There's a reason that I mentioned looking at the curve of theta over the remaining time... the acceleration at the end. Being long an option at 4DTE is just silly beyond all reason.
That there's Mur'ca, boy! Don't you know nothin'?
TSLA options
- Thread starter TimtheEnchanter
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There's a reason that I mentioned looking at the curve of theta over the remaining time... the acceleration at the end. Being long an option at 4DTE is just silly beyond all reason.
That there's Mur'ca, boy! Don't you know nothin'?
Dont forget the old saying - "one man's theta is another man's gamma".There's a reason that I mentioned looking at the curve of theta over the remaining time... the acceleration at the end. Being long an option at 4DTE is just silly beyond all reason.
That there's Mur'ca, boy! Don't you know nothin'?
Meaning theta does not come for free.
Gamma exponentially rises into the expiration. If you want the most exposure to realized vol, the short dated options might be the best structure.
Exactly why I stay with straight call/put and don't trade combinations.
as several people already pointed out the main problem with your trade was the implied volatility of the options - they lose value rapidly. i no longer short tesla (my first trade was a big winner - bought Jun2020 puts on Jan 31 and sold in March; after that I thought I had it all figured out and had a bunch of losers). if you think TSLA will tank, consider the possibility that it might take other components of the NASDAQ down with it. as an idea, NVDA has a much lower IV, is arguably over-bought and if TSLA tanks, maybe it will have experience a short correction... just my 2 cents
You guys are being too kind..OP is asking questions that
should be an indicator that he is in way over his head in TSLA...pre earnings no less..
ATR of close to 100 points,Bid ask spread on his 130 option was close to 6%..
Had nothing to do with High IV..He could have neutralized that at a cost much less than the Bid ask spread..
Couldnt get filled on a spread order so he tried to leg a 2.25 debit spread and got filled at 5.75...Doesnt really know how or why.. Miraculously he only took a 2 point hicky despite paying up 3.50..
Revenge trades and goes from a 3 dollar call spread to a 130 dollar call...
Within minutes,the MM pulls the plug on IV and drops Vol 40 handles,yet he only loses 1000 on
an ATM option with vega of .67???
should be an indicator that he is in way over his head in TSLA...pre earnings no less..
ATR of close to 100 points,Bid ask spread on his 130 option was close to 6%..
Had nothing to do with High IV..He could have neutralized that at a cost much less than the Bid ask spread..
Couldnt get filled on a spread order so he tried to leg a 2.25 debit spread and got filled at 5.75...Doesnt really know how or why.. Miraculously he only took a 2 point hicky despite paying up 3.50..
Revenge trades and goes from a 3 dollar call spread to a 130 dollar call...
Within minutes,the MM pulls the plug on IV and drops Vol 40 handles,yet he only loses 1000 on
an ATM option with vega of .67???
To be precise the 40 vol. handle is only my guestimation.
Not sure I follow that logic so I must be missing something. A combo order (long vertical for example) would have been much preferable to a single in this case. At least you would have been exposed to the relative change in the individual strike IV as opposed to the full drop.
Newbie to the group, saying hi. I did what was in hindsight probably a stupid risky trade on a 10 order TSLA Iron Condor across earnings as a volatility play. I put the shorts 350 points on either side of the price the day of earnings, trading next week's series. It took a long time to fill. The next day I was up $2k (of a potential $2800) and decided to close it. Couldn't get it filled. That night the prices were so whacked that it showed my position up $5k. Next morning, I'm up between $800 and $1500 changing from second to second as I'm watching the stock fall. Finally it made a move up and I just kept adjusting the Limit Order until all at once it got filled for a profit of about $1300. I think it would have expired worthless this week, but was so nuts that I just wanted out with a reasonable gain.
If you trade directional, you want exposure to changes in the underlying. Combination neutralizes that to first order and relying on relative changes, much harder to model.