The Trade at a Glance
- Account Size: $100K
- Underlying Stock: Tesla Inc. ($TSLA)
- Shares Held: 100 (cost basis $264.37)
- Strategy: Sell 1 Covered Call
- Expiration: January 16 2026 (LEAPS)
- Strike Price: $300
- Premium Collected: $3,260
Key Metrics
- Max Profit: $3,260 premium + $35.63 per share capital gain if called away ($264.37 → $300)
- Break‑Even on Shares: $264.37 – $32.60 = $231.77
- Upside Capped: Above $300 the stock is called away; we crystallize gains and premium.
Trade Rationale
- Robust Income Up‑Front – A $3,260 credit delivers significant cash flow and materially lowers our effective cost basis.
- Long‑Dated Flexibility – With ~8 months to expiry, we can actively manage or roll the position as market conditions evolve.
- Comfortable Exit Price – Content to sell TSLA at $300, locking in profits while harvesting elevated IV.
Risk Management
- If TSLA rallies far above $300 early, consider rolling up/out to participate in more upside.
- Should IV compress, we might buy back the call cheaply and re‑establish at a higher strike.
- Downside risk mitigated by premium received and reduced effective basis of $231.77.
Final Thoughts
LEAPS covered calls convert share ownership into a powerful income engine while defining a high‑value exit target. Perfect for the income‑focused $100K portfolio.
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