Wiki Selling TSLA Options - Be the House

[BornToFly]

RBC Capital Reiterates Outperform on Tesla, Maintains $305 Price Target​

Possibly igniting shorts squeeze?

I was wondering about the pop. TSLA showing amazing strength so far today against macros.

 

[dl003]

Tesla has a correlation of more than 90% with NASDAQ. It has also a high beta of 2.

But, as you note TSLA can have wild swings and that is what needs to be analyzed.

What I'm talking about is an analyst saying something like TSLA reversed in the 3rd hour without noting it was just following the index is being willfully blind.

IOW, a lot of the TSLA movement can be explained by index movement. What is interesting is the other portion.

I don't follow anyone on youtube so I don't know who you're talking about and the quality of their work. I'm only talking about my experience from circles of friends and paid rooms I've come across. Beta is taken on a daily close basis so intraday movements don't need to follow beta and they don't. Look at these 2 candles highlighted in yellow. Where's the correlation? The TSLA chart is littered with these candles. It only takes a candle like this everyday to swing the balance between bulls and bears to the extreme and everything happens after that starts off on shaky ground. The noise : signal ratio gets high enough that it's better to ignore it all together, just like how Tesla got rid of Lidar.

 

[juanmedina]

Analyst are lowering their expectations for P&D so it might not be that bad in the end.

 

[SpeedyEddy]

I don't follow anyone on youtube so I don't know who you're talking about and the quality of their work. I'm only talking about my experience from circles of friends and paid rooms I've come across. Beta is taken on a daily close basis so intraday movements don't need to follow beta and they don't. Look at these 2 candles highlighted in yellow. Where's the correlation? The TSLA chart is littered with these candles. It only takes a candle like this everyday to swing the balance between bulls and bears to the extreme and everything happens after that starts off on shaky ground. The noise : signal ratio gets high enough that it's better to ignore it all together, just like how Tesla got rid of Lidar.
View attachment 977314

You on the other hand are a beacon for all of us. I think the Pre-october 255 is incoming and then ...... down we go

 

[Max Plaid]

Hi, can you explain briefly how writing against +C works? I have 7x 12/2025 +C150 and interested in using them to generate a bit of cashflow on the side this way if possible (without too much risk).

I think to a certain degree it can depend on your broker, some have rules, but fundamentally, a long put or call behaves the same as shares. And you can write short positions against those up to the expiry date of the long. If the strike price is above the long call or below the long put then it's fully covered, otherwise there will be a margin requirement to cover the potential shortfall

So I have a LOT of Dec 2025 +c200's and +p270's that I've written Jan & Sep -300 straddles against next year, my rationale being that I think once we get through this Q3 mess, the SP will recover to the upside, then I'll keep rolling to take the theta, maybe widen to strangles if the opportunity presents itself

The long puts are fully paid for by the short puts, hence the +270/-300 disparity, so I do have some margin requirement on those, but as I expect the SP to be 300 next year (might not be, of course), I'm banking on pocketing that premium, if not, the premium from the straddled calls bridges the gap, so it's a sort of neutral setup - individual Deltas aside, etc.

 

[adiggs]

I'm trying to decide what to do with a bunch of Jan 2024 BPSs (these were rolled out from early 2022). -230/+193.3. The original plan was to let them expire worthless in January. I'm not so sure that will happen. When the SP dropped this morning, I could roll them a year to Jan 2025 -230/+195 for $3. With the SP at 247 it is $4. I'm hoping that if the SP climbs this week I could roll them for $5. Not great, but better than paying to roll them if the SP drops below 230. I also think 230 should be safe in 2025....

The other option is pay about $10 debit to close them, and then do weekly 2X BPSs, 15 wide, for 0.2 total. (So twice the number for 0.1 each week). That could be risky and stressful. I'm thinking about taking the roll this week to 2025.

The other option is close out the BPSs and sell a bunch of -250 Puts for Jan 2025, but that gives no income (just covers the cost to close).

Thoughts?

I had a similar situation earlier in the year with BPS's that had gone DITM, but then recovered to go OTM. In my case my decision when the share price got high enough, and the BPS far enough OTM, was to take the remaining loss. My rationale / thinking was that the roll had served its purpose, and reduced an 80% loss to a survivable 20-25% loss (I forget the exact numbers). 80% was really bad, where the roll plus time allows the share price to recover from that amazing dip and keep things intact.

I didn't want to wait another year for the spread to finally have a shot at actual profitability - I just viewed the move from a very high % loss to a modest % loss to be a gain, in the sense that I'd "lost" 80%, so growing back to 25% was a rather dramatic gain. And I really don't like 1+ year sold options


Meanwhile I decided to close some Jan '24 370 strike calls. I sold these a few months back for ~$13 and was able to close them today for !$3.50. I have rather liked this position as its consumed no mental energy to speak of and proven to be quite profitable. Maybe not the same level of % profit as the weeklies, but really easy to "manage".

With share price in the current range I will be looking at new ~6 month and similarly far OTM calls.

 

[Jim Holder]

I think to a certain degree it can depend on your broker, some have rules, but fundamentally, a long put or call behaves the same as shares. And you can write short positions against those up to the expiry date of the long. If the strike price is above the long call or below the long put then it's fully covered, otherwise there will be a margin requirement to cover the potential shortfall

So I have a LOT of Dec 2025 +c200's and +p270's that I've written Jan & Sep -300 straddles against next year, my rationale being that I think once we get through this Q3 mess, the SP will recover to the upside, then I'll keep rolling to take the theta, maybe widen to strangles if the opportunity presents itself

The long puts are fully paid for by the short puts, hence the +270/-300 disparity, so I do have some margin requirement on those, but as I expect the SP to be 300 next year (might not be, of course), I'm banking on pocketing that premium, if not, the premium from the straddled calls bridges the gap, so it's a sort of neutral setup - individual Deltas aside, etc.

Thank you

 

[dl003]

I wouldn't be surprised if TSLA has seen the high of the bounce. I'm closing my short puts here and wait for a breakout of the downtrend channel to re-enter them. If not, the default trajectory is sideway -> down.

 

[Jim Holder]

I kept the following short calls into the weekend:

10x 9/29 -C280 @ $1.30 (now $0.27)
20x 9/29 -C285 @ $.80 (now $0.18)
20x 10/20 -C300 @ $3.75 (now $1.96)

BTC on today's dip:
10x 9/29 -C280 @ $0.07
20x 9/29 -C285 @ $0.04
20x 10/20 -C300 @ $1.40

STO on today's pop:
12x 9/29 -C260 @$1.30
12x 10/20 -C290 @$3.05
(starter positions; waiting to see how TSLA trades into Friday with P&D releasing next week)

 

[Jim Holder]

I wouldn't be surprised if TSLA has seen the high of the bounce. I'm closing my short puts here and wait for a breakout of the downtrend channel to re-enter them. If not, the default trajectory is sideway -> down.
View attachment 977324

Thanks for the update!

What's the lowest strike you'd sell a short call today for 9/29, and are you considering selling any calls beyond 9/29?

 

[SpeedyEddy]

I wouldn't be surprised if TSLA has seen the high of the bounce. I'm closing my short puts here and wait for a breakout of the downtrend channel to re-enter them. If not, the default trajectory is sideway -> down.
View attachment 977324

yeah, think you're right, I was trapped a bit into going to 255, but now have already turned bearish in portfolio, like you. Sorry for calling out the 255, closed the -p240 December too.. too dangerous.

 

[dl003]

Thanks for the update!

What's the lowest strike you'd sell a short call today for 9/29, and are you considering selling any calls beyond 9/29?

I'd say 260 for 9/29. For anything beyond 9/29, BTC on dips.

 

[Jim Holder]

I'd say 260 for 9/29. For anything beyond 9/29, BTC on dips.

Thank you

 

[dl003]

yeah, think you're right, I was trapped a bit into going to 255, but now have already turned bearish in portfolio, like you. Sorry for calling out the 255, closed the -p240 December too.. too dangerous.

I might be wrong, which is why I'm ready to re-sell puts on a breakout. The wave count on the smaller frame indicates this is still just a corrective bounce, as opposed to a new leg up. Just trying to stay fluid. I think things can accelerate once this mini green uptrend is broken.

 

[Knightshade]

Any general non-advice for someone holding -p$255 for Friday? Hypothetically they're cash secured so could just turn into a wheel thing, or we could always get a CT announcement or something that bounces them OTM before end of week-- but wondering if anyone has any more interesting thoughts on doing something with em given current state of the stock and the fact PD over the weekend is likely a miss (and then ER a few weeks later likely won't be thrilling either?)

Following up on pop today I rolled these to -p$245 for Oct 13 before ER for a 50c/sh net credit... as BTF suggested if we're still down near then I'll roll further out and maybe down while still leveraging the higher IV around ER- but otherwise be looking to close earlier perhaps if we get a surprise from PD versus the now-being-lowered expectations.

 

[Nocturnal]

Interesting bit of data, for me at least.

https://x.com/BestTrader01/status/1706722762700751293?s=20

 

[ZenMan]

Interesting bit of data, for me at least.

https://x.com/BestTrader01/status/1706722762700751293?s=20

These 10,000 Calls in aggregate are only worth $200,000. ($0.20 per contract). So don't let the height of the stick influence you.

 

[tivoboy]

My overall operating thesis is that Sept will be worse than AUG for overall markets, but won’t be met with the same dip buying end of month, unless a number of macro items are resolved in the final two weeks of the month. and, buyers of any dips, probably more than the mkt 4% ‘ish that we saw in Aug, won’t return till sometime in Oct. Most of my calls SOLD are for Sept and Oct monthly expiration (MSFT, PANW, NVDA, AAPL, ORCL, CSCO, etc) and the OCT’s are still showing better returns - worse price destruction than the Sept..where ppl probably still have some short term hope.

I’m closing out most of the remaining sold calls here, down ~ 95%,, also I just sold the SPY 429 puts I had bought back in mid July for about 4.5X.. I think we’re going to certainly retest 4200 (my insurance risk off target level for Sept was 4285 and we hit that today), but I’m pretty confident that we’re not retesting last Oct lows.

I’ll park this cash in short term 2,3,6 mo tbills till we see the whites of their eyes. ;-)

 

[SpeedyEddy]

I’ll park this cash in short term 2,3,6 mo tbills till we see the whites of their eyes. ;-)

And miss al the action from a (I guess heavily oversold, so) recognizable bottom ?

 

[SpeedyEddy]

Happy to have taken a little loss to acknowledge my wrong (too high) top-pick AND selling C 255 plus buying 245 and 250 puts, to double down on a further fall of the stock (already more than making up for the loss.) will shave these @ SP 232.50, or in case not yet, roll to next week. No way P&D will be within expectations (that still are set Too high because analysts don’t listen to Elon at earningscalls but just draw straight lines (BTW exponential they think is so awkward as well…) . But I also still think a fall can suddenly be stopped by a FSD licensing announcement or crazy pricing of CT (or the m3+PLAID…). So I think I will shave some off anyway before the weekend starts.