"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.
Newsletter
Subscribe to our email list for regular free market updates
as well as a chance to get coupons!
"Risk Reversal" strategies are great.
TSLA options
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.