Sold 1 Bull Put Credit Spread on TSLA – 4.58% potential income return in 3 days

| Trading | 3 seen

On October 10, 2023, I sold 1 bull put spread on Tesla stock with strike prices at $247.5 and $242.5 with expiry on October 13, 2023. For this trade setup, I was rewarded with $22.92 (after commissions).

As on October 10, my blog was celebrating its 10 anniversary I wanted to celebrate it with something BIG - and without much thinking, I came to options trading. Tesla seems like an ideal candidate for this anniversary. Maybe on the blog's 20th birthday, I will be able to buy actual TSLA. 

This is not trading advice. Investments in stocks, funds, bonds, or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset.

When setting up this trade I was looking for a high probability profit trade and chose my strike prices with Delta less than 0.10.

Now, there is always a 10% risk that things could go South. 

In case the stock price for Tesla drops under my higher strike price at $247.5, I will try to close this position or adjust with a small loss. I will start adjusting in case the delta approaches 0.3

here is the trade setup:

  • SLD 1 TSLA OCT 13 '23 247.5 Put Option 0.51 USD

  • BOT 1 TSLA OCT 13 '23 242.5Put Option 0.26 USD

What happens next?

On the expiry date, October 13, 2023, TSLA is trading above $247.5 per share -  options expire worthlessly and I keep premium - if TSLA trades under $247.5 on the expiry date, I risk getting assigned 100 shares, and will have to buy them paying $24,750

As I already have collected a premium of $0.22 per share, my break-even price for this trade is $247.5-$0.22 = $247.28

As I’m selling a bull put credit spread, my max risk is the width of the spread or $500.

Risking $500 to make $22, with a 90% probability of profit in 3 days, would give about a 4.4% potential income return.

Options trading with TSLA
  • In total: 2 trades since October 10, 2023

  • Options premium: $22

At the moment I'm looking to sell weekly put credits spreads on TSLA stock, looking for Deltas under 0.1 and even maybe under 0.05. What I'm really hoping for - is to grow actual portfolio value from the premiums received.