9july -- ok friends, too much to tweet so put it on here. been months but here we go, put on your helmet.
some of my twitter friends have noted that i had previously Jul30 710 short calls that i also rolled to the 700s for credit. today i rolled those 700 short calls to the Jul23 672.50s... move up to an earlier opex is a first for me. heres the thought process...
i have 11 Jan2022/2023 Leaps on tesla at various strikes, most are out of the money, having purchased when stock was higher. Selling short dated calls against those for premium is easy if you stay at the same strike price as those Leaps. No additional buying power needed, if you sell a short call at a lower strike then some buying power is needed.
few months ago the stock was under 600 so at that level in order to sell short dated calls against my leaps i needed alot of buying power or i needed to stay as close to the strikes of the Leaps...say 700 for discussion.. so selling 600s short calls could be done but could not do 1 for 1 against the leaps... could not sell all 11. only 5-6. when stock recovered closer to 700 i could sell 1-2 more. then it dawned on me.. .instead of selling weekly short calls with the remaining slots , to go out further in time and higher strike. so go 5-6 weeks out and sell 700s or so. thus being back to near same strike as long leap and not needing more buying power.. 5-6 weeks were needed to get decent premium. weekly premium for 700 strikes was $1-2 per... not really worth the effort.
in hindsight my rush to accumulate the leaps caused me to use up the buying power that could have been used to sell Puts or for short calls if stock drops like ive described.. should have not bought that 11th Leap.. regardless here we are and stock has recovered to 650+ and im looking at my short call positioning. with 30min to go before opex today i had
6 Jul 650 short calls and 5 Jul 30 700 short calls (21 DTE)
got me thinking that i wish i had all eleven short calls for next week to get the maximum decay, then roll to Jul23, then roll to Jun30... i was not getting any participation of those 5 short calls for next week or Jul23 week.. i was losing out on decay and a roll for credit for 2 weeks. yes the 700s would decay as well. i was only at the Jul30 opex because 2 months ago i didnt have buying power, not really by choice..
i could have rolled the jul30 700s to next weeks 650s to match my 6lot but that would have again taken up more buying power that right now id rather have for flexibility. so i looked at 2 weeks out the Jul23 week (includes earnings) and adjusted the strikes on etrade until i came up with a slight credit... that was the Jul23 672.50 strike (so move up a week and down 27.50 points) for .25 credit. meaning that if stock is under 672 at opex i capture all the premium ( $19ish i believe it was)... but i capture it a week earlier than if i would not have rolled down.. this allows me now to sell another new 5lot batch for the Jul30s after the Jul23s come off the board.. bottom line i gained another weeks worth of opportunity to put on a 5lot of short calls.. would be kick ass if at that time the stock was in a position where i would want to resell those same 700 strike calls.
make sense?
