If you own Tesla and you are tired of watching it go nowhere, there is a way to get paid while you wait. It is called a short strangle, and it is one of my favorite income strategies for a stock that is stuck in a range. This is not financial advice. I am not a CPA or a trading advisor.
Here is why it fits Tesla right now. Over its history, Tesla has moved in long stretches of sideways consolidation followed by explosive runs. It spent about six years going sideways, then ran roughly 35x, and it has now been consolidating again for about five years. I believe the next big move is coming. It may pull back a little more first and then head higher, or it may simply break out. What nobody knows is when.
That uncertainty is exactly what a strangle is built for. You sell a call above where the stock is trading and a put below it at the same time, and you collect premium on both. If the stock keeps chopping sideways, you keep the money.
But a strangle also puts a ceiling on your upside and a floor where you may have to buy more shares. Before you place one, you need to know exactly where both sit.
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