If you think that Tesla will drop after the earnings-release, consider a vertical call spread. This strategy involves selling a call option while simultaneously buying another call option at a higher strike price. The goal is for the stock to stay below the strike price of the sold call.
Here's a possible setup:
- Sell to Open: 21-Jul-23 285 Call
- Buy to Open: 21-Jul-23 290 Call
The net premium received for this trade setup is $154 (the difference between the premium received from the sold call and the premium paid for the bought call). The maximum risk for this trade is $346, which is the difference between the strike prices minus the net premium received. The maximum profit is the net premium received if TSLA stays below the strike price of the sold call ($290) at expiration.
The breakeven point for this trade is $291.54, which is the strike price of the sold call plus the net premium received. This means that TSLA needs to be above $291.54 at expiration for the trade to be profitable.
The trade has a probability of profit of 61.79%, and the implied volatility rank is 21.64. The position delta is -0.0706, and the position theta is 0.0727. These Greeks indicate the sensitivity of the position to changes in the stock price and time decay, respectively.