the power of sell put options
Option Witch | Tesla Stock Is Down but Still Treading Water - Ideal for Put Option Short Sellers
Tesla Inc stock is off 24% since early July and fell further after the July 23 release of its Q2 results. It has been treading water lately below $200 with high put option premiums. That is ideal for short sellers as an income play - selling short out-of-the-money puts in nearby expiry periods.In mid-day trading on Monday, Aug. 12, TSLA is at $197.38, down 23.4% from $257.86 on July 10. However, since the end of June 30 it has stayed flat at just under $200 per share.Nevertheless, the stock's put option premiums are very high. Short sellers can take advantage of this by shorting them in near-term expiry periods.That provides extra income, especially for existing shareholders who also could gain from any increase in the stock price. One reason is that Tesla stock looks cheap here.For example, look at the Sept. 6 put option expiration period, which is just over 3 weeks away . It shows that the deep out-of-the-money puts still have high premiums. That makes them ideal as income plays.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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