If TSLA falls to $100, your short term trade (TSLA covered call) will definitely become your long term holding. How do I know? Been there done that with GE, RAD, TEVA...
Why will this not work?
- Thread starter clell888
- Start date
Dude,where are you coming up with these prices and expiration??
3/3 is gone..
Are you talking about 3/27 expiration???
If so,the 840's are trading at apx 31 dollars..
Im guessing you are looking at the 940's at apx 14??
And your breakeven analysis is f#$ed...
You dont take the premium received and add it to the strike...
You think the more you sell,the higher your breakeven is??
3/3 is gone..
Are you talking about 3/27 expiration???
If so,the 840's are trading at apx 31 dollars..
Im guessing you are looking at the 940's at apx 14??
And your breakeven analysis is f#$ed...
You dont take the premium received and add it to the strike...
You think the more you sell,the higher your breakeven is??
You might be holding $750 TSLA after it crashes to $100, but I'll be out of it with a $20 profit.If TSLA falls to $100, your short term trade (TSLA covered call) will definitely become your long term holding. How do I know? Been there done that with GE, RAD, TEVA...
Some clarification- It is like a covered call, but with an order to buy the stock when it moves up to a stop instead of already owning the stock. If stock prices drops then no loss.
Meant 4/3. tsla 840c was at $41.95
Sell one call.
Have stock stop purchase in place at $830 - if stock moves up past this you buy at market price.
If stock stays below $840 you make $4195
If stock goes above strike (get exercised) and you buy below you also make money (on stock and option).
Break even - buy stock at $881. Sell due to exercise at $840. Loss on stock equals income from selling call. (is this correct?)
Problems - big gap ups. Might buy stock as high as $900 ($60 above stop purchase).
Lose $6000 on stocks minus $4195 from selling call = $1805 loss.
Also buying stock at $830 then having stock go lower. Break even is at $789. So if you can sell stock before it drop below $789 no loss. If it gaps down and you buy at $770 you lose $1805. (is this correct?).
Meant 4/3. tsla 840c was at $41.95
Sell one call.
Have stock stop purchase in place at $830 - if stock moves up past this you buy at market price.
If stock stays below $840 you make $4195
If stock goes above strike (get exercised) and you buy below you also make money (on stock and option).
Break even - buy stock at $881. Sell due to exercise at $840. Loss on stock equals income from selling call. (is this correct?)
Problems - big gap ups. Might buy stock as high as $900 ($60 above stop purchase).
Lose $6000 on stocks minus $4195 from selling call = $1805 loss.
Also buying stock at $830 then having stock go lower. Break even is at $789. So if you can sell stock before it drop below $789 no loss. If it gaps down and you buy at $770 you lose $1805. (is this correct?).
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You are going to get brutally f#$%d with this strategy....
If you want to sell the call,sell it with a stop..
Why on earth would you take 80 points of heat,and then then buy 100 shares of stock at 830??
You go from not hedging at 750 to way over hedging at 830??
And why on earth are you even looking at TSLA??
If you want to sell the call,sell it with a stop..
Why on earth would you take 80 points of heat,and then then buy 100 shares of stock at 830??
You go from not hedging at 750 to way over hedging at 830??
And why on earth are you even looking at TSLA??
It might be Greta Thunberg, getting into investing and decided to try ET as a first checkpoint on her road to the Twilight Zone.
Wow Overnight comments like that you would kill it on WSB
How about some constructive points on flaws ?
Tao I guess my break even calculations are correct and you are wrong about
"And your breakeven analysis is f#$ed...
You don't take the premium received and add it to the strike..."
I would sell the call on the option no need for a stop.
You would buy the stock at $830 so when you get exercised on the $840 option call that you sold you have the stock to sell.
Why would anyone use a covered call? This could work the same with no downside risk.
Using tsla because premiums so high. Don't want to buy stock as market could go either way. Options too expensive too buy.
How about some constructive points on flaws ?
Tao I guess my break even calculations are correct and you are wrong about
"And your breakeven analysis is f#$ed...
You don't take the premium received and add it to the strike..."
I would sell the call on the option no need for a stop.
You would buy the stock at $830 so when you get exercised on the $840 option call that you sold you have the stock to sell.
Why would anyone use a covered call? This could work the same with no downside risk.
Using tsla because premiums so high. Don't want to buy stock as market could go either way. Options too expensive too buy.
Don't be too hard on @clell888. Guy's heart is in the right place. Just need some help from you pros.
I remembered back in 2013, I thought there was a "can't lose" way writing options: I sell calls, and if called, I turn around and sell puts, and if put the stocks, I turn around and sell calls again..... I gave it a try.
This was your initial breakdown of your strategy,which you did correct.
"sell Mar 3 840 call for $4195 break evenstockprice is $881"
Your expiry was incorrect and expired,your strike price was wrong,hence your premium was wrong.Just for shits and giggles,if you sell 3. 840 calls and collect 4195,what is your breakeven stock price?? Hint; It's not 881..
Are you saying at 830,you will buy 100 shares of stock? What do you think the delta of the 840 call will be,assuming worse case scenario?
Trust me,this is a horrific strategy
"sell Mar 3 840 call for $4195 break evenstockprice is $881"
Your expiry was incorrect and expired,your strike price was wrong,hence your premium was wrong.Just for shits and giggles,if you sell 3. 840 calls and collect 4195,what is your breakeven stock price?? Hint; It's not 881..
Are you saying at 830,you will buy 100 shares of stock? What do you think the delta of the 840 call will be,assuming worse case scenario?
Trust me,this is a horrific strategy