Consider Selling Tesla Puts for an Alternative Strategy
Investors deliberating purchasing Tesla Inc (Symbol: TSLA) shares but wary of the current market price of $233.62/share, may find it prudent to explore the option of selling puts. One particularly intriguing put contract is the January 2026 put at the $50 strike, with a current bid of $1.58. The premium collected from this bid yields a 3.2% return on the $50 commitment or a 1.6% annualized rate of return (termed the YieldBoost by Stock Options Channel).
Ponder the Upside and Downsides
Selling a put does not grant an investor access to TSLA’s potential upside like owning shares would. The put seller would only end up owning shares if the contract is exercised. The person on the other side of the contract would benefit from exercising at the $50 strike only if it resulted in a better outcome than selling at the current market price. Does this bet carry counterparty risk? According to a report, unless Tesla Inc experiences a 78.5% share decline, the put seller’s only upside is collecting the premium for the 1.6% annualized rate of return.
Charting the History and Volatility
Reviewing the trailing twelve-month trading history for Tesla Inc and the stock’s historical volatility alongside fundamental analysis can help gauge whether selling the January 2026 put at the $50 strike for a 1.6% annualized rate of return poses good reward for the risks. The trailing twelve-month volatility for Tesla Inc is calculated at 52%, considering the last 251 trading day closing values and today’s price of $233.62.
Put:Call Ratio Unusually High
During mid-afternoon trading on Wednesday, the put volume among S&P 500 components reached 1.94M contracts, with 2.51M call volumes. This resulted in a put:call ratio of 0.77 for the day, significantly higher than the long-term median put:call ratio of 0.65. Evidently, there is an unusual amount of put buyers in options trading today compared to call buyers.
For more put options contract ideas at different available expirations, investors can visit the TSLA Stock Options page of StockOptionsChannel.com.
For additional insights into options trading activity, discover the 15 call and put options traders are discussing today.
To explore more thought-provoking investment opportunities, check out the Top YieldBoost Puts of the Nasdaq 100.
