How To Generate A 13% Dividend In Tesla Stock Using Options

Investor's Business Daily2022-08-05

Tesla(TSLA) has long been a favorite of option traders, and the stock is now back above the 200-day moving average.The stock's 21-day and 50-day moving averages are also now trending higher.One bad ...

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Comments

Martina 23
2022-08-05
Martina 23
Like 😍
hphoa
2022-08-05
hphoa
Ok
JenneyJJ
2022-08-05
JenneyJJ
Good read 👍🏻
Mindthink
2022-08-05
Mindthink
Ok
ud0m
2022-08-05
ud0m
Interesting read.
BlitzBison
2022-08-05
BlitzBison
Ok

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But what if we could use options to manufacture our own dividend?Let's say I have $60,000 that I want to invest into Tesla stock. I could simply buy some shares and hope the stock rises.But if I want a more conservative play, I could sell a June 16, 2023, put with a strike price of 600 and set aside the $60,000 in case I am assigned on the short put.$6,100 In Option PremiumThat 600 strike put generates around $6,100 in option premium in just under 11 months.So, my $60,000 investment into Tesla is giving me a 13.07% annualized \"dividend.\"What's the catch? Well, much like owning Tesla shares, if the stock drops, I'm going to lose money in the short-term.If Tesla is below 600 next June, then I will be forced to buy 100 shares at $600 each.But, if TSLA stays above 600, then I achieve a 13.07% per annum return when the put expires worthless.Cash-secured puts are a bullish strategy but are considered slightly less bullish than owning Tesla stock because the potential gains are limited to the premium received.The 600 strike put currently has a delta of 15. That means selling this put gives an exposure roughly equivalent to owning 15 shares of Tesla stock, although this will change as the stock moves up and down.Other Option Trades To PonderOne method that can help cut the risk is to turn it into a spread and buy a 400 strike put. This turns the trade into a bull put spread.There're lots of interesting scenarios you can create with options.According to the IBD Stock Checkup, Tesla is ranked No. 2 in its industry group and has a Composite Rating of 88, an EPS Rating of 76 and a Relative Strength Rating of 77.It's important to remember that options are risky and investors can lose 100% of their investment.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9902220670,"gmtCreate":1659710061693,"gmtModify":1704709282056,"author":{"id":"4100148382994820","authorId":"4100148382994820","name":"Martina 23","avatar":"https://static.tigerbbs.com/0da0ef3c008de1824736dfd4f6ff6f73","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"4100148382994820","authorIdStr":"4100148382994820"},"htmlText":"Like 😍","listText":"Like 😍","text":"Like 😍","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9902220670","repostId":1122791495,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9902686929,"gmtCreate":1659686925963,"gmtModify":1704871547592,"author":{"id":"3578790486524477","authorId":"3578790486524477","name":"hphoa","avatar":"https://community-static.tradeup.com/news/28a11e936497493af7ee5ccdc32238a3","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3578790486524477","authorIdStr":"3578790486524477"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9902686929","repostId":1122791495,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9902606135,"gmtCreate":1659678431729,"gmtModify":1704963016619,"author":{"id":"3573203718015318","authorId":"3573203718015318","name":"JenneyJJ","avatar":"https://static.itradeup.com/news/b13adb37ca4f467841be761d65d844b5","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3573203718015318","authorIdStr":"3573203718015318"},"htmlText":"Good read 👍🏻","listText":"Good read 👍🏻","text":"Good read 👍🏻","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9902606135","repostId":1122791495,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9902870607,"gmtCreate":1659676281511,"gmtModify":1705069261972,"author":{"id":"4102837759709900","authorId":"4102837759709900","name":"Mindthink","avatar":"https://community-static.tradeup.com/news/89b965229f7209196369426d161728ee","vip":1,"crmLevel":2,"crmLevelSwitch":1,"idStr":"4102837759709900","authorIdStr":"4102837759709900"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9902870607","repostId":1122791495,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9902858713,"gmtCreate":1659673613434,"gmtModify":1705058375935,"author":{"id":"4105626399467870","authorId":"4105626399467870","name":"ud0m","avatar":"https://static.itradeup.com/news/feb5c89f3091cbc9591283eb8d51a318","vip":1,"crmLevel":2,"crmLevelSwitch":1,"idStr":"4105626399467870","authorIdStr":"4105626399467870"},"htmlText":"Interesting read.","listText":"Interesting read.","text":"Interesting read.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9902858713","repostId":1122791495,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9902858235,"gmtCreate":1659673581729,"gmtModify":1705058071321,"author":{"id":"4096589756885460","authorId":"4096589756885460","name":"BlitzBison","avatar":"https://community-static.tradeup.com/news/2c711017cde68be46bd029006fcefb6c","vip":1,"crmLevel":7,"crmLevelSwitch":0,"idStr":"4096589756885460","authorIdStr":"4096589756885460"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9902858235","repostId":1122791495,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":155,"commentSize":22,"repostSize":0,"favoriteSize":6,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; 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