Hey traders,
I put on a simple income trade today and I want to walk you through it — the “what,“ the “why,“ and the “what if.“
TSLL is a 2x leveraged Tesla ETF. That just means it tends to move about twice as much as TSLA.
If Tesla drops 4%, TSLL will be roughly down 8%. If Tesla bounces a dollar, TSLL typically moves about two dollars. Leverage cuts both ways, so respect it.
The Setup: Sell Cash Flow, Not Hopes
I’m looking for a near-term pop in Tesla. Instead of buying calls, I sold a put on TSLL.
- Ticker: TSLL (the ETF with 2x leverage)
- Expiration: Oct 31
- Strike: $20 put
- Credit collected: $2.00 per contract (it ticked up to ~2.33 after)
When I placed it, TSLL was around $21.20, in the video you’ll see quotes near $20.02 — the point is, this thing moves.
As usual, selling a put means I get paid up front.
If TSLL is above $20 at expiration, the option expires worthless and I keep the entire premium with no obligation.
The Math and Why I Like It
If TSLL finishes above $20 on Oct 31, I’m looking at about a 39.7% return on the capital the broker ties up for this position. That’s for one month.
When I say “the capital the broker ties up”, here’s what I mean:
On margin, my platform shows about $504 per contract held aside. That’s because if you’re using margin in your account, regulations require you to have roughly 20% of the amount needed in case you are assigned those puts
The math works like this: $20 strike price x 100 shares, that’s $2,000. And roughly 20% of $2000 is that $504 I mentioned.
Now, if you’re NOT using margin — if you’re doing what’s called a cash-secured put — you’d need to have the full $2,000 per contract in your account. Still perfectly fine if you prefer maximum simplicity.
“What If I Get Assigned?”
If TSLL finishes below $20, I might be assigned 100 shares per contract at $20. But remember — I already collected $2.00 per share or $200 per contract. That means my effective cost basis is $18 per share or $1800.
From there, I shift gears:
- I can turn around and sell covered calls. For example, looking out to the third week of November, I could sell the $20 calls for around $3.60. That’s additional cash on top of the $2 I already took in.
- Or, if price is trending up, I can choose a higher strike — say $22 or $23 — to aim for both premium + stock gains above my $18 basis.
Either way, I’m staying in control and letting the premium work for me.
Why Not Just Buy Calls?
Nothing wrong with calls, but selling puts gives me cushion:
- The stock can go up, sideways, or even down a bit, and I can still win.
- If I do end up owning shares, I own them below today’s price since I’ve collected cash up front for selling those puts (that’s where my $18/share cost basis comes from)
- Then I can sell calls and keep collecting cash while I wait.
I’m not predicting the exact move. I’m getting paid for what hasn’t happened yet — and might not happen. (TSLL finishing below $20.)
Straight Talk on Risk
This trade relies on the underlying security, Tesla, holding up or bouncing.
TSLL is leveraged, so both wins and losses can add up faster.
If you want a smoother ride, you can apply the same idea — sell puts until you’re assigned, get assigned shares, sell calls on them — on less volatile names.
It might be lower returns, but it’s also less nail-biting. And the same principles will apply.
Bottom Line
I sold the TSLL Oct 31 $20 put for $2. If TSLL closes above $20, I keep it all — roughly 39.7% on the broker’s capital set aside.
If I get shares at an $18 basis, I sell calls (for example, ~$3.60 at the $20 strike into mid-November) and keep the wheel turning.
That’s how I let the trend, time decay, and probability do the heavy lifting.
Trade well,
Jack Carter
P.S. I scanned 100,000 options and found one stock primed to pop. Check it out here.
