Wiki Selling TSLA Options - Be the House

[thenewguy1979]

This is an illusion.
Selling & buying options is simply the act of adding & subtracting Greeks. At the end of the day, no matter how intricate your "strategy" is, the bottom line is how much delta and theta have you added? How much more or less exposed are you to IV? That's it. No matter how good you think your 3 leg strategy is, I guarantee you I can just do a 1 leg option that has nearly identical risks : rewards, but one that you will frown upon because it's too simple and too risky. It's very dangerous to think adding a spread or a butterfly, or whatever, will magically put you in a better place. It's dangerous because, thinking you're golden, you will pay less attention to what really makes a great trade: levels, timing, trends, etc...

Thinking out loud.

Was trying for days of doing credit spread stragedy but no matter what I choose for the spread the credit to max loss ratio is never 1:4 and with a low delta of .30. Meaning I was aiming for credit of 100 with max loss of 400 on the spread at .30 delta of being in the money. Risk defined not naked not cover.

But if I add 2 more leg on the opposite end (resulting in a condor) I can achieved a 1:4 credit to max loss ratio with a combine delta risk of .30.

Was playing around with call credit spread for Tesla expiring 12/1. I can moved the spread closer to ITM but that's also increase the delta to .50 or more with higher risk. Yes, I think the alternative is just go long in the direction I think SP is going but I'm missing out on the Theta play.

I completed 90% of the option training but dog brain still small

 

[elasalle]

I had a revelation. I am wanting to sell Jan 2025 CCs on all my shares for income for the next year. But there is always the risk that they go ITM and I have to roll them to 2026, which means no income the following year. I found the solution.

Instead of just selling the CCs at (for example) 200X SP 420 for Jan 2025 for $12.70 and making $12.70 per contract, I also do the following:
Buy to open 200X 400 Calls, and sell 200X 420 calls (make a $20 wide Bull Call spread) for about $2.00 debit.

So total trades would be BTO 200X 400, and STO 400X 420. Total credit is now $10.70.

But the beauty is that if the SP is over 420 in Jan 2025, the Bull call spread now earns $18/contract ($20 minus the $2 paid to open). That gives me income for 2025, and now I'm free to roll the 420CCs to Jan 2026 for zero credit, keeping my shares and probably easily raising the strike over 500.

I think $2 is a small price to pay for insurance to make sure I have income the following year if my CCs go ITM.

Thoughts?

Edit: I am holding off on doing this until the SP rebounds and the premiums are better for 2025.

How about selling CC's at a higher strike like 500 for less? When SP was on the way down, I closed all my Jan 24 CC's for like 80-90% gains, and reopened and sold jan 25 500 CC's against all my shares for like $7.8 or something (net $6) with the roll
Next year onwards I am hoping/planning to not put back sold CC money back to buying more shares/calls ...

Bull call spread you are adding more money, and the diff b/w spreads is another possible max loss no ?

 

[dl003]

There's a possibility that this will go much much deeper than 223, IF the high for the rebound was set this morning at 244 and not 243.5 yesterday. If the high was set today, it would mean that we've just finished wave 1 down. The potential for damage would be much more devastating.

 

[BornToFly]

How about selling CC's at a higher strike like 500 for less? When SP was on the way down, I closed all my Jan 24 CC's for like 80-90% gains, and reopened and sold jan 25 500 CC's against all my shares for like $7.8 or something (net $6) with the roll
Next year onwards I am hoping/planning to not put back sold CC money back to buying more shares/calls ...

Bull call spread you are adding more money, and the diff b/w spreads is another possible max loss no ?

A higher strike gives less premium. What I proposed gives higher return, and guarantees income for the next year if the CCs go ITM and they need to be rolled. The 2nd best outcome is that the CCs finish OTM along with the Bull Call insurance spread. (The best outcome being that the SP ends just below the CC strike, and I collect essentially full profit on the spread as well - but that is not the point of the spread).

 

[Jim Holder]

There's a possibility that this will go much much deeper than 223, IF the high for the rebound was set this morning at 244 and not 243.5 yesterday. If the high was set today, it would mean that we've just finished wave 1 down. The potential for damage would be much more devastating.

How low and how would we tell?

 

[BornToFly]

This is an illusion.
Selling & buying options is simply the act of adding & subtracting Greeks. At the end of the day, no matter how intricate your "strategy" is, the bottom line is how much delta and theta have you added? How much more or less exposed are you to IV? That's it. No matter how good you think your 3 leg strategy is, I guarantee you I can just do a 1 leg option that has nearly identical risks : rewards, but one that you will frown upon because it's too simple and too risky. It's very dangerous to think adding a spread or a butterfly, or whatever, will magically put you in a better place. It's dangerous because, thinking you're golden, you will pay less attention to what really makes a great trade: levels, timing, trends, etc...

I think you missed the point of my strategy. It is to guarantee income for next year, and the year after, regardless of what happens to the SP, without having to trade constantly. I know I can make more money trading everyday, but I can also lose more. My goal is guaranteed income for my expensive lifestyle.

 

[dl003]

How low and how would we tell?

You'll know when I know.

 

[Knightshade]

I think you missed the point of my strategy. It is to guarantee income for next year, and the year after, regardless of what happens to the SP, without having to trade constantly. I know I can make more money trading everyday, but I can also lose more. My goal is guaranteed income for my expensive lifestyle.

Have you tried ordering less avocado toast?

 

[dl003]

I think you missed the point of my strategy. It is to guarantee income for next year, and the year after, regardless of what happens to the SP, without having to trade constantly. I know I can make more money trading everyday, but I can also lose more. My goal is guaranteed income for my expensive lifestyle.

No, I think you missed my point.
You started out wanting guaranteed income.
You worried the stock might run up past your strike and you'll be stuck for a year.
You figured if you buy a call spread, it would solve your problem.

It doesn't. If you're happy with $10 in credit, why not just sell a 450C? You'll get $30 cushion instead of $20. If the stock runs past 450, you will be on the exact same boat. I guarantee that. In fact, I guarantee you will sleep much better if you sell a 450C instead of doing what you're gonna do.

Timing your short calls well, such as at 242 yesterday, will solve your problem.

 

[steve3]

You'll know when I know.

Appreciate that.

 

[BornToFly]

No, I think you missed my point.
You started out wanting guaranteed income.
You worried the stock might run up past your strike and you'll be stuck for a year.
You figured if you buy a call spread, this will solve your problem.

It doesn't. If you're happy with $10 in credit, why not just sell a 450C? You'll get $30 cushion instead of $20. If the stock runs past 450, you will be in the exact same boat. I guarantee that.

Timing your short calls well, such as at 242 yesterday, will solve your problem.

Because I don't know if 450 is safe for Jan 2025. If the SP closes at 480, I will have to roll and won't have any source of income. With my strategy, I will have $20 in income, and can roll the CC for no credit (closer to my 1,000 target for selling all my shares).

 

[dl003]

Because I don't know if 450 is safe for Jan 2025. If the SP closes at 480, I will have to roll and won't have any source of income. With my strategy, I will have $20 in income, and can roll the CC for no credit (closer to my 1,000 target for selling all my shares).

You will have $20 in gain but your 420 CC will be $60 ITM. And you're not gonna roll that?

Ok you will have $20 to roll but how much more expensive do you think the 420 CC will be compared to the 450C? More than $20.

But you do what you do. I'm done giving advice to people.

 

[Knightshade]

I’m doing Something crazy…don’t follow me.

BTO 30x +c245 11/24 @.21..short term little lotto ticket

Curious if there's a thesis here?

 

[tivoboy]

Curious if there's a thesis here?

100-200% quick return by Friday based on media black out during holiday. Again, there’s no logic in lotto tickets. Already made my $$ for the week/month. ;-)

 

[dl003]

Curious if there's a thesis here?

Yes

I'm kidding

 

[EVNow]

Was there any news / rumor behind yesterday's SP run up and today's decline ? Looks strange without any news ...

 

[intelligator]

stoch momentum, macd, and rsi 1hr and 4hr trend reversing to the down side. is that one composite contributing to possibility to go deeper than 223?

 

[Jim Holder]

100-200% quick return by Friday based on media black out during holiday. Again, there’s no logic in lotto tickets. Already made my $$ for the week/month. ;-)

Well, looks like needs $243+ at Friday open or bust…

 

[OrthoSurg]

You will have $20 in gain but your 420 CC will be $60 ITM. And you're not gonna roll that?

Ok you will have $20 to roll but how much more expensive do you think the 420 CC will be compared to the 450C? More than $20.

But you do what you do. I'm done giving advice to people.

I thought everything was « Not advice » on the internet anyway

 

[Knightshade]

100-200% quick return by Friday based on media black out during holiday. Again, there’s no logic in lotto tickets. Already made my $$ for the week/month. ;-)

Gotcha...

Everytime I look at these kinda things though I think "Well, these 10 cent options only need to go to 20 cents to double my money!" but then unless I put a crapton of $ into them I'm not making much even with 100% return.

Like... a lotto ticket is invest $5 to make $100,000 or $1,000,000 or whatever. If lotto tickets were $5 to MAYBE win $10 I don't know they'd sell many.

Mind you I say this as I'm happy enough to close weeklies mid-week for 67% return if I think there's any risk so WTF do I know?