Tesla Short calls

 30 oct

as most of my online friends know i own deep in the money leaps and sell short calls near dated for premium.. the intent is that the short call premium is the money maker. price appreciation via the leaps is gravy.

as weve all seen , TSLA has taken off the last 2 weeks and would have blown thru the top range of any short calls i would have had or rolled to. regardless, what to do now. last week i had the Oct29 905 short calls , a 6 lot, with stock around 1050 ... way above my short calls.

so at the current premiums i could only roll up and out a week to the 910s and it not be a debit.. whether its 905 or 910 doesnt matter much as far away the stock is so i decided to roll to Nov05 905s to get max credit. on down days the premium improves in my favor, on up days i would get less premium to roll. i checked every day last week and the premium was between 4 and $8.50 credit.. at one point i believe wednesday i entered an order at $8.35 credit and was at midpoint right before closing with no fill.

i expected a pullback in morning so i increased the premium to $8.50 GTC order since i would not be behind computer in morning. i didnt mess with the order and yesterday im with a customer and i get the confirmation emails that 5 of the 6 lots filled at $8.50. i logged in 15 min later and the midpoint was about $4.50. cant explain what happened but i will take it. score one for the little man. i closed the 6th lot at $4.85 in the afternoon.

now the point of all this is that even with the stock nearly 200 points out of the money near 1100 i was able to roll my 6lot position for between $4.85 - $8.50 for $3000+ for a week. the ideal time to roll is on big down days, if stock drops 50 points and the IV increases i might be able to roll from 905 to 925 and still get small credit but until that happens the question is (and the answer may not be the same for all based on your short call strike and what else you have going on) is the $3000 for a week worth it to stay as is?.. as in roll 905 to 905 to 905 maybe the occasional roll up 5points

if the stock keeps going higher and higher that $3000 credit to roll will do down and down so at some point you might decide youre commiting xyz dollars and only getting $750 to roll so you reset the positions. 

but im also still expecting a gap fill at some time, sooner than later would be helpful so for the moment a 905ish short call is ideal for a gap fill to the 900-910 area.

so to answer my own question. that $3000 credit and some short put sales/credit put spreads added in there is enough per week