Yesterday, TSLA spiked to $450. On sudden moves like this the price on long-term options spikes because people want to buy them in case the stock keeps running up.
I checked on the prices and $490 calls that expire on Dec 2028 were selling for $145 each. I knew that that was crazy high, so I sold 7 of them. Put $101,500 in my pocket.
That sounds great, but I was only able to do that because I already own 700 shares of TSLA. **NOTE WELL -- be very wary of selling naked calls, if the stock soars they can crush you.**
I bought my TSLA shares for $340. Now if TSLA goes above 490, then I will be forced to sell them for 490 each, *no matter how high TSLA has gone*. But I’m OK with that because I already have $145 in my pocket, so it’s really like selling them for $635. I would be OK with that too — either way — I WIN
Well today TSLA sudden fell back to $425. And the wind blew out of the sails on those 490s, and they crashed from 145 down to 130.
So I bought them all back!!
You’ve heard of buy low / sell high, right? Turns out that you can also sell high and buy low!!
I made $15 per share. 7 Contracts controls 700 shares, so that’s $10,500.00 profit in one day.
But what about that $102,500 that I was going to make? Well let me ask you this. Would you rather make $100,000 in 2 1/2 years, or $10,000 in one day?
And when TSLA goes back up — I CAN SELL THEM AGAIN!!! Might sell them for more next time.
I wish I had figured this stuff out sooner. It’s really not that hard, and I’m making a good living doing it. In the long run, I think TSLA is headed up, but in the meanwhile, I'm making bank on the swings