31 oct 2021 - lets to a quick update to mikes trade idea and my alternative... big win for mikes trade. give credit where its due.. the sell Jan650 put and buy Jan 850/900 for near zero is going for $30ish now ($3000) .. that short put still has near $10 in value to decay and like i said below even though the stock has blown thru the top end of the call spread, the max value will not be realized till near opex in Jan as the short put and short call have to decay away.. but $3000 is a good win if you are taking profits here.
My alternative trade below was sell the Jan750 put and buy Jan 850/940 call spread for slight credit.. thats going for $53ish now ($5300).. another grand slam.. same comments, even though stock is 200 points higher the short put and call need to decay away to get that max profit. max profit is $9000 on this and $5000 on mikes... if stock trades sideways for 2 months both trades will go out at max profit... good win/ win here.. you decide if you want to exit all 3 legs or typical thing is to buy back the short put.. your call .. buying back the put frees up alot of buying power.
16 oct 2021
been a while since ive posted on this blog.. when i wasnt working around 2010 after financial crisis layoff i was commenting on the weekly trade suggestions from the Options Action crew. just no time outside of catching their hits on twitter.
This week Mike and crew discuss TSLA which im 95% all in via in the money leaps from 2022-2024 at 650 -750 strikes and then selling short calls against for premium. the occasional short put selling, etc also
With earnings coming on oct 20 after market and stock up 40points to 843 or so the last few days, Mike suggests a risk reversal call spread for Jan 2022:
Sell the 650 put at $21.10 credit and use that to buy the 850/900 call spread for near $21 debit .. all for zero. i like the idea and Mike and Tony mention all the other points that often get overlooked. by selling that short put you have to commit buying power for the duration of the trade and as tony mentions that by buying a way lower put you turn it into a sell put spread to buy call spread trade with reduces the buying power needed.
the max profit is not realized until opex even if stock moves past 900 and even on a slight down move the trade will show a mark to market loss until eventually the short call (800) and short put (650) decay away.
Note that you would have to hold this trade for 3 months, check me on this, might include the next earnings in Jan.
I have an alternate based on mikes trade. the thesis being that if stock moves to 900 its going to overcome that resistance and keep on going. regardless of reason, deliveries next quarter, yearly deliveries, improvement in ramping up production at other plants or cyber truck.. whatever, if you are bullish then id expect maybe a pause at 900ish then all those cup and handle people come in, etc .. point being im going to give the upside more room to run but still for free. here we go: instead of selling that Jan650 im going to assume more bullish stance going forward or at least less bearish after earnings....
Sell the Jan 750 for $35ish credit and use that to buy the 850/940 call spread. all for about slight credit. max profit capped at $9000 per vs mikes $5000 . downside of 750 is 26delta. again if it breaks 900 also the "to the moon, next stop 1000" will be out in force
i will "save my trade on etrade, what i really want is a decent down day in order to ramp up the Put premiums.. that would be the day to put this trade on... adjust the call strikes though. i will keep my eye on this ..
here is the CNBC clip im referencing
