21 nov
my current positioning and thesis for TSLA. have been making good coin selling weekly short calls against my long 2022 calls. at some point with diagonal spreads the stock blows thru the short calls for whatever reason. i was lucky that i had closed out my short calls the day prior to the S&P inclusion announcement so i was able to sell new short calls after the 50point pop. the stock moved an additional 40 points or so since.
i currently have the Dec04 465 short calls that i rolled up from the Nov monthly 455s. rolled for $4.05 credit. Yes the short calls are 25points in the money but have $12 ($1200) in extrinsic value (time value) that will decay up until opex. as in it decays in my favor
the breakout level / resistance level everyone was looking at was 462 area. that breakout is holding for the moment.
just considering my short calls the ideal action would be for stock to drift back down to 465 area for me to capture all that premium and then be able to sell a higher short call for the following week. i previously tweeted that if stock pulled back to test that prior breakout area (previous resistance becomes support) then i would look at selling a short put at least below the 50day near 425 or best case at bottom of the gap near 412.
that got me thinking that maybe the retest is unnecessary for this situation since the S&P inclusion will artificially create buying. volume since announcement seems like the buying has started but not completed. so an artificial floor has been put in.. maybe that floor is the previous breakout, maybe higher. so my conclusion was any dips will be bought at least until the inclusion on 21dec.
ideal situation for me is to sell a strangle... sell a put and sell a call. i dont have naked call option writing access at etrade and really dont want it. likely has kept me from entering more risky trades. so the poor mans version is to have a long call first(my Jan2022 calls) and THEN sell the short call. broker treats that as a spread so no additional buying power/margin needed. Put selling is easy since its cash secured or within my buying power
All that together now means using the old breakout level as my line to shoot against i sold the Dec04 460 put for $11.25 credit ($1125).. see what i did there? kept the same opex as the short calls
scenarios at opex
1. stock above 465. the short put profits, i capture most of the $12 time value remaining in the short calls and resell higher strike calls for the following week
2.stock below 460. capture most of the premium on the short calls and resell following weeks calls. the short put will be rolled down and out to the next week if needed. if i have not taken profits previously
3. if stock sells of down to 465 area rapidly on one of those markets in turmoil days i will look at rolling the short calls up and out to gain a higher short strike. concurrently roll the short put down and out (keeping the same opex time as the short calls)
i can use the rationale that i can hold the short put up until i roll out the calls since either the Put or the Calls is profiting. this situation pays by not trading till near opex or per my mechanics of when the time value is less than $1.00. im not looking to thread the needle and hoping for the stock to close between 460-465 at opex. im using offsetting positions and profiting from the decay
so now just sit tight. have $500+ of daily decay in my favor
