Part 9/12:
This method provides magnified leverage—up to 4x compared to direct stock holding—potentially adding 600 shares’ worth of exposure on a capital base of $50,000, which is substantial. It also aligns with the bullish outlook, betting that Tesla won’t fall below the strike price before expiration, especially given the upcoming launch and positive market sentiment.
Risks and Caution
However, the speaker cautions about the perils of over-leverage. If Tesla's stock plummets unexpectedly, the short puts could impose significant losses, especially since the leverage can work both ways. They emphasize thorough understanding, paper trading, and cautious position sizing, especially for retail traders unfamiliar with complex options mechanics.