Tesla strangle strategy breaks down

Added: 2026-05-18

[00:00:00]Look at this range in Tesla, cuz this is going to be important for my trade. The The lows are down around April 9th or 10th when it was trading around $350 or $360.

[00:00:09]The highs were all the way back in December of last year when it was trading around $500. Why not go outside of that huge range and see if this stock can beat us. I'm going into June with 34 days, a good monthly implied volatility of 49, so I'm going to get a lot of theta decay here. I'm going to go all the way up to the 5 15 call. That's about a 12 delta call, trading for around $3.75, $3.80.

[00:00:37]I'm going to go all the way down to the 370 put. That's trading for a little bit more in in price than the calls, $4.40.

[00:00:46]But look at this, I'm all the way down at a one standard deviation move uh on the uh stock itself, meaning that there's a $43 expected move. 43 versus 4 426 doesn't bring us anywhere near our break even of under $365.

[00:01:06]I did this at $828.

[00:01:09]I'm sure if you wait and sit with the stock down $17, you'll get filled at the same price, too. This is a trade that has a very small, long one delta, but it has a very high probability of success and a big $38 or more in theta decay per day, but it does use a lot of buying power. There's always going to be a correlation between theta and buying power on this trade.