Tesla Stock Today: This Broken Wing Butterfly Options Trade Can Earn As Much As $1,075
Here's What You Need to Know
* Tesla stock is trading at $290.65, up 1.51% as of 11:07 AM EST. * The stock has been on a roller coaster ride in recent months, but it has managed to stay afloat amid the market volatility. * One popular trading strategy for Tesla stock is the broken wing butterfly options trade.Broken Wing Butterfly Options Trade for Tesla Stock
A broken wing butterfly options trade is a neutral strategy that involves buying one at-the-money (ATM) call option, selling two out-of-the-money (OTM) call options, and buying one OTM put option. The maximum profit for this trade is $1,075. The mechanics of the trade are as follows: * Buy one TSLA 210716 C290 (ATM) * Sell two TSLA 210716 C300 (OTM) * Buy one TSLA 210716 P285 (OTM) The total premium for this trade is $1,075. The maximum profit occurs if TSLA closes at $295.00 on the expiration date. This trade is suitable for investors who believe that TSLA will continue to trade within a range in the coming weeks. The risk of loss is limited to the premium paid for the trade. However, it is important to note that there is no guarantee of profit.Conclusion
The broken wing butterfly options trade is a neutral strategy that can be used to generate income from TSLA stock. The trade has a limited risk of loss and can be executed with a small amount of capital. However, it is important to remember that there is no guarantee of profit and that all trading involves risk.Disclaimer: This article is for informational purposes only and should not be considered as investment advice. Trading in options involves risk and is not suitable for all investors.
