Tesla (TSLA) stock has been on fire lately and currently has a best possible composite rating of 99 and an RS rating of 99

The EPS rating is the only red mark on the checklist with a value of 76

The implied volatility for TSLA stocks is currently 71%, which is not as high as it was before, but still quite high in relative terms. High volatility can result in higher than normal option premiums if you focus on option selling strategies

A bull put spread is a defined risk option strategy that benefits if the stock closes above the short strike when it expires. To execute a bull put spread, an investor would sell one out-of-the-money put and then another Buy out-of-the-money put

Traders who believe TSLA stock won’t go below 700 could try selling a February 19,700 bet and buying a Feb. 19 695 set

Yesterday this spread was trading for around $ 200, meaning that a trader selling this spread would receive an option premium of $ 200 and have a maximum risk of $ 300, which translates to a 6667% return on risk between now and February 19 as long as the TSLA stock remains above 700

If Tesla stock closes below 695 on the expiration date, the trade will lose the full $ 300. The break-even point for the bull put spread is 698, which is calculated as 700 minus the 2,000 option premium per contract

If Tesla’s stock price falls below 700 I would close the trade early on a loss. Traders who believe TSLA stock could pull back in the next few days may prefer to wait for a better price on the spread / p>

Earnings for Tesla stock is set for January 27, so this trade would have a profit risk

It is important to remember that options are risky and investors can lose 100% of their investment

This article is for educational purposes only and is not a trading recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions

Gavin McMaster has a Masters in Applied Finance and Investment He specializes in trading options income, is very conservative in his style, and believes that patience while waiting for the best setups to follow is key to trading successfully him on Twitter at @OptiontradinIQ

Erin is a sports enthusiast who loves to indulge in the occasional soccer game.She is a passionate journalist with a perfect command of English, currently offering her sports and health skills at Report Door

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World news – AU – TSLA shares achieve spread gains if support holds – report the door

Source: https://www.reportdoor.com/tsla-stock-put-spread-profits-if-support-holds/