$TSLA diagonal spread

6 dec - saw the stock up 6bucks Premarket so cancelled GTC order and instead raised the strike and sold the Dec13 345call at $3.20-$3.40 (reg and IRA accounts) with stock at 337ish, 32 delta on the short call. still holding the long DITM Jan2021/2022 calls


4Dec - stock held up as market sold off and with 2days left till opex closed the short call at .95ish today, at 70% of max potential profit. entered a GTC order for the Dec13 342.50 calls at $4.00+, should fill if stock moves up a few bucks. GTC order since ill be away from computer for a bit, this $2.00+ profit reduces cost basis of the DITM call


2Dec - didn't get the recovery for the ratio spread to work out so on to the next week, so on Dec2 sold Sold weekly 340 call at $3.20 to reestablish the diagonal spread $tsla

Going off memory stock was 333 area. trying to bring in couple hundred a week via the short calls.



Nov 22

we all know the story with the tesla truck reveal with the Mandalorian armor. here is how to im trading my position. stock dropped to 333 or so, down 25. of course the short call from below drops to near max profit. closed at .03. With big down moves I look to enter into ratio spreads, also called catch up spreads. you buy one upside call, sell 2 higher calls against your long stock or long DITM option. with stock at 332area

Bought nov29 335 call, sold 2 of the 342.50 calls for .55 credit. 

this trade sets me up for a potential reversal. this trade will be profitable between 335-350 at opex and my underlying DITM call gains as well. so you get upside leverage. max profit would be at opex at 342.50 of $750.

If I can time it I generally prefer to sell upside calls on up days not down. that's why I did not resell a short call to get back into the diagonal spread. this position is just for next week (I get .55 in credit to wait it out the week) , reevaluate after that. best case stock rebounds a bit, close this portion out for profit, resell a short call higher. again my LEAP is 2022 so ive got all 2020 and 2021 to trade around it. volatility is expected. note that the short call from 20nov was 99% max profit, lowering the cost basis of the long call. I chose my ratio strikes based on getting to near zero in cost, credit is ideal but prefer near zero by picking at further out higher strike. a free trade essentially, but don't want to go too wide on the strikes to have to pay more than 25cents. just my principle.




Nov 20-entered into another Tesla diagonal spread today. im sure my entry will be marking the top, but what caught my eye today was the implied volatility (IV) of this weeks options. was in the high 60's. high IV means juicy premiums. usually have high IV right before earnings, dont know if its just the movement of the stock or the upcoming news about the electric truck but its elevated. diagonal spreads are my go to trade, some call it a poor mans covered call. so i entered the following:

bought Jan2022 275call at 133.00 ($13300), delta 74
Sold this weeks (exp in 2days) 360 call for $4.10 ($410), delta 31, IV 66

didn't really have a level to use to select the 275 call, was more looking to get in the mid 70s delta. a 74 delta means if the stock goes up a dollar, the call option goes up 74cents. the stock moves around a lot so with stock around 353 sold the short call for $4.10... 7dollars out of the money. so break even is 364.10 for short call to go out flat but im gaining on the long call same time.

ideally would like to sell weekly upside calls in the 30-35delta range, at least $3-$4 premium is what im looking for. strategy is to collect consistent income, just like owning the stock and selling covered calls. im prepared for a lot of movement up and down of the stock. since the long call is out to 2022 there is no pressure if it drops on a general market selloff. if the stock moves up all the better as I chip away at the cost basis with the steady short sales.

as far as the electric truck and living in Texas and owning two F-150s myself, I see this as a niche market. seems that part of owning a truck in Texas includes getting it lifted, tires, rims (the small penis package), but what is missing is the engine noise you see from the douchebags with the lifted F-250s. but im sure some hipsters will want one trying to score some cool points. not realizing that unless you drive a Ford, Chevy, or Dodge truck there are no cool points to be had. sorry Nisan / Toyota owners but you don't think of Japan when you think of trucks.

I have spoken

forgot to add that Mike Khouw had a segment on Fast money on tesla, same strike I was selling short, here is his hit

TSLA fast money clip