profit at expiry... sweetttttttttttttttttttttttttttttttt

edit: at current sp 805, it means i will make realized gain=1478 per contract using this strategy instead of doing nothing and waiting for sp to rise into 901.66; 1478 is almost the same as CC income so this is a bigger win

View attachment 1045585

another thing i learned is that the strategy is almost delta-neutral (websites didn't teach this )

long x1 = 50Δ
short x2 = 54Δ

net = negligible -4Δ

by buying 4 shares, i become delta-neutral and have eliminated the risk resulting from stock moves (ie, unrealized gain/loss stays 0 until expiry as long as i keep/update the hedge daily)

 

[Jim Holder]

I've adopted a new selling style. 20% of my income goal everyday . I call the top everyday and sell into it. So, while I may not get the best strike possible, the goal is my sell always turns green after I execute it. In fact, my strike has gone down everyday since I started. But, I'm having to adjust my philosophy a bit here. As sellers, we're exposed to the risk of overnight news. The problem with finding the "best" strike and unload 100% or even 50% of firepower right then and there is we get married to the trade, leaving little room for daily development. Therefore, I'm using levels as mid-term guidelines only and relying more on intraday momentum to sell. When the momentum gets close to a pivot on a higher timeframe, then I'll do something like a 20 DTE ATM CC. So, please don't ask me for a rigid strike ahead of time; I'm not a good source for that, at least until, as I've mentioned last week, the daily momentum starts fizzling out. If you caught 200 last week, that's great. But right now, I'm doing short term sells only. The strategy seems easy now as we're in a short term downtrend. However, when we reach "cheap" on the 2H, either through time, price or a bit of both, I will be sitting on my hand and let the spike happen, before calling the daily tops again.

I expect the next bounce to be bigger than $10 and there will be some news to make it feel legit. So, I'm eating the lower strike everyday as we're chopping down in exchange for the ability to stay out of that $10+ bounce. Maybe in a few months I'll become more in tune but right now I'm taking it slow. Using my new approach, the spike from 140 to 200 would have been so clearly telegraphed.

Very interesting, thanks for sharing.

Would be great if you can post your intraday BTO and STC, even just for a couple days, will help us get some insight.

 

[InTheMiddle]

STO 100x -TSLA240510P170 CSPs for $0.82. Not expecting them to be ITM by EOD tomorrow, but currently thinking if they are I’ll just wheel the shares next week. Contrarian indicator is strong, however, so I now assume it’ll plummet to trap me.

 

[Jim Holder]

While 99.99% not Buffet, seems someone’s been selling (?) loads of $260 puts for 6/21 the past few days:

https://twitter.com/x/status/1788643868419748315

 

[Max Plaid]

I’m back with @MaxPain seeing risk to the downside. Volume has dried up again and other than that post-ER surge it doesn’t seem like much has changed in the short-term.

I’m expecting Q2 to be down, per Troy, and I think the market will start to reflect that as we get closer to P&D next month. I’m feeling pretty comfortable with my ITM calls for this week and bought a few puts for tomorrow and next week.

Too early in the quarter to predict, but the factual numbers we have are for Europe, where April was roughly the same as April 2023, but April 2023 was +50% compared to January 2023, but this year it's around 20% down. Given that the wave is not as strong an effect as before and that Tesla allegedly had 50k in-transit cars, I think it looks pretty bad also given that China was also down compared to 2023

Of course things could turn around, we don't know, but I am expecting a repeat of Q1 and that would also invalidate Musk's flippant comment on the earnings call that 2024 would show growth over 2023

Against that we have the shareholder meeting in June where we could expect backing for Musk as CEO, plus he'll likely be on best behaviour, so that might help keep the SP higher

I'm bracing for volatility mid June to mid July, hope I can get my current straddle to a wide strangle before then... maybe even better to be all out of short weeklies and see if the long puts and calls don't bring some wins for once

 

[Jim Holder]

Some support @ 172 and 170:

 

[tivoboy]

5130 is strong resistance.. we’d have to have ppl really change opinion about Fed cuts (which HAVE changed a bit today for July/Sept cuts probability). Then 5180 is pretty strong resistance.. so getting past 5130 and filling that whole gap to 5180 I think there isn’t enough juice for that.

I RE-added some June 21 SPY 490 today at 3$ again, a bit more than I paid in the last round.

Welp, the next level WAS 5200, and now we’re through that.. I still think it’s going to be rug pull, but not before a blow off top.
IF CPI next week WEDNESDAY at 05:30 PST, is anywhere near AT or BELOW expectations it’s going to be a very nice call selling day and or ATH in various places.

I DO find it interesting that it isn’t TECH making this the last run, but Financials and Industrials, so IF Tech comes in a tad higher in the next week+, we could for sure get to a new top.

 

[tivoboy]

I've adopted a new selling style. 20% of my income goal everyday . I call the top everyday and sell into it. So, while I may not get the best strike possible, the goal is my sell always turns green after I execute it. In fact, my strike has gone down everyday since I started. But, I'm having to adjust my philosophy a bit here. As sellers, we're exposed to the risk of overnight news. The problem with finding the "best" strike and unload 100% or even 50% of firepower right then and there is we get married to the trade, leaving little room for daily development. Therefore, I'm using levels as mid-term guidelines only and relying more on intraday momentum to sell. When the momentum gets close to a pivot on a higher timeframe, then I'll do something like a 20 DTE ATM CC. So, please don't ask me for a rigid strike ahead of time; I'm not a good source for that, at least until, as I've mentioned last week, the daily momentum starts fizzling out. If you caught 200 last week, that's great. But right now, I'm doing short term sells only. The strategy seems easy now as we're in a short term downtrend. However, when we reach "cheap" on the 2H, either through time, price or a bit of both, I will be sitting on my hand and let the spike happen, before calling the daily tops again.

I expect the next bounce to be bigger than $10 and there will be some news to make it feel legit. So, I'm eating the lower strike everyday as we're chopping down in exchange for the ability to stay out of that $10+ bounce. Maybe in a few months I'll become more in tune but right now I'm taking it slow. Using my new approach, the spike from 140 to 200 would have been so clearly telegraphed.

Finally coming over to the dark side..
- wringing hands emoji -

 

[Jim Holder]

Welp, the next level WAS 5200, and now we’re through that.. I still think it’s going to be rug pull, but not before a blow off top.
IF CPI next week WEDNESDAY at 05:30 PST, is anywhere near AT or BELOW expectations it’s going to be a very nice call selling day and or ATH in various places.

I DO find it interesting that it isn’t TECH making this the last run, but Financials and Industrials, so IF Tech comes in a tad higher in the next week+, we could for sure get to a new top.

Thanks for the update. Right on time. Was about to buy +P490 6/21 SPY @$1.45 and canceled the order. Will see if we get $525-$530+.

Are you holding yours still or closed/rolling?

 

[Jim Holder]

Would be nice if TSLA wouldn’t close below the 50-day ($172.49). Much to ask?

Let’s see.

 

[Max Plaid]

Would be nice if TSLA wouldn’t close below the 50-day ($172.49). Much to ask?

Let’s see.

It's having a go...

Edit: meh!

Edit 2: without going and looking, I think that might be the lowest volume day in living memory...

 

[ChiefRollo]

Seems daily 34-EMA...or maybe the confluence with 50-SMA...is holding.

 

[tivoboy]

Thanks for the update. Right on time. Was about to buy +P490 6/21 SPY @$1.45 and canceled the order. Will see if we get $525-$530+.

Are you holding yours still or closed/rolling?

Still holding it, it wasn’t a full position and I still have insurance on my house and cars. ;-). I may move the SPY level up a tad 495/500, but I’ve got sunscreen in my eye at the moment and can’t see the options charts. ;-)

 

[Jim Holder]

without going and looking, I think that might be the lowest volume day in living memory...

Seems SPY too:

https://twitter.com/x/status/1788661818367365629