man the options for TSLA are trading at such insane values.
For option players like those who like to sell covered calls
on the positions they own to generate income - heck you can get as
much as $50 a share for Aug 21st call options for Aug 21st.
that means if you don't plan to sell TSLA, you will not be
called out unless it trades over 2000 by Aug 21st close, which if
it does so what you make huge profit on the shares - but otherwise
assuming it doesn't it's free cash might as well sell them.
Aug 21st 1800 calls are trading for 70, Aug 1500 are trading
for $133
One could also sell naked puts if they were okay buying the
stock if it dipped down to 1100 or something. Otherwise the
covered call options if you don't plan to sell are a great way to
generate some income while you hold it and they are priced as such
you can generate an easy 10% without really risking losing
your position in just over a month
Those are great ideas, Matt. Selling puts to buy stock reminds
me of something I was just reading in one of Wyckoff's books
printed in, get this: 1918, I think. I love those old books. He
recommends during panics to place ridiculously low standing buy
orders. I think I will try that Has anybody done this?
"Risk Reversal" strategies are great. I prefer the classic
approach of selling a put to finance the price of a call (sometimes
for a small credit), but you can do it with stock instead (as
described). Personally, I would only do stock vs options for
tax reasons and/or because the underlying pays a decent sized
dividend that I want to capture.
Risk reversal on TSLA seems incredibly risky with the 38.2%
retracement of the move from March currently at $1010. That
would just be a standard pullback....and I'd expect a decent
likelihood that TSLA retraces to the 50 or 61.8% (881 & 753) at
some point (like all equities do eventually). Speaking from
experience, it's not fun when a risk reversal goes hard against
you. Even though you know it's only a paper loss until it gets
below your short strike, it can blow up an account while you're
waiting for the premium to decay.
I agree and options are priced that high because of the risk. My
point was if someone had a core position that they planned to not
sell like avg cost was 300 or something, then they could sell
covered calls way out of the money that have a very small
likelihood of getting hit and generating some extra cash out of
their position.
definitely agree with selling calls against TSLA , Just
would be very careful about selling puts to offset cost of stock,
in this particular case. I'd prefer to sell puts on something I
think maybe bottoming or near major support and use the proceeds to
purchase stock or calls.
i sold covered calls on thursday at close and had to buy them
back on friday. i sold off most position monday at close and
rest this morning. I was planning to sell calls again but figured
it was much easier to sell after a 400 point move in 7 days . I
always find it difficult to manage with covered calls esp with
momentum stocks. 50% success so far.
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TSLA options
Posted by matt on 7th of Jul 2020 at 02:31 pm
man the options for TSLA are trading at such insane values. For option players like those who like to sell covered calls on the positions they own to generate income - heck you can get as much as $50 a share for Aug 21st call options for Aug 21st. that means if you don't plan to sell TSLA, you will not be called out unless it trades over 2000 by Aug 21st close, which if it does so what you make huge profit on the shares - but otherwise assuming it doesn't it's free cash might as well sell them. Aug 21st 1800 calls are trading for 70, Aug 1500 are trading for $133
One could also sell naked puts if they were okay buying the stock if it dipped down to 1100 or something. Otherwise the covered call options if you don't plan to sell are a great way to generate some income while you hold it and they are priced as such you can generate an easy 10% without really risking losing your position in just over a month
Those are great ideas, Matt.
Posted by brophy on 7th of Jul 2020 at 03:55 pm
Those are great ideas, Matt. Selling puts to buy stock reminds me of something I was just reading in one of Wyckoff's books printed in, get this: 1918, I think. I love those old books. He recommends during panics to place ridiculously low standing buy orders. I think I will try that Has anybody done this?
"Risk Reversal" strategies are great.
Posted by jtsurfah on 7th of Jul 2020 at 04:09 pm
"Risk Reversal" strategies are great. I prefer the classic approach of selling a put to finance the price of a call (sometimes for a small credit), but you can do it with stock instead (as described). Personally, I would only do stock vs options for tax reasons and/or because the underlying pays a decent sized dividend that I want to capture.
Risk reversal on TSLA seems
Posted by jtsurfah on 7th of Jul 2020 at 04:26 pm
Risk reversal on TSLA seems incredibly risky with the 38.2% retracement of the move from March currently at $1010. That would just be a standard pullback....and I'd expect a decent likelihood that TSLA retraces to the 50 or 61.8% (881 & 753) at some point (like all equities do eventually). Speaking from experience, it's not fun when a risk reversal goes hard against you. Even though you know it's only a paper loss until it gets below your short strike, it can blow up an account while you're waiting for the premium to decay.
I agree and options are
Posted by matt on 7th of Jul 2020 at 07:13 pm
I agree and options are priced that high because of the risk. My point was if someone had a core position that they planned to not sell like avg cost was 300 or something, then they could sell covered calls way out of the money that have a very small likelihood of getting hit and generating some extra cash out of their position.
definitely agree with selling calls
Posted by jtsurfah on 7th of Jul 2020 at 09:34 pm
definitely agree with selling calls against TSLA , Just would be very careful about selling puts to offset cost of stock, in this particular case. I'd prefer to sell puts on something I think maybe bottoming or near major support and use the proceeds to purchase stock or calls.
i sold covered calls on
Posted by arun on 7th of Jul 2020 at 08:15 pm
i sold covered calls on thursday at close and had to buy them back on friday. i sold off most position monday at close and rest this morning. I was planning to sell calls again but figured it was much easier to sell after a 400 point move in 7 days . I always find it difficult to manage with covered calls esp with momentum stocks. 50% success so far.