New Trading Options for Tesla Investors: A Smart Way to Play the Market
Key Insights on Tesla’s Latest Options
Investors in Tesla Inc (Symbol: TSLA) have new options trading available today, set to expire on February 14th. Stock Options Channel has analyzed the TSLA options chain and identified one put and one call contract that stand out.
The put contract at the $375.00 strike price currently has a bid of $27.50. By selling-to-open this put contract, an investor effectively agrees to buy the stock at $375.00 while collecting the premium. This lowers the effective cost basis of the shares to $347.50 (not including broker fees). This could be appealing for those who want to invest in TSLA but find the current share price of $379.72 to be high.
The $375.00 strike price offers about a 1% discount from Tesla’s current trading price, meaning it is out-of-the-money by that percentage. Furthermore, there is a 60% chance that the put contract might expire worthless based on current analytical data. If that happens, the premium earned would yield a return of 7.33% on the cash committed, or an impressive 62.25% on an annualized basis—referred to as the YieldBoost.
Options Trading Chart Overview
Here’s a chart illustrating Tesla Inc’s trading performance over the last twelve months, clearly indicating where the $375.00 strike sits in that context:
Call Option Insights
On the call side, the contract at the $395.00 strike price is currently priced at $30.65. If an investor buys TSLA stock at $379.72/share and sells-to-open this call contract, they are agreeing to sell the stock at $395.00. Adding the premium collected would result in a total return of approximately 12.10%, assuming the stock is called away at expiration (not counting any dividends or broker commissions). However, if Tesla’s shares rise significantly, the investor may miss out on further profits. Thus, examining Tesla’s twelve-month trading history and its business fundamentals is essential.
The chart below depicts TSLA’s trading history over the past year, with the $395.00 strike highlighted:
The $395.00 strike represents a roughly 4% premium to the current trading price, meaning it is out-of-the-money by that percentage. There is also a 49% probability that this covered call could expire worthless, allowing the investor to keep both their shares and the collected premium. Should this occur, the premium would bring about an additional return of 8.07%, or an annualized YieldBoost of 68.52%.
Both the implied volatility for the put and call contracts is around 66%. In contrast, the actual trailing twelve-month volatility, calculated using the last 251 trading days and today’s price of $379.72, measures at 63%. For more options contract ideas, visit StockOptionsChannel.com.
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Also see:
- BSRR Insider Buying
- Institutional Holders of FCTY
- SVXY Options Chain
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
