How to Earn 21% Annual Yield on Tesla Stock Using Options
Tesla (TSLA) shares have long been in the spotlight, especially among options traders. Recently, the stock broke above key technical levels — the 50- and 200-day moving averages — fueling optimism in the market.
The main drawback of Tesla for income investors is that the company doesn’t pay dividends. But this can be solved by using options to create your own “dividend.”
The main drawback of Tesla for income investors is that the company doesn’t pay dividends. But this can be solved by using options to create your own “dividend.”
Tesla (TSLA)
Strategy example: An investor has $34,000 and wants to invest in TSLA but in a more conservative way. Instead of buying the stock outright, they sell a put option with a $340 strike expiring on July 17, 2026, setting aside the cash in case of assignment. Selling this put can currently bring in around $6,280 in premium for one year, which equals an annual yield of 24.39%.
If by expiration TSLA remains above $340, the option expires worthless, and the seller keeps the premium. If the stock falls below this level, they will have to buy 100 shares at $340. The trade becomes unprofitable if the price drops below $277.
Risks:
One way to reduce risk is to turn the position into a bull put spread — for example, by buying a $300 strike put. This reduces the maximum potential loss from $27,700 to $1,950.
Tesla remains the market leader in U.S. electric vehicle sales with about a 70% market share and a strong ecosystem of sales, service, and charging. The company continues to scale, but like any stock, its price is subject to volatility.
Options allow investors to generate income even when a company doesn’t pay dividends, but they require careful risk management and a solid understanding of how the instrument works.
If by expiration TSLA remains above $340, the option expires worthless, and the seller keeps the premium. If the stock falls below this level, they will have to buy 100 shares at $340. The trade becomes unprofitable if the price drops below $277.
Risks:
- Limited profit — the maximum gain is the option premium.
- Potential loss if the stock falls and shares are assigned at an unfavorable price.
- Missing out on upside if the stock rallies sharply.
One way to reduce risk is to turn the position into a bull put spread — for example, by buying a $300 strike put. This reduces the maximum potential loss from $27,700 to $1,950.
Tesla remains the market leader in U.S. electric vehicle sales with about a 70% market share and a strong ecosystem of sales, service, and charging. The company continues to scale, but like any stock, its price is subject to volatility.
Options allow investors to generate income even when a company doesn’t pay dividends, but they require careful risk management and a solid understanding of how the instrument works.
Remember, options are risky, and investors can lose 100% of their investment. This article is for educational purposes only and is not a recommendation for traders. Always conduct your own due diligence and consult with a financial advisor before making any investment decisions.