Maximizing Income with Tesla
Options trading can be a powerful way to generate income, and two popular strategies—cash-secured puts and covered calls—offer investors opportunities to capitalize on high-volatility stocks like Tesla (TSLA)
OPTION TRADINGSELLING OPTIONSATC STRATEGY
5/27/20251 min read
Cash-Secured Puts: Earning Premiums with a Safety Net
Tesla (TSLA): Tesla’s high volatility results in juicy put option premiums. For example, selling a cash-secured put with a strike price 5-10% below the current market price (e.g., $400 if TSLA is at $450) can yield significant premiums due to Tesla’s implied volatility, often exceeding 50%. If the stock stays above the strike, you keep the premium. If it dips and you’re assigned, you acquire TSLA at a discount, aligning with a long-term bullish outlook on its EV dominance.
Covered Calls: Boosting Returns on Owned Shares
Tesla (TSLA): If you own 100 shares of TSLA (e.g., at $450), selling a call option with a strike price 5-10% above the market (e.g., $480) can yield attractive premiums due to Tesla’s volatility. If TSLA stays below $480 by expiration, you keep the premium and your shares. If it’s called away, you realize gains up to the strike price plus the premium, which can still be profitable.
Key Considerations: Select strike prices that align with your willingness to sell the stock. Higher strikes offer more upside potential but lower premiums. Monitor earnings and news (e.g., Tesla’s production updates) to avoid selling calls before major catalysts.
