Wiki Selling TSLA Options - Be the House

[Chenkers]

I'd expect we break 700 after a bit of resistance sometime this week but don't go over or get pushed below 750 by Friday. I wouldn't be surprised if we stay in the 690-750 range until just before earnings and then shoot up on a beat a few days after.

Btw I sold 70 x 640/670 750/780 9July IC's before close on Friday based on these assumptions.

 

[buttershrimp]

Is the market open yet?

 

[adiggs]

Is the market open yet?

Yes! You'll have to relay the play by play though.

 

[UltradoomY]

I'm in this week with Bought calls again (IV under 50) -
Went with $682.50's at $5.90 each - will look to take my investment back with a credit later this week and roll them to next week at a higher strike.
Cheers!

 

[cbh03]

Sold some conservative (I hope) weekly puts this morning ($600 at $3.09 each).

Also in for some leaps 17Sep2022 ($500 at $250 each). I am looking to buy a few leaps to reach my long term share goal. I don't have the funds to buy the shares now, but am expecting to sell some real estate next spring and will use those proceeds to exercise at least a few of the leaps to increase my share count. Does anyone have any advice/strategies for using leaps to increase share count? For example, if I want 300 shares, should I buy only 3 leaps or buy more and and plan to sell the excess leaps to fund the shares? Should I buy the leaps at the lowest strike price I can afford, buy at varying strike prices/dates, etc.?

TIA.

 

[adiggs]

Sold some conservative (I hope) weekly puts this morning ($600 at $3.09 each).

Also in for some leaps 17Sep2022 ($500 at $250 each). I am looking to buy a few leaps to reach my long term share goal. I don't have the funds to buy the shares now, but am expecting to sell some real estate next spring and will use those proceeds to exercise at least a few of the leaps to increase my share count. Does anyone have any advice/strategies for using leaps to increase share count? For example, if I want 300 shares, should I buy only 3 leaps or buy more and and plan to sell the excess leaps to fund the shares? Should I buy the leaps at the lowest strike price I can afford, buy at varying strike prices/dates, etc.?

TIA.

Nothing specific on timing from me, but I do have a couple of observations that might be worth a few $ for you.

The first is that it may make a ton of sense to mentally think of acquiring shares via exercise on the LEAP, you will almost certainly do better to sell the leap and buy shares with the proceeds plus the additional cash you've accumulated. This is due to the time value in the LEAP at the time of sale / exercise. If you exercise then you give that time value away to the seller. If you sell the LEAP, then you will collect both the intrinsic and extrinsic value (more shares for the same price).

The other observation is about how to count your "share count" using long dated calls. If you own 100 shares then a different way to count that is 100 delta (each share has a 1 delta; 100 shares = 100 delta). Delta is the term used to describe and measure the change in the position value for each change in $1 change in the share price. Meanwhile a deep ITM long dated call might have a .91 delta. Therefore each of those call contracts is worth 91 delta (100 shares * .91).

Therefore if you want 300 shares (aka 300 delta) you might want to buy 4 long dated calls at the .75 delta.

Among others an important difference to buying delta via call contracts is that the delta will change as the share price goes up and down. This is beneficial as the shares go up - those 4 .75 delta contracts will turn into 4 .90 delta contracts when they are far enough ITM. That 300 delta position will become 360 delta and you didn't do anything to make it so (except do nothing and let it happen).

That works in reverse of course as well - if the shares go down enough you will eventually have 4 .50 delta contracts. That 300 delta position is now a 200 delta.

 

[cbh03]

The other observation is about how to count your "share count" using long dated calls. If you own 100 shares then a different way to count that is 100 delta (each share has a 1 delta; 100 shares = 100 delta). Delta is the term used to describe and measure the change in the position value for each change in $1 change in the share price. Meanwhile a deep ITM long dated call might have a .91 delta. Therefore each of those call contracts is worth 91 delta (100 shares * .91).

Thank you, this is very helpful. The reason I am trying to use leaps to ensure a desired share count is that I think that the share price will be higher by this time next year (when I have freed up additional funds). Thinking in terms of delta seems to align with my goal of not missing out on this (and future) appreciation.

 

[adiggs]

With the drop to start the day I've opened some 500/600 put spreads for about $2 in credit and also bought some more Jun '23 300 strike calls.

I'm designing and selling put spreads with a short put mentality - I sell as many (or a few more) as I would naked puts (so I don't go too crazy with the leverage) and then I manage them as I would short puts. That is also where the big spread comes from - the wider the spread the more than the position behaves just like a short put.


The additional calls are to back additional covered calls. I like these particular contracts as I paid about $34 in time value over the next 24 months for them. I treat them and think of these as share replacements. And I expect that I'll get most of that $34 in time value back when I sell them sometime later - probably with 3-12 months remaining.


AND with the big drop today I'm holding off on selling any covered calls for this week. It'll be really hard not to sell them tomorrow even if its only for a few days at that point.

I will also be considering pairing up some call spreads with those put spreads for the final 1 or 2 days of the week - but not doing anything with those yet.

 

[RHJP]

With the drop to start the day I've opened some 500/600 put spreads for about $2 in credit and also bought some more Jun '23 300 strike calls.

I'm designing and selling put spreads with a short put mentality - I sell as many (or a few more) as I would naked puts (so I don't go too crazy with the leverage) and then I manage them as I would short puts. That is also where the big spread comes from - the wider the spread the more than the position behaves just like a short put.


The additional calls are to back additional covered calls. I like these particular contracts as I paid about $34 in time value over the next 24 months for them. I treat them and think of these as share replacements. And I expect that I'll get most of that $34 in time value back when I sell them sometime later - probably with 3-12 months remaining.


AND with the big drop today I'm holding off on selling any covered calls for this week. It'll be really hard not to sell them tomorrow even if its only for a few days at that point.

I will also be considering pairing up some call spreads with those put spreads for the final 1 or 2 days of the week - but not doing anything with those yet.

Newbie question for you and thank you for your detailed replies today.

I've been thinking of getting rid of my Jan 22 800 srike calls and buying the Jun '23 300 strike calls.

Is the best best time to do this when the stock is down like it is today?
and do I just sell the 800's and but the 300's or is there a benefit to rolling them in one transaction?

 

[EVCollies]

I sold 4x 645 ccp @$765 delta .4 and 10x 630 ccp @$590 delta .2 all expiring 7/9. Not likely to sell any cc this week but $8,960 is a good enough for me.

 

[adiggs]

Newbie question for you and thank you for your detailed replies today.

I've been thinking of getting rid of my Jan 22 800 srike calls and buying the Jun '23 300 strike calls.

Is the best best time to do this when the stock is down like it is today?
and do I just sell the 800's and but the 300's or is there a benefit to rolling them in one transaction?

I think that for a change like this that there isn't a particular value in doing this as a single transaction. The one circumstance where nothing else will do is when you're trying to close a sold option position while opening a new one, and you don't have the cash to close first and then separately open new. You can usually get around this problem if you have enough cash to close one option - just do a bunch of little transactions to work your way through.

A benefit, while not being unavailable as separate transactions, is that a roll transaction is a way to manage the bid / ask and share price change slippage during the two transactions. But keep an eye on that bid/ask range - Fidelity defaults to a limit order at the worst end of both trades. I change it to the mid point but sometimes can't get the order to fill. The bigger that bid/ask spread, the more likely I personally would enter as two orders (and hope the share price is in my favor during that window between first and second transaction).


I don't know which will be better - sell when up or down. When the price is higher then the 800 strike calls will be worth more. WHen the price is lower those 300 strike calls will be cheaper. I'd guess on the balance being in favor of the 300s due to much higher delta. I'm pretty confident that you'll have fewer of the 300s than the 800s.


The question I'd ask myself - what was the thesis behind buying the 800s originally and does that still hold? Or have you identified something different you'd like to do with that money? Those 800s provide significantly more upside when the shares move up (or at least they probably do - I'm assuming you have more of these than the 300s you're thinking of switching to). If that was the investment thesis - leveraged exposure to big upward share moves, then the change to 300s will reduce that leverage (you'll gain a lot of extra time though).


One observation I will make about those 800s - the time value on them is going to start going down in an accelerating fashion from here on out. I personally plan to close / roll these long dated calls with somewhere around 3 to 6 months to expiration. The more OTM they are, the more time value they have (its all time value for those 800s) and thus more absolute value time decay to experience.

 

[MikeC]

Newbie question for you and thank you for your detailed replies today.

I've been thinking of getting rid of my Jan 22 800 srike calls and buying the Jun '23 300 strike calls.

Is the best best time to do this when the stock is down like it is today?
and do I just sell the 800's and but the 300's or is there a benefit to rolling them in one transaction?

A share price increase from here means your earlier dated calls will appreciate faster on a percentage basis than later ones, and higher strikes will appreciate faster than lower ones.

So it would make more sense to me to roll 2022 800s to 2023 300s at a local peak, not a dip.

 

[RHJP]

I think that for a change like this that there isn't a particular value in doing this as a single transaction. The one circumstance where nothing else will do is when you're trying to close a sold option position while opening a new one, and you don't have the cash to close first and then separately open new. You can usually get around this problem if you have enough cash to close one option - just do a bunch of little transactions to work your way through.

A benefit, while not being unavailable as separate transactions, is that a roll transaction is a way to manage the bid / ask and share price change slippage during the two transactions. But keep an eye on that bid/ask range - Fidelity defaults to a limit order at the worst end of both trades. I change it to the mid point but sometimes can't get the order to fill. The bigger that bid/ask spread, the more likely I personally would enter as two orders (and hope the share price is in my favor during that window between first and second transaction).


I don't know which will be better - sell when up or down. When the price is higher then the 800 strike calls will be worth more. WHen the price is lower those 300 strike calls will be cheaper. I'd guess on the balance being in favor of the 300s due to much higher delta. I'm pretty confident that you'll have fewer of the 300s than the 800s.


The question I'd ask myself - what was the thesis behind buying the 800s originally and does that still hold? Or have you identified something different you'd like to do with that money? Those 800s provide significantly more upside when the shares move up (or at least they probably do - I'm assuming you have more of these than the 300s you're thinking of switching to). If that was the investment thesis - leveraged exposure to big upward share moves, then the change to 300s will reduce that leverage (you'll gain a lot of extra time though).


One observation I will make about those 800s - the time value on them is going to start going down in an accelerating fashion from here on out. I personally plan to close / roll these long dated calls with somewhere around 3 to 6 months to expiration. The more OTM they are, the more time value they have (its all time value for those 800s) and thus more absolute value time decay to experience.

Thank you adiggs for taking the time to answer my questions. The reason for buying the 800 calls was to eventually add to my core shares but didn't have the capital at the time and didn't want to miss out on any run up that should eventually occur. I think you hit the nail on the head bringing up the time value of the Jan 2022 800 calls. With six months remaining it would be nice to have some more time and the hope is the 2023 calls would give me that.

 

[RHJP]

A share price increase from here means your earlier dated calls will appreciate faster on a percentage basis than later ones, and higher strikes will appreciate faster than lower ones.

So it would make more sense to me to roll 2022 800s to 2023 300s at a local peak, not a dip.

Thanks for chiming in MikeC.

I may just buy the Jun '23 300 strike calls and hold onto the Jan 2022 800 calls a little longer in the hope that the share price increase before the calls expire.

 

[AxlxA]

Thanks for chiming in MikeC.

I may just buy the Jun '23 300 strike calls and hold onto the Jan 2022 800 calls a little longer in the hope that the share price increase before the calls expire.

Definitely make a decision on your 1/2022 calls by September.... Last 2 months (45DTE) that theta kills fastest

 

[MrMoo]

Unless we get some random big Wednesday upswing (It happened a few weeks ago) I think the momentum has died off and we are just waiting/hoping for Q2 earnings pump. I've put my money where my mouth is and sold about 10% of my TSLA shares, sold close OTM Puts at $640 to get them back. I've also sold 700 CC's on the upside.

I'm fairly frustrated at the stock movements the last 6 months, trailing the index. I'll be aggressively wheeling with the 10% I sold to try to trade some profits from the up and down movement of the stock. Basically if I get assigned at 640 i'm selling 645 calls next week. So on and so forth. If i'm wrong so be it. Still have 90% holdings. 35% which are not limited by the CC's.

 

[buttershrimp]

I have no idea what the stock will do tomorrow. Or any day for that matter. Just a whole lot of delusional confirmation bias, astrology and you tube videos of people drawing lines on candlestick charts. If there is a rise tomorrow I’m pretty sure it will be because it’s due to correction from today and pre earnings trends. I have revised my target to 680 touching 540 and 800.

 

[adiggs]

I have no idea what the stock will do tomorrow. Or any day for that matter. Just a whole lot of delusional confirmation bias, astrology and you tube videos of people drawing lines on candlestick charts. If there is a rise tomorrow I’m pretty sure it will be because it’s due to correction from today and pre earnings trends. I have revised my target to 680 touching 540 and 800.

I can agree with that - especially the 540 / 800 range!

 

[pz1975]

July 23 puts have a very high premium. It seems like the market thinks that the earnings report will be that week. I think it’s less than 50% chance of that - more likely July 26 or 28 will be the date. Either way, you can sell $450 puts for $5, $500 puts for $7 and $550 puts for $10. I like selling way OTM puts like those and these are great premiums.

 

[generalenthu]

July 23 puts have a very high premium. It seems like the market thinks that the earnings report will be that week. I think it’s less than 50% chance of that - more likely July 26 or 28 will be the date. Either way, you can sell $450 puts for $5, $500 puts for $7 and $550 puts for $10. I like selling way OTM puts like those and these are great premiums.

October 2020 has the same calendar as this month. Earnings were on the 21st.