Tesla Covered Calls

Selling covered call options on Tesla (TSLA) is an income-generating strategy that involves owning the underlying stock and selling call options against it. This approach is particularly appealing for Tesla due to its high volatility, which results in elevated option premiums. As of June 28, 2025, Tesla's stock price stands at approximately $323.62, providing a solid base for implementing this strategy. The goal is to collect premiums while potentially capping gains if the stock price exceeds the strike price, balancing income generation with risk management.

Recent research, such as articles from Smart Investor: Improve Your Returns on Tesla with Covered Calls, highlights Tesla's 24.51% surge in the past month, making it an opportune time for covered calls, especially with earnings on the horizon. This volatility, driven by events like the robotaxi launch, creates significant extrinsic value in options, as noted in Mastering Tesla Covered Calls, enhancing premium collection opportunities.

Your preference for tastytrade is well-founded, given its options-centric interface and user-friendly tools. Compared to alternatives like Interactive Brokers (IBKR), which offers institutional-grade features, tastytrade's simplicity aligns with your needs for managing covered calls efficiently. Tastytrade Help Center supports this, noting that covered calls are available in all account types, including cash accounts, which suits your trading style.

A snapshot comparison from your notes shows:

This table underscores tastytrade's suitability for your strategy, especially with its flat 1 USD/contract fee, which is cost-effective for frequent trades.

The process for selling covered calls on tastytrade is streamlined, as detailed in What is a Covered Call & How Does it Work?. Here's a straightforward process:

1. Log into tastytrade and search for TSLA.
2. Go to the Trade tab, select Table mode, and expand the desired expiration.
3. Use the Strategy Menu to choose ‘Covered Call’ or manually pick the call to sell.
4. Select your strike price and expiration, review details, and send the order.

For more details, check Tastytrade Covered Call Guide.

Manual Steps:

• Enter TSLA, go to Trade tab, Table mode.
• Expand the expiration date.
• Click the Bid price of the call to sell.
• Review and send the order.

These steps ensure you can execute trades efficiently, aligning with your plan to sell on 100 shares every two weeks. Given Tesla's current price, you'll need at least $32,362 for 100 shares, and tastytrade's cash account support means no additional margin is required for covered calls.

Selecting the right strike and expiration is critical. Research from Option Samurai indicates 276 covered call opportunities for TSLA in the next three months, with returns ranging from 0.58% to 8.56% until expiration, annualizing to 83.35%–292.12%. For your bi-weekly cadence, focus on options with 7-14 day expirations. A common strategy, as suggested by Smart Investor, is to sell OTM calls with strikes 5-10% above the current price ($340–$355), balancing premium collection with assignment risk.

For example, at a strike of $350, you might collect a premium of around $2.50–$5.00, depending on volatility, aiming for a 1% monthly return as a target. Tastytrade's probability-of-profit tools can help assess the likelihood of the option expiring worthless, typically targeting a delta of ~0.2 for lower risk.

Tax Implications in France

Given your flat tax stance, options income in France is taxed at a 30% PFU rate (12.8% IR + 17.2% PS), as noted in your provided details. This simplifies reporting, requiring you to file on Form 2042, lines 3VG/3VH, with Tastytrade's activity statement CSV. Losses can offset gains within the year and carry forward for 10 years, and trades in USD must be converted to EUR at the Banco de France daily rate, with Tastytrade reports including this conversion.

Risk Management and Market Context

Covered calls carry risks, primarily the stock being called away if Tesla rises above your strike, potentially missing further gains. To manage this, consider rolling options, as discussed in Offensively Rolling Covered Calls Explained, by buying back the current call and selling a new one with a higher strike or later expiration. Another risk is a stock price drop, offset partially by the premium, but Tesla's volatility (IV percentile 59.92% per Option Samurai) means significant moves are possible.

Recent news, such as Tesla's robotaxi launch facing early struggles , could increase volatility, affecting your strategy. If the launch succeeds, Tesla's stock might surge, increasing assignment risk; if it struggles, the stock could decline, letting calls expire worthless. Staying informed via platforms like CNN Markets is crucial for managing positions.

From seasoned EU call-sellers' in your notes, keep positions to 25% per ticker to manage risk, given Tesla's potential for overnight 10% swings. Enter orders 15–30 minutes after the US open for tighter spreads, and use Tastytrade's tools to export trade data for record-keeping, tagging trades with reason codes (e.g., "income," "roll") for post-mortems. Celebrate hitting annualized yield targets but avoid chasing extra pennies when assignment means realizing gains.

Selling Tesla covered calls on tastytrade, with your bi-weekly 100-share cadence, leverages the platform's strengths for income generation. By selecting appropriate strikes, managing risks, and adhering to French tax rules, you can enhance returns. Stay informed about Tesla's developments, like the robotaxi launch, to adjust your strategy dynamically.

Professional trading desks run covered call programs as systematic yield-generation strategies. Here's how the machine works:

• Collect premium up-front: Steady, bond-like "yield" regardless of outcome
• If expires below strike: Keep premium + underlying asset
• If expires above strike: Get "called away" but keep premium

Either way, the premium is theirs. The only difference is whether they still hold the underlying afterward.

This is why Tesla (and crypto like BTC) sometimes catches a mild bid in the 24-48h after big option maturities.

Who runs these systematic programs?

Key Insight: Because they must roll every expiry, their flows are quasi-mechanical — making them predictable for professional traders to anticipate.

Here's what typically happens around major option expiries, using Bitcoin as a proxy for high-volatility assets like Tesla: