What I really don’t like is rushing between cases like last Friday to roll my newly underwater 900 CCs opening my iPad and my iPhone to BTC my underwater 900 CCs and STO 990 CCs at market order for a small credit and rush back into the OR. I don’t lose sleep over trades however I don’t like when I have to think about trade during busy fridays at work. That’s the only thing I don’t like about weeklies. I love the Underwater Puts I sold 25% ITM 6 months out.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Interesting to me with rolls - the desirable time and share behavior to roll shifts as you go more and more DITM.
Sticking to calls (same logic applies, but opposite directions of course for puts) - rolling ATM or a little OTM gets the best roll (best = big strike improvement for a net credit). ATM or slightly OTM is frequently on an upwards move on the share price. The same logic that applies for opening new covered calls - open into strength.
Get DITM enough though and you'll want to roll on weakness, or the shares going down. What you're really looking for is the share price to be as close as possible to the strike price for the best rolls.
An interesting exercise I commend to all - figure out a mechanism for testing rolls at varying ITM amounts. It won't be precise but it will provide a sense / rule of thumb of the quality of the available roll at different amounts ITM. IV is a big deal - I've seen $100 ITM rolls that would get a (small) strike improvement and a credit; I've also seen $60 ITM rolls that wouldn't improve the strike.
There are probably option calculators that will enable you to set up different scenarios. What I do is pretend I have different strike calls relative to the current share price, and see what those could be rolled for. Either by doing the math manually, or setting it up as a transaction that I don't execute. As a for instance if I wanted to test a $100 ITM roll with the shares at $1000 then I would pretend I have a 900 strike call for whatever expiration, and then go look up the replacement position (for 1 week, 2 weeks, ..). Then test again - maybe 980 strike call to see what a $20 ITM roll would look like.
My general sense is that roll quality is on an S curve with high and nearly the same quality for $20 or $30ish ITM (using current IV). Then the quality falls off pretty fast down to around $60 or 70ish ITM. Then the quality of the roll degrades slowly from there to whatever DITM level will no longer get a strike improvement and a credit; I think around $100 or $110 right now.
(In this context, quality is a combination of the available strike improvement plus the net credit).
I hear dat
My solution to the first problem was to get rid of the job - now it doesn't get in the way of my option sales!
But the bigger and more useful observation is that a good trade and trading strategy isn't strictly a function of the financial results. Its also a function of how well it fits into one's life (assuming this is something you anticipate doing for years - not just for a few weeks or quarters), how much mental energy its consuming the rest of the time, how much it costs in stomach acid and sleep. Stuff like that.
Maybe for you those longer dated options are a better choice. You might not be achieving 'optimal' or maximum financial results, but optimal for each of us is different and not solely a $ and cents metric.
The idea that this is a longer term activity and needs to be studied and learned in those terms leads me to choices that aren't necessarily the best as others define it.
An early instance of this for me - turns out I was too attached to my shares. I took a single covered call position and got REALLY aggressive with it for the purpose of actually running through a cycle of the Wheel. I hadn't to that point actually gone through that cycle.
My intent was to have it be assigned and then use that cash to sell a put until that got assigned and I was back in shares. If I remember right, even selling ATM took a few weeks. Anyway in that experiment I learned several things, but the key bit was that getting assigned on cc wasn't a problem. The problem was being over in cash - I was constantly worried about whether I could get assigned on the put to get back into shares. That one experience was enough to persuade me that the active version of the Wheel strategy wasn't for me. I did make out pretty well on that round trip financially though - I like being paid to learn, even when what I learn is that I won't be doing that again.
(Worth noting - I think I am achieving enlightenment by loosening my attachment to individual shares, and will be better able to turn the Wheel these days than I was back then)
I ended up doing nothing and waiting, and going on a bike ride. I was happy to see the SP around 1,000 when I got back. Tomorrow I'll have more time to watch the ticker, and I think I won't do anything unless the SP gets to 1040 or higher.
LightngMcQueen
Aspirationally Rational
Do you have good understanding what are exact conditions when IBKR account switches from regular to concentrated margin ?I received a Bulletin today from IBKR saying that they will be increasing margin requirements on concentrated positions (like mine) over 4 days starting from the 18th. That could potentially send me into negative territory, just when I was starting to get some reasonable buying power back.
I had some of my accounts switch back and from few times... I do see that under concerted margin rules, only top 3 positions are counted for maintenance margin requirements.
I also had bought some protective PUTs and noticed that my account had flipped back from concentrated to regular margin, again I do not understand actual threshold. The problem is that under concentrated margin rules, IBKR margin report goes bonkers and looses individual stock level maintenance margin details, required to reverse engineer the logic.
For interested: IBKR Margin requirement for ea 100 shares with a protective PUT is 10% PUT strike price + 100% of OTM amount [ difference of SP and strike price]
Here is more on option margin requirements ( I do not claim do understand it all) : https://cdn.cboe.com/resources/options/margin_manual_april2000.pdf
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Yes I thought about quitting my job however it’s one of the thing I love the most in the World to hammer down a pressfit acetabular cul in a total hip replacement. I love it as much as going for a 80 miles bicycle ride in a beautiful scenery. I love following all the news about EVs and Tesla and investing in one Of the greatest company we will find in our lifetime is also fulfilling. Then comes raising good kids and keeping my wife happy. Probably the top priorities for someone to stay happy is to keep doing what they love and what is fulfilling. Unfortunately it comes with things I really don’t like, taking calls and receiving might time calls about patient who has bladder scan with less than 20mL urine during night time, watching the ticker repeatedly on to make sure not to get assigned on weeklies and changing diapers for the last 8 years. I wish Covid happened 8 years ago and caused me anosmia so I don’t smell full diapers every morning and evening from my kids eating clearly too many fruits and vegetables :XI hear dat
My solution to the first problem was to get rid of the job - now it doesn't get in the way of my option sales!
But the bigger and more useful observation is that a good trade and trading strategy isn't strictly a function of the financial results. Its also a function of how well it fits into one's life (assuming this is something you anticipate doing for years - not just for a few weeks or quarters), how much mental energy its consuming the rest of the time, how much it costs in stomach acid and sleep. Stuff like that.
Maybe for you those longer dated options are a better choice. You might not be achieving 'optimal' or maximum financial results, but optimal for each of us is different and not solely a $ and cents metric.
The idea that this is a longer term activity and needs to be studied and learned in those terms leads me to choices that aren't necessarily the best as others define it.
An early instance of this for me - turns out I was too attached to my shares. I took a single covered call position and got REALLY aggressive with it for the purpose of actually running through a cycle of the Wheel. I hadn't to that point actually gone through that cycle.
My intent was to have it be assigned and then use that cash to sell a put until that got assigned and I was back in shares. If I remember right, even selling ATM took a few weeks. Anyway in that experiment I learned several things, but the key bit was that getting assigned on cc wasn't a problem. The problem was being over in cash - I was constantly worried about whether I could get assigned on the put to get back into shares. That one experience was enough to persuade me that the active version of the Wheel strategy wasn't for me. I did make out pretty well on that round trip financially though - I like being paid to learn, even when what I learn is that I won't be doing that again.
(Worth noting - I think I am achieving enlightenment by loosening my attachment to individual shares, and will be better able to turn the Wheel these days than I was back then)
I am thinking about rolling my 1035 1/4 CCs to something like 1400 15/7 or 1500 19/8 and forget about weeklies for a while. Starting medicolegal expertises next week, a lot of bike travels on the schedule and medical conferences. Some extra OR days added from other specialities not having enough patients.
I am starting to think more and more to use option selling as a long time investing vehicle selling 3-6 months 25% ITM puts, close them when the stock has a sharp run up and they become OTM or roll them out if the SP has pulled back or nothing reached the strike yet.
Now trying to think about an effective strategy with CCs but I don’t see one as I expect a gradual increase over time with the roller coaster ride so I am not that inclined to sell deep ITM CCs when we reach ATH. I am more inclined to sell CCs 3-6 months out at a price I am willing to let my shares go but I would have to become less attached to my shares like you did.
Growing less attached to my shares hasn't been easy or fast. Its easy to make the connection between early retirement and the initial share purchase in 2012. Those shares are worth keeping forever, right!?! Hard to let those go, even in a retirement account with no tax considerations.
NOT-ADVICE
There are a couple of time windows that I would be considering if I were going out past the weeklies I'm using now. One is the 1-3 month range. Somewhere in there is the knee on time value, with monthly expirations adding less and less time value as you go further out. And therefore lose (collect) time value more slowly when you're out past that range as the seller of the option. Our version of weeklies are usually 1-2 month (45 DTE) type contracts in other underlying specifically because that is when time decay really starts to accelerate.
The problem I see with that 1-3 month range is that there is enough time to move in one direction pretty aggressively, but not as much opportunity for an aggressive move in one direction to come back. Then again if you're rolling out 1-3 months on "forever roll" positions, there will almost certainly be a good strike improvement and a good credit available
The other time window I'd be thinking about is more like 9-12 months. Now you're getting into a window with opportunity for big ups and downs to occur, leaving you with the opportunity to close early at a desirable point. The closest I've come to this was selling some 600 strike puts when shares were around $500 (pre-split). I didn't like having the money tied up for a year, but I was also able to close for a 2/3rds profit after 1/2 of the time had elapsed. And the up front credit was .. big. THe overall position wasn't as profitable as 6 months of weeklies, but it also wasn't far off, and didn't need a fraction of the time to manage (ignore
).I've also sold some 2 year calls (on a roll) and I won't go that far out (closest thing to an absolute I have) again. I really didn't like the dynamic on those. In post-split numbers I sold the 840 strike with shares around 300. I figured that if I was ITM and held to expiration then the account would be 3x what it was when I opened and that'd be a great result over 2 years. Right up until 6 months went by and they were ITM. Then I wasn't as thrilled with my brilliance. I never cared for having the shares tied up that way either.
I hear dat
My solution to the first problem was to get rid of the job - now it doesn't get in the way of my option sales!
But the bigger and more useful observation is that a good trade and trading strategy isn't strictly a function of the financial results. Its also a function of how well it fits into one's life (assuming this is something you anticipate doing for years - not just for a few weeks or quarters), how much mental energy its consuming the rest of the time, how much it costs in stomach acid and sleep. Stuff like that.
Maybe for you those longer dated options are a better choice. You might not be achieving 'optimal' or maximum financial results, but optimal for each of us is different and not solely a $ and cents metric.
The idea that this is a longer term activity and needs to be studied and learned in those terms leads me to choices that aren't necessarily the best as others define it.
An early instance of this for me - turns out I was too attached to my shares. I took a single covered call position and got REALLY aggressive with it for the purpose of actually running through a cycle of the Wheel. I hadn't to that point actually gone through that cycle.
My intent was to have it be assigned and then use that cash to sell a put until that got assigned and I was back in shares. If I remember right, even selling ATM took a few weeks. Anyway in that experiment I learned several things, but the key bit was that getting assigned on cc wasn't a problem. The problem was being over in cash - I was constantly worried about whether I could get assigned on the put to get back into shares. That one experience was enough to persuade me that the active version of the Wheel strategy wasn't for me. I did make out pretty well on that round trip financially though - I like being paid to learn, even when what I learn is that I won't be doing that again.
(Worth noting - I think I am achieving enlightenment by loosening my attachment to individual shares, and will be better able to turn the Wheel these days than I was back then)
These are all the reasons I am currently rolling my BPS monthly. Work/trade/life balance did not work with weeklies. I didn't realize this until the recent SP downturn requiring panic rolls weeks into the future. Just a break from the nailbiting/looking at all options to improve my situation made me realize I needed to slow down. Without the option of jettison my work, I'm hoping the transition to monthlies will be successful.Growing less attached to my shares hasn't been easy or fast. Its easy to make the connection between early retirement and the initial share purchase in 2012. Those shares are worth keeping forever, right!?! Hard to let those go, even in a retirement account with no tax considerations.
NOT-ADVICE
There are a couple of time windows that I would be considering if I were going out past the weeklies I'm using now. One is the 1-3 month range. Somewhere in there is the knee on time value, with monthly expirations adding less and less time value as you go further out. And therefore lose (collect) time value more slowly when you're out past that range as the seller of the option. Our version of weeklies are usually 1-2 month (45 DTE) type contracts in other underlying specifically because that is when time decay really starts to accelerate.
The problem I see with that 1-3 month range is that there is enough time to move in one direction pretty aggressively, but not as much opportunity for an aggressive move in one direction to come back. Then again if you're rolling out 1-3 months on "forever roll" positions, there will almost certainly be a good strike improvement and a good credit available
The other time window I'd be thinking about is more like 9-12 months. Now you're getting into a window with opportunity for big ups and downs to occur, leaving you with the opportunity to close early at a desirable point. The closest I've come to this was selling some 600 strike puts when shares were around $500 (pre-split). I didn't like having the money tied up for a year, but I was also able to close for a 2/3rds profit after 1/2 of the time had elapsed. And the up front credit was .. big. THe overall position wasn't as profitable as 6 months of weeklies, but it also wasn't far off, and didn't need a fraction of the time to manage (ignore
I've also sold some 2 year calls (on a roll) and I won't go that far out (closest thing to an absolute I have) again. I really didn't like the dynamic on those. In post-split numbers I sold the 840 strike with shares around 300. I figured that if I was ITM and held to expiration then the account would be 3x what it was when I opened and that'd be a great result over 2 years. Right up until 6 months went by and they were ITM. Then I wasn't as thrilled with my brilliance. I never cared for having the shares tied up that way either.
I don't have any idea of the criteria they use. I've had extra margin applied from time to time but there's often no logic to it or warning given. I also go through periods where positive margin is applied to both sides of an IC, which makes it very hard to trade out of a hole from either BPS or BCS. I've just assumed these were times when the portfolio margin algo decided to lock down the account when risk levels were elevated.
With Puts I currently have several 650P+ in the account, current value is $3 each and yet they each provide $15k of additional margin maintenance. IB's portfolio margin algo is a little crazy, sometimes in a good way.
Since that Bulletin I've seen no change in my account and no further communication. Hopefully it doesn't get applied and I can carry on as normal. I've rebuilt a nice margin buffer with this run up and will be looking forward to applying it in coming weeks.
has anyone else thought of intentionally opening an ITM BPS?
for ex, STO 12/16 BPS x100 -p1200/+p1100 credit $675,000
assuming that war is over and "everyone" knows sp will be >1200 in Dec, is there any other risk? i know that:
for ex, STO 12/16 BPS x100 -p1200/+p1100 credit $675,000
assuming that war is over and "everyone" knows sp will be >1200 in Dec, is there any other risk? i know that:
- weeklies will give more $ income overall (but it's so stressful)
- theta collection is slow until yearend is approaching
- i can always BTC anytime when profit is already good (ie 50%)
- i can use the $675k to sell 30% OTM 5 DTE trades while waiting for 12/16
I have nearly that many Jan'23 1100/1200 BPS. However these were taken out to roll out DITM BPS left over after rolling a few weeks from Elon's sale. It's not something I would normally do instead of weekly trading. So far it's looking like a good way to rescue a position and gradually rebuild my account.
You cannot "use" the money as more is always required for either margin or max loss (if cash only).
Played with it yesterday. Only ~50% ROIC and capital is blocked until then. Selling 10% OTM weekly BPS currently yields about 5-10% ROIC weekly.
But the long-term BPS are hassle-free
Now that is my rationale for selling ITM puts. However from what I understand if you sell ITM BPS but the stock doesn’t go up as expected and you need to roll it, the rolling options won’t be favorable if the stock has not increased to reach at least the midpoint of your BPS. Rolling a passed Mid point ITM BPS would be for a debit or for an increased strike price to roll neutral or for a credit. But if the stock is going straight to $1,600 that would be an excellent trade
Growing less attached to my shares hasn't been easy or fast. Its easy to make the connection between early retirement and the initial share purchase in 2012. Those shares are worth keeping forever, right!?! Hard to let those go, even in a retirement account with no tax considerations.
NOT-ADVICE
There are a couple of time windows that I would be considering if I were going out past the weeklies I'm using now. One is the 1-3 month range. Somewhere in there is the knee on time value, with monthly expirations adding less and less time value as you go further out. And therefore lose (collect) time value more slowly when you're out past that range as the seller of the option. Our version of weeklies are usually 1-2 month (45 DTE) type contracts in other underlying specifically because that is when time decay really starts to accelerate.
The problem I see with that 1-3 month range is that there is enough time to move in one direction pretty aggressively, but not as much opportunity for an aggressive move in one direction to come back. Then again if you're rolling out 1-3 months on "forever roll" positions, there will almost certainly be a good strike improvement and a good credit available
The other time window I'd be thinking about is more like 9-12 months. Now you're getting into a window with opportunity for big ups and downs to occur, leaving you with the opportunity to close early at a desirable point. The closest I've come to this was selling some 600 strike puts when shares were around $500 (pre-split). I didn't like having the money tied up for a year, but I was also able to close for a 2/3rds profit after 1/2 of the time had elapsed. And the up front credit was .. big. THe overall position wasn't as profitable as 6 months of weeklies, but it also wasn't far off, and didn't need a fraction of the time to manage (ignore
I've also sold some 2 year calls (on a roll) and I won't go that far out (closest thing to an absolute I have) again. I really didn't like the dynamic on those. In post-split numbers I sold the 840 strike with shares around 300. I figured that if I was ITM and held to expiration then the account would be 3x what it was when I opened and that'd be a great result over 2 years. Right up until 6 months went by and they were ITM. Then I wasn't as thrilled with my brilliance. I never cared for having the shares tied up that way either.
I wonder how likely for Tesla to 3x with in two years now that is worth $1T. I am really not happy about my latest trade with 12/16 $1200/1250 but I confident we will see the SP in the $1200's in the upcoming years just like we just saw high 600s which most of us thought we would never see again. Long term trades can work out if you get the timing right my two attempts have been terrible.
I took advantage of the dip to close the call portion of my 940/945/1005/1010 IC at a 15% profit. I still think there is a chance we stay under 1005 this week, but not sure enough to continue to hold it.
An update on my idea of selling long-term BPS to avoid weekly trading... didn't quite go as planned because I saw an opportunity to get out with about 45% profit, figured I will get an opportunity to open these up again over the next few months.
On 3/7 I opened 10x 500/700 BPS for 12/16 for $70K, bought back today for $42K, profit $28K.
On 3/14 I opened 20x 450/650 BPS for 12/16 for $131K, bought back today for $70K, profit $61K.
On 3/7 I opened 10x 500/700 BPS for 12/16 for $70K, bought back today for $42K, profit $28K.
On 3/14 I opened 20x 450/650 BPS for 12/16 for $131K, bought back today for $70K, profit $61K.
Looks like the MMD is back, so I was also able to play the day trade a bit. Bought back -c1120, then resold -c1130 on the rebound for a whopping $0.10 cr. Still pretty sure they will expire worthless, so really just keeping the morning interesting and practicing my timing skills
Looking ahead a week and a half we have the production report soon. I'm trying to figure out whether we'll see it before / during trading on Friday 4/1. I went looking for a history of the production reports and more importantly the dates when they were released.
At the moment I'm thinking this quarter's production report will be sometime after close of trading day on Friday, and thus expect a post P/D report pop to happen on Monday 4/4.
But that is really a guess that sounds reasonable to me - anybody have some historical data? Has Tesla ever announced quarterly production during trading on the 1st of the month?
At the moment I'm thinking this quarter's production report will be sometime after close of trading day on Friday, and thus expect a post P/D report pop to happen on Monday 4/4.
But that is really a guess that sounds reasonable to me - anybody have some historical data? Has Tesla ever announced quarterly production during trading on the 1st of the month?
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