Cash-secured puts on Tesla: how expiry choice shapes risk and reward

Tesla’s next earnings report, scheduled for 22 October, could be a lively one. The stock has been hovering near USD 439 after a strong run, and investors are debating whether results will justify the momentum or trigger a pause. For long-term holders, moments like this can feel uncertain — but they can also open the door to opportunity.

One approach that fits a patient mindset is the cash-secured put (CSP). It’s a conservative options strategy that lets you set a preferred entry point for the stock — often below today’s price — while earning a premium for taking on that obligation. In other words, instead of placing a limit order that pays you nothing while you wait, a CSP pays you for agreeing to buy if the price dips.

At the moment, Tesla’s option market is offering particularly interesting setups around the upcoming earnings date. Two expiries stand out: 24 October 2025, which falls just after results are announced, and 21 November 2025, roughly a month later. Both allow investors to express a bullish long-term view but differ in how much time, risk, and potential reward they carry.

The October contracts capture the immediate reaction to earnings, when volatility is at its highest. They pay attractive premiums but come with concentrated event risk — a sharp post-earnings move could easily test your strike. The November contracts, on the other hand, extend beyond the noise of earnings week. They offer a steadier, lower-stress way to potentially acquire Tesla shares at a discount once the market has absorbed the results.

Choosing between the two is less about guessing the earnings outcome and more about deciding how you want to take exposure: do you prefer a quick opportunity with more uncertainty, or a slower, steadier approach that fits a buy-and-hold rhythm?

A quick refresher on cash-secured puts

A cash-secured put is one of the most straightforward option strategies, yet it’s often misunderstood. When you sell a put, you agree to buy 100 shares of a stock at a set price (the strike) if it trades below that level at expiry. In return, you collect a premium up front.

To ensure you can meet that obligation, you keep enough cash in your account to cover the purchase — hence the term cash-secured. If the share price stays above your strike, you keep the premium and the trade simply expires worthless. If the stock falls below your strike, you may be assigned and buy the shares at an effective cost of strike minus premium.

It’s a strategy that works best for investors who already like the stock and are happy to own it at a lower level. The CSP simply formalises that intention, offering compensation while you wait for the right entry. Important note: The strategies and examples described are purely for educational purposes. They assist in shaping your thought process and should not be replicated or implemented without careful consideration. Every investor must conduct their own due diligence, considering their financial situation, risk tolerance, and investment objectives before making decisions. Remember, investing in the stock market carries risks, so make informed decisions.

Comparing two near-term expiries

Looking at the 24 October 2025 option chain, two strikes stand out:

• USD 400 put, with a mid-price around USD 4.13, and
• USD 430 put, priced around USD 12.80.

The 400 put sits roughly 9% below Tesla’s current price and offers a reasonable buffer if the stock sells off after earnings. The 430 put, by contrast, lies much closer to the market and carries a higher premium — but also a higher likelihood of assignment if results disappoint.

The choice between them simply illustrates how different investors might approach event risk. These examples aren’t recommendations but ways to understand how strike selection changes the balance between income and safety. Many other combinations of strikes and expiries are possible depending on personal outlook, risk comfort, and portfolio objectives.

Further out, the 21 November 2025 expiry offers a different rhythm altogether. Here, the focus shifts from the immediate earnings move to what happens in the weeks that follow. Two notable strikes include:

• USD 350 put, trading around USD 5.00, and
• USD 400 put, near USD 14.60.

The 350 put represents a deeply discounted potential entry — more than 20% below today’s price — appealing to those who see long-term value but want a wide buffer. The 400 put again offers a balanced trade: meaningful premium income with a realistic chance of being assigned at an effective cost near USD 385.

Because these options expire a month later, they spread risk across a longer period and avoid the concentrated uncertainty around earnings week. The trade-off is a lower daily premium, but the reward is smoother price action and less chance of a sharp overnight surprise.

Choosing the right approach

All of the following examples assume the base case of using a cash-secured put, meaning the investor is willing to buy Tesla shares at a chosen strike price if assigned. The comparisons below are therefore educational illustrations of how different strike and expiry selections can change the balance between time, risk, and premium potential — there are many other ways to structure such trades.

• For investors seeking short-term income: The 24 October 430 put delivers the richest premium in just a few days, but it’s highly sensitive to Tesla’s earnings move. This choice makes sense if you expect results to hold steady or improve slightly — but you must be ready to take assignment if the market reacts negatively.
• For those preferring a balance of safety and opportunity: The 24 October 400 put offers a similar timeframe with more breathing room. You earn less upfront, but your breakeven sits near USD 396, providing a modest cushion below current prices.
• For investors with a longer horizon: The 21 November 400 put fits a patient style. It gives you time for the market to settle after earnings and still offers a respectable return while you wait.
• For cautious buyers seeking deep value: The 21 November 350 put allows you to set a far lower entry point — a “buy the dip” level, but with the advantage of being paid while waiting. If Tesla never drops that far, you simply keep the premium.

Managing the trade with discipline

Managing a CSP doesn’t end after opening it. Once the trade is on, there are three main paths forward:

1. If the stock rises or stays above your strike: The option expires worthless, and you keep the entire premium. This is the best-case scenario — your cash remains free for the next opportunity.
2. If the stock drifts near your strike: You can hold steady, roll the position to a later expiry to buy more time, or close it early if you want to reduce exposure before earnings or key news.
3. If the stock drops well below your strike: You’ll likely be assigned and buy shares at the agreed price. Your cost basis is the strike minus the premium received, which can still represent a discount.

Because CSPs require full cash collateral, the key is preparation. Treat each trade as a conditional stock purchase plan, not a short-term bet.

The bottom line

Cash-secured puts are one of the most practical tools for long-term investors who prefer steady decisions over constant action. In Tesla’s case, both the 24 October and 21 November expiries present useful ways to express a patient, bullish stance.

The October options provide high short-term premiums but come with the volatility of earnings week. The November series trade with calmer conditions, lower implied volatility, and more flexibility in managing the position.

Ultimately, the best choice depends on your time horizon and comfort with temporary drawdowns. Both paths can align with a buy-and-hold approach — either as a way to earn additional return on idle cash or to accumulate shares at levels that fit your long-term conviction.

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Today’s Links

Some speculate that a very well-timed whale hit the crypto market with such precision timing that insider knowledge rumors are running rampant.

As noted on today’s pod, I have zero special knowledge here, but have heard from multiple sources that something is going on at the top of China’s political structure. Would treat these rumors as highly suspect, but would make sense that if there is room for debate anymore at the top in China, the deepening adversarial relationship with the US must be pressurizing the situation. One specifica interesting development has been Hu Chunhua’s appearances of late. Again, no idea if there is even smoke, much less fire there.

Really looking forward to reading the latest treatment of the great stock market bubble and crash of 1929, from Andrew Ross Sorkin - here interviewed on the Odd Lots podcast.

Just in time for the top? Why an ETF like MEME even exists or is allowed to exist is beyond me - and yet it does.

Chart of the Day - looking away from the retail frenzy…at boring old financial stocks as earnings season kicks off.

The presence of retail in this market is enormous, and it is certainly worth keeping an eye on the speculative names driven by the frenzy of speculation and option buying in everything from the Rigettis (RGTI) and Oklos (OKLO) to QuantumScapes (QS) and USA Rare Earths (USAR). On Friday, I trotted out the Dow Theory angle on things, which some might view as outdated. Financials are also important to track, both because they are often a leading sector and because it is a “boring” sector clean of the retail speculative froth - note how close this very large sector is to the 200-day (40-week here) moving average. The chart is of the XLF ETF, which holds all of the big banks as well as Berkshire Hathaway (it’s largest holding at 12%, credit card companies, etc.).

Questions and comments, please!