Wiki Selling TSLA Options - Be the House

[mickle]

I wish I knew how much margin I was using, but there are so many numbers to look at and they are called different things with different brokers. Can anyone explain the most important numbers to be watching? I am using Fidelity and Etrade. I see so many things that seem important that I try to keep them all extremely large compared to my total portfolio value. Just an example, not even one completely common term between them!

Fidelity:
Non-margin buying power
Margin buying power
Margin equity
House surplus
SMA
Exchange surplus

Etrade:
Total Margin Requirements
Total Margin Equity
Adjusted SMA
Maintenance Excess
Non-Margin Purchasing Power
Margin Purchasing Power

 

[adiggs]

Question for folks who hold DITM LEAPs.... seems like I recall folks typically roll out further as they get into the last year of the option...

I've got a bunch about to be in that situation ($550 Jan 2023s for example)... Looks like just adding another year of time would run roughly $50/share right now... an amount that ought be reasonably easy to cover selling OTM calls against em... that the way to go?

Or are there reasons to consider changing my strike as SP has moved up fair bit from when I originally got em? Or for waiting nearer to original expiration?

I hold DITM calls. June '22 750s, June '23 300s and 400s.

I'm really, really still fiddling with my own approach on these. I've had a recent bit of experience with shorter expiration DITM calls and I now consider 6mon to be the bare minimum. Anything shorter, for me, are speculative calls with low leverage (purchased ITM), that I'm also selling some CC against to offset the time premium.


Anyway I recently rolled June '22 600s forward to the 750s (untaxed account). It was long enough to expiration that I wasn't ready to roll to a later date. The roll up enabled me to harvest some of the gains, and use that cash to buy more leaps and thereby sell more CC.

I think that this will tend to be my approach. When the shares are moving up, then I'll roll up the strike periodically to harvest some of those gains and use them for whatever I want. When choosing the new strike I l like to do the roll when the shares are down and/or when we're at the bottom of the trading channel. I roll forward to ~$100 behind the second significant support behind the shares that I can id. The $750 strike came from viewing $900 and probably $800 (somewhere in there) as 2 significant supports below the share price.

When rolling out the 1 year, I would choose the new strike using whatever methodology you like. Hopefully the new strike will be higher than the old strike, and you'll harvest some cash from the position.

In my retirement accounts I'll probably do something more like 1 year options with a roll at 6 months.


For your example situation, I like to track my time value at open so I can compare it later on. I keep track as $/month time value. That tells me the call premium to collect each month and can also be used to answer your question. If you opened the original call with $3/month, and you expect to have an opportunity like that in the future, then $4/month is too much to pay. My own recent experience has been more like $7-10.

In fact you mentioning this - another year for $50 or $4/month - that sounds pretty awesome. I'll probably use that on the June '23s I have right now. That is also a taxed account in my case, so easy to time the year early roll for just over 1 year from the original open. There will be a realized result when you roll so if its taxed be sure and consider short term and long term capital gains.

 

[CHGolferJim]

After several weeks off for holidays and while Elon sales dust settled, ventured back in today:

* 12/27 STO 123121C1100 at $32.95 on the $1073 non-core buy-write —> 12/30 BTC at $3.73
* 12/27 STO 123121C1200 at $10.98 on 60% of core long shares —> 12/30 BTC at $0.22
* 12/27 STC 031822C1100 at $130 on 3 of 4 purchased 12/14 for $62.50; 4th LO at $150
* watching 2x011422C1100 re roll timing probably week of 1/10

 

[FS_FRA]

Considering opening a 1/7 -950/+750 BPS, hoping for another MMD to get a better premium than $5.x (currently below $5)

Expect P&D to push, rather than SpaceX China feud & camera recall to depress.

Thoughts on market movers?

 

[Tslynk67]

Considering opening a 1/7 -950/+750 BPS, hoping for another MMD to get a better premium than $5.x (currently below $5)

Expect P&D to push, rather than SpaceX China feud & camera recall to depress.

Thoughts on market movers?

I honestly can't call this P&D and what might happen - many times in the past we've had great numbers and the Hedgies/MM's have killed it off - recall all the times you saw and AH +10%, PM +7%, then magically by the main open, flat...

That's why I was thinking of the 1100 straddle, but now, with the fat put premiums I was just gifted, I'm waiting on the call side and likely just go with a c1200 strangle in the end... will see

 

[BrownOuttaSpec]

leave me alone, i am busy daytrading 1/7 on the peaks/dips... up $44k this wk playing with the hedgies

Can I and this 1 post at the same time?

I've been thinking about doing something like that. Pick a good date and spread and then just trade that same position during the big swings of the day. If it doesn't swing big enough (yeah right, this is TSLA after all) then just hold onto it till expiration for that Theta decay like the original plan. I guess that takes way more management and time then just letting things ride out Theta.

 

[wooter]

Considering opening a 1/7 -950/+750 BPS, hoping for another MMD to get a better premium than $5.x (currently below $5)

Expect P&D to push, rather than SpaceX China feud & camera recall to depress.

Thoughts on market movers?

I think that's way OTM and only 6 full trading days, and therefore low premium. You could just put the order in and see if anyone bites once there is a temporary drop. That's how I ended up with my jan7 -950/+930bps 2 weeks ago.

But move it to -1050/+850bps and your premium is x5.

 

[Yoona]

Considering opening a 1/7 -950/+750 BPS, hoping for another MMD to get a better premium than $5.x (currently below $5)

i opened 1/7 BPS -p950/+p850 this morning, credit 4.19

 

[FS_FRA]

I think that's way OTM and only 6 full trading days, and therefore low premium. You could just put the order in and see if anyone bites once there is a temporary drop. That's how I ended up with my jan7 -950/+930bps 2 weeks ago.

But move it to -1050/+850bps and your premium is x5.

-1050/+850 is too close to the sun for me. I need lower management requirement, not more. Will take a look at -1000/+800, but honestly, that's not far from the strike right now (8% -ish) and a ton of manipulation going on. FWIW (and actually it's too far out) MaxPain for 1/7 = 1050, with currently major put walls at 1050 and 1000 which are probably delta hedging and should shift considerably before end of next week.

I shall ponder more...

 

[mickle]

I opened a number of 1/7 700/900 BPS a few days ago for about $3 credit, don't feel I have much to worry about with those.

I also sold some 1/7 CCs at 1210 and 1220 that I'm a little concerned about, might have to roll those up a little more on Monday after the P&D numbers come out.

 

[EnzoXYZ]

Anyone looking to buy 900c for 6-9 expiration? Last March ‘22 600c purchase was a really good call back in ~August @Lycanthrope. Currently up 160%.

I feel like 900 is a great support and would like to take advantage of some leverage with BPS winnings.

 

[Knightshade]

Anyone looking to buy 900c for 6-9 expiration? Last March ‘22 600c purchase was a really good call back in ~August @Lycanthrope. Currently up 160%.

I feel like 900 is a great support and would like to take advantage of some leverage with BPS winnings.

Cautionary tale.

On the big dips early this year I bought a bunch of July calls, thinking SURELY this ridiculous dip will rebound when Q1 ER is out and heck that expiration is post Q2 P&D!

They all expired worthless.

(that said, my julys were all slightly OTM when bought, though still hundreds under the previous stock high I fully expected us to return to way sooner than we did... but since then it's reinforced my notion the best calls to own are DITM leaps)


Historically speaking TSLA has been down in June/July compared to Jan highs 3 of the last 4 years (2020 being the obvious exception)- not that past performance is a guarantee of anything, but there's enough potential FUD around ramp speeds/delays on Austin and especially Berlin that I probably wouldn't be making 6-9 month out bets presently.

 

[MP3Mike]

I was upset yesterday because I got busy and didn't manage to buy the BPSs I wanted, 1/7 945/995, for the credit I wanted before close. But it worked out, I got them for ~23% more than what I was planning on getting for them. (And they are already at ~38%.)

So thanks to whoever for the dip. (Most likely because of the recalls, that I feel are meaningless.)

From the options interest/volume it is looking like they are planning for a close near $1080 tomorrow.

 

[Tslynk67]

Cautionary tale.

On the big dips early this year I bought a bunch of July calls, thinking SURELY this ridiculous dip will rebound when Q1 ER is out and heck that expiration is post Q2 P&D!

They all expired worthless.

(that said, my julys were all slightly OTM when bought, though still hundreds under the previous stock high I fully expected us to return to way sooner than we did... but since then it's reinforced my notion the best calls to own are DITM leaps)


Historically speaking TSLA has been down in June/July compared to Jan highs 3 of the last 4 years (2020 being the obvious exception)- not that past performance is a guarantee of anything, but there's enough potential FUD around ramp speeds/delays on Austin and especially Berlin that I probably wouldn't be making 6-9 month out bets presently.

ITM calls are best, DITM better, sell covered calls against them to recuperate initial premium and reduce cost-basis...

For example, the c900's I'm holding, I can freely sell lcc1200's against them, if the short goes ITM, and I don't feel like rolling, I can close the whole lot out and pocket $250k profits, then wait for a dip/lower IV to buy something else

One of the benefits of LEAPS is that you don't (tend) to get emotionally attached to them in the same way as shares, and there's always the possibility to go back into a new position without necessarily losing out - either at a higher strike, on SP dip, or even a premium dip during low IV

 

[MP3Mike]

I can freely sell lcc1200's against them

The 1/7 c1200s are looking a little tempting, close to $8, while max pain is closer to $1,100. But who knows what can happen with the P&D report. I'm not sure what, if any, calls to sell for 1/7...

 

[Knightshade]

Anyway I recently rolled June '22 600s forward to the 750s (untaxed account). It was long enough to expiration that I wasn't ready to roll to a later date. The roll up enabled me to harvest some of the gains, and use that cash to buy more leaps and thereby sell more CC.

I think that this will tend to be my approach. When the shares are moving up, then I'll roll up the strike periodically to harvest some of those gains and use them for whatever I want. When choosing the new strike I l like to do the roll when the shares are down and/or when we're at the bottom of the trading channel. I roll forward to ~$100 behind the second significant support behind the shares that I can id. The $750 strike came from viewing $900 and probably $800 (somewhere in there) as 2 significant supports below the share price.

So I looked at this... rolling my Jan 23 $550s to Jan 24 $750s for example nets me about $55 a share credit... plus "saving" me the ~53/share cost of rolling to Jan 24 550.... so I net about $108 a share, for a $200/share strike bump, compared to rolling a year out on the same strike, though only about half that is "new" cash

So in theory for say every 10 of these one rolled they could get 11 of the 750s a year further out at about even cost.... though somewhere in my brain taking $108 for a $200 strike increase DITM seems...not great?


Ran some examples through options calc trying to get my brain working...

Running this through the options calculator, and looking where I'd be when I was once again about a year from expiration (so Jan 2023) and looking at a few stock prices, I get:

Pay ~$53 share to keep the 550 strike out another year, keep it at 10 contracts:
Stock at $1100 I lose ~$47,500 total (about 100k including the 53k I had to add)
Stock at $1300 I make about $158,000 total (about 105k including costs)
Stock at $1500 I make about $320,000 total (267k w/costs)
Stock at $1800 I make about $640,000 total (587k w/costs)


Or roll it 11 Jan 2024 $750s:
Stock at $1100 I lose ~$85,000
Stock at $1300 I make about $100,000
Stock at $1500 I make about $300,000
Stock at $1800 I make about $610,000

Plus in theory I make some non-zero amount on selling 1 extra CC.


But I think adding the 53k to my losses isn't accurate math...because a roll isn't really a roll it's a sell and buy- so I should only care about what I paid for the buy....

In which case the $550s seem to win at every price I tested even with there being one less of them... since I'm probably not gonna make 20k in a year selling one extra CC and at most SPs the gap is even bigger than 20k.



Or am I thinking about this all wrong?

 

[FS_FRA]

Closed my 12/31 -1280C for $0.08 or 95% profit.

Opened 1/7 -950/+750 BPS @ $4 (never got back to $5+ I originally wanted) - don't have time anymore to watch the ticker today...

 

[wooter]

Would 5x dec30 -1110c/+1180c be crazy?

 

[strago13]

Rolled my 1/07 950 puts up to 1/07 990. After seeing the drops the past two days, the resilience, and the capping at 1100, I think we are in a position of strength for next week. If not, I will just roll.

Had to feed my dopamine the same way @Lycanthrope does!

 

[MikeC]

Would 5x dec30 -1110c/+1180c be crazy?

There's still 12/31 tomorrow - could be a FOMO last day before the delivery numbers.