TSLA (Tesla) — Rolled Up and Out Trade
I rolled my TSLA covered call:
Bought to close: October 7 $362.50 Call
Sold to open: October 23 $377.50 Call
Net credit: $0.91 per share
Total net credit: $91
Why I Made the Trade
My October 7 $362.50 call was well in the money, with TSLA trading above the strike.
Rather than allow the shares to be called away at $362.50, I rolled the position out to October 23 and increased the strike to $377.50.
The important part of this trade was improving the strike.
I moved the potential sale price of the shares up by:
$15 per share
On 100 shares, that's an additional:
$1,500 of potential stock value
And I was able to make that adjustment while still collecting a $91 net credit.
Why I Chose $377.50
I looked at several alternatives.
The $380 strike required a small debit, while the $377.50 strike still allowed me to move substantially higher and collect a credit.
That made $377.50 the best balance for me between increasing the strike, preserving additional upside and avoiding paying a debit to make the adjustment.
If TSLA remains above $377.50 as expiration approaches, I'll reassess the position again.
Where the Position Stands
I still own 100 shares of TSLA.
My new covered call is:
1 October 23 $377.50 Call
My stock basis is around $357 per share, so moving the call to $377.50 also gives me some useful flexibility.
If TSLA were to weaken materially, the call should become less expensive to manage. Depending on the circumstances, I could potentially roll the strike back down closer to my stock basis and collect additional premium.
That isn't something I've decided in advance. I'll make that decision based on the stock price and the option economics if the situation develops.
For now, I've improved my potential exit price by $15 per share while collecting another $91 in net option premium.
I'm comfortable with that outcome.
Execution Parameters
I was comfortable making this trade around the prices shown above. If the stock or option has moved materially by the time you receive this alert, I would not chase it. The economics may be different from the trade I made.
This is a record of my actual trade and actual fill, not a trade instruction or signal.