Wiki Selling TSLA Options - Be the House

[ZenMan]

Upper Bollinger band this morning is at $821.72. Lost the protection of that band. Bollinger Band could be $825+ by tomorrow.

Entered Buy orders this morning to close my short 820Cs and short 825Cs. Need a dip to $815 for them to execute.

Edit: And my orders executed. BTC 820C at $4.10 BTC $825C at $2.50.
Felt like there was no viable recovery if they went significantly in the money. Don't want to be short any calls going into earnings next week.

 

[bkp_duke]

IV continues to drop, 41.23 as of this post.

Anyone else considering some OTM BCS for 10/22 exp? I had dismissed them a few days ago, but premiums have been steadily climbing, and now there is a decent call wall at 830 for next week. 890/920 was on my radar, if the premium spread gets above $2.

 

[BornToFly]

IV continues to drop, 41.23 as of this post.

Anyone else considering some OTM BCS for 10/22 exp? I had dismissed them a few days ago, but premiums have been steadily climbing, and now there is a decent call wall at 830 for next week. 890/920 was on my radar, if the premium spread gets above $2.

I keep thinking about it too, but then I keep going back to the idea that I will take on less risk just waiting one more week. If the Accountant is correct on his $2 EPS estimate, 890 might not be safe, especially if we slowly climb to 850 between now and Wednesday.

 

[bkp_duke]

I keep thinking about it too, but then I keep going back to the idea that I will take on less risk just waiting one more week. If the Accountant is correct on his $2 EPS estimate, 890 might not be safe, especially if we slowly climb to 850 between now and Wednesday.

Yeah, the possibility of a real blowing off the top of this thing exists. It's what gives me pause.

 

[Yoona]

IV continues to drop, 41.23 as of this post.

Anyone else considering some OTM BCS for 10/22 exp? I had dismissed them a few days ago, but premiums have been steadily climbing, and now there is a decent call wall at 830 for next week. 890/920 was on my radar, if the premium spread gets above $2.

my BCS next week is 850-930 but will BTC tomorrow

 

[Right_Said_Fred]

I read a lot about people trading in BPS that are far OTM. Does anyone ever sell them ATM? A few days ago @805 I saw that selling a BPS of 805-785 would net $6.45 and at the same time opening a B(ear)CS of 805-825 would net $10.30. Together that is $16.75 for a risk of 20 points.

If the SP moves 20 points in either direction, which is highly likely over the span of 1.5 week, you can pull the longest leg (rolling up or down by 20 points) and get maybe another $4 to $6 in extra net premium.

That would result in a position that is guaranteed to be profitable at expiration, no matter what SP does from that point on. Or am I making a miscalculation?

 

[stealthyc]

I read a lot about people trading in BPS that are far OTM. Does anyone ever sell them ATM? A few days ago @805 I saw that selling a BPS of 805-785 would net $6.45 and at the same time opening a B(ear)CS of 805-825 would net $10.30. Together that is $16.75 for a risk of 20 points.

If the SP moves 20 points in either direction, which is highly likely over the span of 1.5 week, you can pull the longest leg (rolling up or down by 20 points) and get maybe another $4 to $6 in extra net premium.

That would result in a position that is guaranteed to be profitable at expiration, no matter what SP does from that point on. Or am I making a miscalculation?

Well rolling legs up or down costs additional buying power, so that has to be kept in mind, and as such I don't follow your last line.... the stock can continue to move in a direction, where is the guaranteed profit? You can keep widening spreads but buying power is not infinite.

Edit: oh I see you are adding the extra premium in. Are you sure you can get that much? There's definitely no free lunch here.

 

[samppa]

I read a lot about people trading in BPS that are far OTM. Does anyone ever sell them ATM? A few days ago @805 I saw that selling a BPS of 805-785 would net $6.45 and at the same time opening a B(ear)CS of 805-825 would net $10.30. Together that is $16.75 for a risk of 20 points.

If the SP moves 20 points in either direction, which is highly likely over the span of 1.5 week, you can pull the longest leg (rolling up or down by 20 points) and get maybe another $4 to $6 in extra net premium.

That would result in a position that is guaranteed to be profitable at expiration, no matter what SP does from that point on. Or am I making a miscalculation?

You mean you'd sell an iron butterfly, and then invert it after stock moves?
Sounds complicated and possibly quite risky.. can't say more, never tried somethibg like that.

Couple weeks back I experimented: sold $100 wide atm bps, then rolled out and down by 20 points for zero credit, it's sitting otm right now. But I missed one week of incone in that position - less risky open would have been more profitable. Roll happened when short strike went just barely itm.

 

[corduroy]

IV continues to drop, 41.23 as of this post.

Anyone else considering some OTM BCS for 10/22 exp? I had dismissed them a few days ago, but premiums have been steadily climbing, and now there is a decent call wall at 830 for next week. 890/920 was on my radar, if the premium spread gets above $2.

I wasn't expecting IV to keep dropping going into earnings... Not sure what to make of this.

Date	IV	Percentile
10/01/2021	51.7	28%
10/04/2021	50.9	26%
10/05/2021	49.2	23%
10/06/2021	51.2	28%
10/07/2021	50.9	26%
10/08/2021	48.3	20%
10/11/2021	47.2	18%
10/12/2021	44.7	15%
10/13/2021	44.1	14%
10/14/2021	41.5	12%

 

[Drezil]

I read a lot about people trading in BPS that are far OTM. Does anyone ever sell them ATM? A few days ago @805 I saw that selling a BPS of 805-785 would net $6.45 and at the same time opening a B(ear)CS of 805-825 would net $10.30. Together that is $16.75 for a risk of 20 points.

If the SP moves 20 points in either direction, which is highly likely over the span of 1.5 week, you can pull the longest leg (rolling up or down by 20 points) and get maybe another $4 to $6 in extra net premium.

That would result in a position that is guaranteed to be profitable at expiration, no matter what SP does from that point on. Or am I making a miscalculation?

Congratulations. You just found out about the iron butterfly, or iron fly for short
Maybe that keyword helps when googling for answers or adjustment strategies.

 

[bkp_duke]

Congratulations. You just found out about the iron butterfly, or iron fly for short
Maybe that keyword helps when googling for answers or adjustment strategies.

OOOOO . . . . I've got some homework to do now!

 

[Drezil]

I wasn't expecting IV to keep dropping going into earnings... Not sure what to make of this.

10/01/2021	51.7	28%
10/04/2021	50.9	26%
10/05/2021	49.2	23%
10/06/2021	51.2	28%
10/07/2021	50.9	26%
10/08/2021	48.3	20%
10/11/2021	47.2	18%
10/12/2021	44.7	15%
10/13/2021	44.1	14%
10/14/2021	41.5	12%

Min IV is at ~850 and will continue to fall if we trend higher slowly and go back up on a reversal (like we can see tomorrow due to the MM).

 

[Chenkers]

I've rolled all of my BPS from 735/760 to 745/770 for a $0.3 credit each.

Max pain has increased to $765 but it looks like the real balance point should currently be somewhere between $780 and $795 - assuming they can get it down that low with all the buying pressure.

I rolled these BPS again, this time to 760/785 for between $0.25 and $0.35 per contract. The Put/Call balance point now looks to be around $795 and will take a lot of effort even to get below $800.

These rolls may not seem much but I see them as icing on the cake as long as they're safely below the rising balance point. (actually $33k overall in this case so a little more than just icing).

Not Advice but a consideration instead of closing out safe BPS's early is to roll them up at a safe level under a rising Put/Call balance point for extra premium. Done early enough it can add up significantly.

 

[Right_Said_Fred]

Well rolling legs up or down costs additional buying power, so that has to be kept in mind, and as such I don't follow your last line.... the stock can continue to move in a direction, where is the guaranteed profit? You can keep widening spreads but buying power is not infinite.

Edit: oh I see you are adding the extra premium in. Are you sure you can get that much? There's definitely no free lunch here.

I calculated (looking at the premiums for higher and lower strikes) that pulling one of the legs after a 20 point move would net about $4.50 to $5.00 extra premium. Total premium received would then be $21.25 to $21.75, with total cost at expiration being $20. But I have to admit that leaves little room for error.

 

[Yoona]

I read a lot about people trading in BPS that are far OTM. Does anyone ever sell them ATM? A few days ago @805 I saw that selling a BPS of 805-785 would net $6.45 and at the same time opening a B(ear)CS of 805-825 would net $10.30. Together that is $16.75 for a risk of 20 points.

If the SP moves 20 points in either direction, which is highly likely over the span of 1.5 week, you can pull the longest leg (rolling up or down by 20 points) and get maybe another $4 to $7 in extra net premium.

That would result in a position that is guaranteed to be profitable at expiration, no matter what SP does from that point on. Or am I making a miscalculation?

i analyzed that...

the initial credit may be huge, but any sideways move will erode the gain. In the 785/805/805/825 example above, just a 10-pt move (ie sp is now 815) reduced the credit by half at expiration.

Stretching the longs by 20 into 765/805/805/845 is still half the initial total credit at expiration and doubled the margin requirement from 2000 into 4000

 

[juanmedina]

So far the BPS that opened on Monday are only up 12% with IV currently at 42. Looking back it took from September 27th to the 30th for the IV to go from 42.2 to 51 because of the P&D report I assume.

I am at 40% profit now on my 10/22 BPS and I wish I had open more. I still have a good amount of cash waiting to be deployed but IV keeps on dropping.

 

[pz1975]

I closed my 720/620 BPS and opened 730/630 for next week to replace them. To make up for the lost profit by not waiting until tomorrow, I opened sold some naked 760 puts expiring tomorrow. They somehow still have $1.00 premium which is kind of surprising. The odds of TSLA falling 7% between now and expiry tomorrow is <1% IMO. Nice easy small profit I think.

 

[mongo]

I read a lot about people trading in BPS that are far OTM. Does anyone ever sell them ATM? A few days ago @805 I saw that selling a BPS of 805-785 would net $6.45 and at the same time opening a B(ear)CS of 805-825 would net $10.30. Together that is $16.75 for a risk of 20 points.

If the SP moves 20 points in either direction, which is highly likely over the span of 1.5 week, you can pull the longest leg (rolling up or down by 20 points) and get maybe another $4 to $6 in extra net premium.

That would result in a position that is guaranteed to be profitable at expiration, no matter what SP does from that point on. Or am I making a miscalculation?

Well, I don't know much about BPS, but my ATM 8/22 780 puts have done well so far this week (not as well as 10/15s would have though).
(Can't do spreads in my IRA, and don;t mind getting shares so am being wheelish)

 

[Cherry Wine]

IV continues to drop, 41.23 as of this post.

Anyone else considering some OTM BCS for 10/22 exp? I had dismissed them a few days ago, but premiums have been steadily climbing, and now there is a decent call wall at 830 for next week. 890/920 was on my radar, if the premium spread gets above $2.

I'm content to wait for a better opportunity to present itself. I've been badly burned selling calls too close to the money going into earnings (Q3'19 actually, when the stock gapped up ~20% the next open from the previous day's close) and right now the premiums are just not compelling to me.

But it is tempting, and I keep looking for a position that I like, just not seeing it.

 

[Tslynk67]

I didn't sleep well last night thinking about my current trading risk. I'm trying to be safe by using strikes that are far from the current SP, $50 spreads, and knowledge on how and when to roll. However, I realized that I'm still trading using my old naked Put strategy, where I don't lose everything if the SP goes below the strike (the SP would have to go to 0 on the assigned shares). The fact that with BPS you "lose" everything if the SP gets to the long leg, and now learning that others here are using only part of their available cash/margin so they can "start over", isn't part of my new trading strategy yet. I'm currently throwing all available cash/margin so that I can sell as many contracts as possible. I'm thinking now that I should follow the strategy of keeping a "start over after a Black Swan event" reserve. However, I am also not trading blindly like someone who is selling TSLA BPS without really understanding the company and the EV space, and is just using the same % gap to the SP every week without knowing about P&D release dates, earning report dates, etc.. I'm also taking into account the Bollinger bands, the 50 MA, and Tesla's trajectory with higher than expected earnings, new factories coming on line, and so forth. Anyway, I appreciate the knowledge I'm gaining from this thread. I traded my old career for this new one that gives me a lot more time and flexibility. Always learning....

Well this kind of explains why you've made extreme profits this year

But some worry and introspection is good, probably means it's time to dial it back a bit - as you said, don't bet the farm ever week. I mean you don't need to, do you, if you make 1, 2 or 3% of portfolio value, they're all ridiculously big sums of money, no?

I like the look of the trade @Right_Said_Fred posted earlier - the idea that either side cancel out, so chances are you'll make money on one side of the trade, maybe both, but you'll never lose, worth checking out such scenarii