Tesla, Inc. (TSLA) stock has been flat over the last 2 months. But investors are making money by selling short out-of-the-money (OTM) put options. For example, over the next month, Tesla put options with exercise prices 6.4% lower than today's price provide a 3.2% income yield.
TSLA closed at $438.07 on Friday, Jan. 2, 2026. That is about where it was on Nov. 6, 2025, when it closed at $445.91. However, some investors have made money by selling short out-of-the-money (OTM) put options (and OTM calls).
Making Money with Out-of-the-Money Xash-Secured Put Sales
For example, I discussed this in a Dec. 2, 2025, Barchart article, “Tesla Stock Has Been Flat - Good for Shorting Puts to Make a One-Month 2.5% Yield.”
I demonstrated how an investor could earn $1,068 on December 2, 2026, by securing $40,500 in collateral with their brokerage firm for a put that expired on January 2, 2026.
That was a cash-secured short-put play for investors, giving them an immediate 2.637% one-month yield (i.e., $10.68/$405.00). In return, the investors had an obligation to buy 100 shares with the collateral at $405.00, if TSLA stock fell by 5.6% to that price on or before Jan. 2, 2026.
Since TSLA closed at $438.07, this obligation expired, and the investors made a clean 2.64% one-month yield. (By the way, TSLA rose from $430.46 to $438.07 over the last month, or just +1.77% - so shorting OTM puts was a better play).
Therefore, it now makes sense to repeat this short put play.
Shorting TSLA Puts Over the Next Month
For example, look at the Feb. 6, 2026, expiration TSLA put option chain. It shows that the $410 exercise price put option contract has a midpoint premium of $13.23.
An investor can earn an immediate yield of 3.226% (i.e., $13.23/$410.00) for an obligation to buy 100 shares at $410, i.e., 6.4% below Friday's close.
In other words, by securing $41,000 with their brokerage firm, the investor who enters an order to “Sell to Open” 1 put contract at $410 expiring Feb. 6, immediately collects $1,323.00.
Moreover, even if TSLA falls to $410 on or before Feb. 6, 2026, the investor's net cost, i.e., the breakeven (B/E) point, is below $400 per share:
$410.00 - $13.23 income received = $396.77 B/E
In other words, this is a good way to set a potential lower buy-in point. That B/E is $41.30 below Friday's close at $438.07, or a downside protection of 9.4%
That seems like a good way for existing investors to make extra income, plus potentially lower their average cost in TSLA stock.
For new investors, it also sets a lower buy-in point but provides income while waiting.
Risks and How to Handle Them
Nevertheless, it could result in an unrealized loss if TSLA falls below $410 and the puts are assigned to buy 100 shares with the cash-secured collateral. For example, if TSLA falls to $396.00, the investor would have a net unrealized loss, as it would be below the B/E point.
However, all would not be lost. Don't forget that by doing successive one-month short-put plays, the investor builds up income. For example, over the last two months, an investor would have gained $1,068 + $1,323, or $2,391, or $23.91 per put contract shorted.
That means that the net breakeven is now $410-$23.91, or $386.09. That's 11.9% below today's price.
Moreover, even after having an assignment, the investor now owns 100 shares of TSLA. They have not sold anything. That means they could sell out-of-the-money (OTM) covered calls over the next month. This would help defray any potential unrealized loss - again without selling any TSLA shares.
The bottom line is that if TSLA stock stays flat over the next several months, it makes sense to take advantage of the high put option premiums.
Shorting one or two-month out-of-the-money put options provides good income and a potentially lower buy-in point.
On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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