Wiki Selling TSLA Options - Be the House

[TheTalkingMule]

What rational Penn grad would sell at 850 instead of 1250 just to save a few % in tax?

 

[FS_FRA]

More interesting data from Gary Black. It sure looks like we are setting up for a classic sell the news dump next Thursday. I'm planning on saving lots of margin to open BPS at the end of next week.

Confirms my intention to close my 10/22 705/605 BPS well before Thursday.

 

[Drezil]

You lost me. Can you explain this like I'm 5?

Sure.
Imagine you have a BPS with 0.5delta.
As one option represents 100 shares it loses 100*0.5=50$ in value for each $ TSLA falls.

Now to gain 50$ for every $ TSLA falls you can go short 50 TSLA. The BPS still loses value, but the short TSLA position gains to be same amount. This cancels out and you have nearly no portfolio movement to the down or upside.

Pro: no movement, if stock goes down hard.
Con: if one is wrong, no movement and miss out on gains.

That is one reason why I don't own TSLA directly. So I can use a fast short that I can even open/close in pre and after market to balance options going south without touching the options.

In this way one can cancel out a short crash if one happens to be able to trade (and not sleep or something like it ).


Normally your broker offers you statistics like "portfolio Delta" or "position Delta" that calculates the cumulative exposure on several positions, so you dont have to do it by hand.

I went into this Monday with effectively ~3k Delta and no covered calls and using this as risk mitigation if we do not get a green Monday, but a selloff. Closing covered calls in premarket on a rise is not possible as you can only trade options when the market is open. Mitigating downfall in premarket via short shares, however, is.

Feel free to ask specific questions. Happy to help

 

[jw934]

With so many entering new bullish PUT spread positions to leverage for the earnings call, puts expiring Oct 22 that are under $500 have actually increased in value on Friday, vs those above $500 which have dropped by 50% - 60% on Friday. My interpretation.

 

[AquaY]

S&P futures vs fair value: +0.60. Nasdaq futures vs fair value: -32.80.

TSLATESLA INC COM
$843.030.00 (0.00%)
At close: Oct 15, 2021, 4:00 PM ET

Extended hours
$852.92+9.89 (+1.17%)
Bid x Size $852.15 x 100 Ask x Size $852.80 x 500
Before hours: Oct 18, 2021, 7:47 AM ET

I had the best week ever last week which was preceded by my former best week ever, which was preceded by the previously best week ever.
Sure be happy to keep this trend going. I'll be happy with one of the preceding weeks profits!

I feel good about my positions for 10/22.
All BPS, well OTM. My highest short leg strike is 740. I do not want to be short any calls going into earnings.

 

[juanmedina]

S&P futures vs fair value: +0.60. Nasdaq futures vs fair value: -32.80.

TSLATESLA INC COM
$843.030.00 (0.00%)
At close: Oct 15, 2021, 4:00 PM ET

Extended hours
$852.92+9.89 (+1.17%)
Bid x Size $852.15 x 100 Ask x Size $852.80 x 500
Before hours: Oct 18, 2021, 7:47 AM ET

I had the best week ever last week which was preceded by my former best week ever, which was preceded by the previously best week ever.
Sure be happy to keep this trend going. I'll be happy with one of the preceding weeks profits!

I feel good about my positions for 10/22.
All BPS, well OTM. My highest short leg strike is 740. I do not want to be short any calls going into earnings.

I might sell some 930cc's if IV picks up. I think on the last earnings I was able to get $10-6 for a 10% OTM call. Yeah the 10/22 BPS are doing great I am going to see If I can close mine today at 90-85% and open some for next week.

 

[corduroy]

IV is now back to 0%. Are we crushing before earnings?

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%
10/15/2021	39.5	9%
10/18/2021	35.2	0%

 

[bkp_duke]

IV is now back to 0%. Are we crushing before earnings?

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%
10/15/2021	39.5	9%
10/18/2021	35.2	0%

Certainly looks that way.

Lowest point in 2 years by the graphs I was looking at.

 

[phantasms]

c$1000's are now about $1. What a time.

 

[mickificki]

Last week was my first significant loss week in a couple of years of selling options.

I got a bit greedy, not allowing for that much of a rise and was overloaded with BCS c/w BPS with the BCS C- legs 820, 830 and 835. I was also expecting/hoping that there would be some defence of the Call walls when I got up in the early hours to sort everything about an hour before the close. What I found was the stock price climbing again and by the time I'd sorted out what to do, all the C- were well in the money and the loss rapidly increasing. I ended up closing everything out but didn't get time to STO any rolls or replacement positions. While the loss was significant it still equates to just 2 weeks worth of premiums, so shouldn't take too long to recover.

I aim to be a little more conservative and less complacent around events in future. I also need to listen to the danger signs and be prepared to close out positions earlier if needed to mitigate the risk of a larger loss. This was also the first week in ages I can recall seeing Call walls on the Open Interest get ignored on relatively modest volume. Perhaps the presence of all those massive 700 to 750 put walls gives the MM enough wins not to bother with the call walls. Whatever the case we should be more cautious about how much MM or others are prepared to defend call walls in future.

I feel your pain. I broke @BornToFly 's first 3 rules of options investing: don't be greedy...with my ridiculous 20x 810strike CC's, and had my shares called away.

bought them back at market open, though with fewer shares. Only minor solace is my bps on my other account is doing ok.

 

[BornToFly]

Sure.
Imagine you have a BPS with 0.5delta.
As one option represents 100 shares it loses 100*0.5=50$ in value for each $ TSLA falls.

Now to gain 50$ for every $ TSLA falls you can go short 50 TSLA. The BPS still loses value, but the short TSLA position gains to be same amount. This cancels out and you have nearly no portfolio movement to the down or upside.

Pro: no movement, if stock goes down hard.
Con: if one is wrong, no movement and miss out on gains.

That is one reason why I don't own TSLA directly. So I can use a fast short that I can even open/close in pre and after market to balance options going south without touching the options.

In this way one can cancel out a short crash if one happens to be able to trade (and not sleep or something like it ).


Normally your broker offers you statistics like "portfolio Delta" or "position Delta" that calculates the cumulative exposure on several positions, so you dont have to do it by hand.

I went into this Monday with effectively ~3k Delta and no covered calls and using this as risk mitigation if we do not get a green Monday, but a selloff. Closing covered calls in premarket on a rise is not possible as you can only trade options when the market is open. Mitigating downfall in premarket via short shares, however, is.

Feel free to ask specific questions. Happy to help

Interesting. Thanks for the explanation.

 

[jeewee3000]

c$1000's are now about $1. What a time.

Sold some . 16% OTM. Will close upon opportunity.

 

[corduroy]

I sold some $960 cc. Also some 10/22 BPS 740/640s right on open for $2.95, already up 30%.

 

[bkp_duke]

Just a heads up to all those holding shares for margin.

I've got a Margin call and I could not for the life of me figure out why . . . and then I looked at the margin calculator and Fidelity have devalued TSLA to 40% (I believe it was 60%). Explains why the account went from perfectly fine with plenty of excess margin to having both a federal and margin call at the same time.

My BPS are at 75%, so I may close them out to cover the call and prevent liquidation of the shares (they are 1 month from going from short term to long-term capital gains status).

 

[juanmedina]

Just a heads up to all those holding shares for margin.

I've got a Margin call and I could not for the life of me figure out why . . . and then I looked at the margin calculator and Fidelity have devalued TSLA to 40% (I believe it was 60%). Explains why the account went from perfectly fine with plenty of excess margin to having both a federal and margin call at the same time.

My BPS are at 75%, so I may close them out to cover the call and prevent liquidation of the shares (they are 1 month from going from short term to long-term capital gains status).

bastards they always have to ruin the party

 

[BornToFly]

Just a heads up to all those holding shares for margin.

I've got a Margin call and I could not for the life of me figure out why . . . and then I looked at the margin calculator and Fidelity have devalued TSLA to 40% (I believe it was 60%). Explains why the account went from perfectly fine with plenty of excess margin to having both a federal and margin call at the same time.

My BPS are at 75%, so I may close them out to cover the call and prevent liquidation of the shares (they are 1 month from going from short term to long-term capital gains status).

Interesting. Mine has not changed. It is criminal that they can change this on customers and force a margin call.

Edit: It looks like mine did drop to 40%

 

[bkp_duke]

Interesting. Mine has not changed. It is criminal that they can change this on customers and force a margin call.

I've got a lot of levers to pull. I'll deposit cash before I cash out those shares one month before long-term cap gains (after that, I don't care). I may also sell another group of stocks in the account, sell a covered call, etc.

 

[BornToFly]

Interesting. Mine has not changed. It is criminal that they can change this on customers and force a margin call.

I think I take it back. It is showing 40%. I will have to do more investigating to see why my margin is still looking ok.

 

[cbh03]

I am conflicted about how to trade this week. Last week, I opened some BPS for 10/22 (720/620) with about half of the margin that I want to use in a week. Those are up significantly, but still have a decent amount of value, so I don't feel the need to close them at this time.

I am considering:
a) opening BPS at a higher strike, like 780/680 (but I don't want to be too close to the money in case we get a post-earning drop);
b) opening BPS at the same or lower strike (but it doesn't seem worth it today given the low IV);
c) selling CC (but the chance of the SP continuing to rise on a strong earning beat is too high); or
d) doing nothing.

Given that I don't see a trade that I am comfortable with at this time, I'm choosing option d. I will likely re-visit option b if we get a pullback or a spike in IV prior to close on Wednesday.

 

[tradenewbie]

I am conflicted about how to trade this week. Last week, I opened some BPS for 10/22 (720/620) with about half of the margin that I want to use in a week. Those are up significantly, but still have a decent amount of value, so I don't feel the need to close them at this time.

I am considering:
a) opening BPS at a higher strike, like 780/680 (but I don't want to be too close to the money in case we get a post-earning drop);
b) opening BPS at the same or lower strike (but it doesn't seem worth it today given the low IV);
c) selling CC (but the chance of the SP continuing to rise on a strong earning beat is too high); or
d) doing nothing.

Given that I don't see a trade that I am comfortable with at this time, I'm choosing option d. I will likely re-visit option b if we get a pullback or a spike in IV prior to close on Wednesday.

same same here, so tempted to do a BCS (-950/+1050, the premium is attractive for around $1.5) but I would rather do nothing now and tell myself not to be greedy, at least for today.