Hi all,
During the run-up of $TSLA after the election, I bought the following put option:
WKN: GQ70BD (350P) at an entry point of $346 / $0.59 per contract (total investment: $5K). (Expiration: 20.06.2025)
I usually only hold options short-term, but the continued bull run caught me off guard. Now I’m considering holding the option until expiration or at least for a longer period.
To break even at expiration, Tesla would need to reach $291, since: (350−291)×0.01=59×0.01=0.59 per contract.
**Talking Strategies:**
I obviously don’t know whether the price will go up, down, or sideways, so this is hypothetical. I want to lock in profits because you never know how Elon pumps the stock with vaporware, and I also want to mitigate risk.
IV is currently rather low at 57.44%—even if the share price stays flat, an increase in IV should significantly increase the value of the option, for example, the day before the next earnings report. That would be a possibility to lock in some profits, correct?
I’m rather inexperienced when it comes to theta.
* Theta is my enemy if the price moves in the wrong direction and the option goes OTM, but my friend if the option is ITM, correct?
* A significant drop below, say, $300 should increase the price of the option since the probability of expiry ITM rises. That would also be a possibility to lock in some profits, correct?
I currently don’t hold any call options to hedge. What could be a strategy to hedge the risk here?
Cheers!