My Earnings Options Playbook: Covered Call on TSLA (Bought 100 shares of TSLA + Sell TSLA CALL 251121 505)

My high probability + consistent income option playbook - Bought 100 shares of TSLA + Sell TSLA CALL 251121 505

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TASK 1:

In this earnings season, I was closely watching $Tesla (TSLA.US)$ - one of my most favoured companies, packed with strong expectations and trading interests. With high expectations comes high volatility, as we can see in the IV.

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TASK 2:

My strategy is very simple: own the stock (minimum 100 shares) since it is one of my high-conviction stocks, and sell a call with a Delta of 0.30, around 30 days to expiration. As we know TSLA is a very volatile stock. Right after TSLA earning release, it swung wildly downward. During the selldown, I managed to pick up TSLA at USD420.88 per share. Immediately after that, TSLA swung upward wildly, during which I managed to sell a 0.3 delta TSLA CALL 251121 505 at USD11.49 per contract. My plan is to let the call goes worthless at expiration date. Below are the possible outcomes.

Possible outcomes:

A: If Tesla (TSLA.US) closes below the strike price USD505 per share on 21 Nov 2025, I get to keep the premium (USD11.49 x 100 shares = USD1149) as the call option expires worthless while I retain the shares. I will then sell another call option to roll over the covered call strategy.

B: If TSLA closes at or above the strike price USD505 per share on 21 Nov 2025, I may get assigned and will sell TSLA at USD505 per share x 100 (the strike price). In that case, I still keep the full premium (USD1149) from the sold call plus the cash proceeds (USD505 x 100 = USD50,500) from selling the underlying TSLA. At this point, I have two options: buy back TSLA and sell another covered call, or sell a cash-secured put on TSLA. For the latter, if I get assigned, I am happy to keep the stock; if not, I will repeat the strategy by either buying TSLA and selling another covered call or selling a cash-secured put.

C: If TSLA falls sharply right after I sell the covered call, I may choose to close the position early by buying back the call. I set a threshold to buy back if the price of the sold call falls by more than two-thirds (USD11.49 x 2/3 = USD7.66) to USD3.83 in less than two weeks. Don't reject quick gains. Take money off the table. You will never get broke by taking profits. Right?

TASK 3: The attached photos show the recent trades I have executed with consistent results: steady income while holding TSLA.

TASK 4: Key Learnings

High conviction: The key to this strategy is that I must be comfortable holding the underlying shares, and it must be a high-conviction investment.

Selling calls with Delta 0.3: A Delta of 0.3 strikes a good balance between premium received and the distance between the underlying price and the strike price. It compensates me adequately for the risks I’m taking—either getting assigned or missing out on TSLA’s upside.

Discipline matters: Selling covered calls is a high-probability, low-profit strategy. The aim is to generate consistent income. Discipline is crucial while letting time decay work in your favor.

Goal: Generate steady income while maintaining exposure to a high-conviction stock. Whether I get assigned or not, I have a plan to either roll over or sell a cash-secured put later. Tesla (TSLA.US)