Hi folks! For those who have been following us, we are sharing our tricks and plays on how to trade smarter. Due to an overwhelming request asking for the second part of how to accumulate Tesla shares for free, decided to share this although most of you using Part 1 might not have accumulate enough to start Part 2.
Previously, you are selling put options way lower that the trading price and using the proceeds to buy 1-2 $TSLA shares every week (some with balls of steel buy 4-5 shares a week). Once you accumulate 100 $TSLA shares, now you can do something called “covered calls”. It’s selling call options and collecting the premium. Let me explain with a photo below.
As you can see (in red arrows), the premiums are quite good. So what you do is, for example, sell Nov 26 $1,120 call and capture about $20. Since 1 contract is worth 100 shares, you will be collecting about $2,000. The downside of this strategy is that if the price skyrockets by $100 per share, you are limiting your upside. So unless you are absolutely certain that it will go up or you have some magical gifts to foresee the future, I prefer to get “sure money” than waiting and hoping that something will happen.
So in summary,
- Part 1: I sell puts way below the current price to be safe. I usually collect 1% or $10 per share (put premium) and sell 10 contracts. That’s about $10,000. With that money, I go buy about 9-10 shares of $TSLA every week
- Part 2: With shares I have (have to be in multiples of 100 shares), I sell covered calls collecting another $10 per share resulting in another $10,000. And I use this money to buy another 9-10 shares.
- Of course, $TSLA shares fluctuate so you can buy and sell as much as you like and make even more money and buy even more $TSLA shares
- If you do this for 2.5 months, you will accumulate another 100 shares (worth over $100,000) that you can accelerate Part 2
- If you do the math right, in a year, you can accumulate 500 shares of TSLA = $500,000 (minus capital gains tax you need to set aside)
Yup, this is exactly what I have been doing. Yes, it’s easy. But do your own DD to decide if this strategy is right for you.
Part 3 will cover what to do when the stock price falls your put option striking price or when it goes above your call option price. Stay tuned and follow us on Twitter.
And for assholes who are criticizing my writing skills, ..l.. If you don’t like it, don’t read it or follow me. I am sharing useful tricks that made individuals I teach how to invest smarter very rich resulting in 8-12x S&P 500 every years for the last 20+ years.