TSLA bull put spread: credit, risk, strikes

You are still selling downside — just not all of it. The long $285 put cuts the tail off below that level, which is why this needs $725 of buying power instead of the $29,500 a cash-secured put would tie up.

Above $295 at August 28, 2026, both puts expire worthless and you keep the full $275. Below $285, you lose the maximum $725. Breakeven is $292.25.

Return on risk is 38% for 27 days — 513% annualized. That headline is the reason people prefer spreads to cash-secured puts, and the reason spreads blow up accounts: the same capital supports several times the notional risk.

Between the strikes the loss scales linearly, so most of the damage happens fast when TSLA breaks $295. There is no assignment-and-hold escape hatch: the long put you own expires the same day.

Early assignment on the short leg leaves you long 100 shares plus a long put — a synthetic call, not a disaster, but a position you did not choose and one that requires $29,500 of cash on Monday.

Early assignment is an operational risk rather than a market one: it arrives on a weekend, converts a defined structure into a stock position, and requires cash you may have allocated elsewhere.

The credits look like a different asset class, and they are compensation, not edge. Tesla's realized vol has spent long stretches at or above its implied, which is the definition of a name where premium selling has no structural tailwind. Defined risk is not optional here: a naked short strangle on TSLA has produced account-ending weeks more than once.

TSLA's Aug 28 strikes are $5 apart near the money (1.61% of spot). Coarse enough that the strike you want frequently does not exist, and the nearest rung is a different trade. 56k contracts of open interest on Aug 28 is workable around the money and thin in the wings — width costs more here than the ladder suggests. 36 strikes on that expiry — 49% of the board — carry prints that agree with their own implied volatility and hold up across the ladder, and those are the strikes priced here. Retail-deep at every strike and every weekly. Four-leg fills near mid are routine, even in the wings.

Skew is inverted: the 25-delta CALL implies 4.2% more vol than the put. That is the market pricing upside risk above downside risk — a squeeze, a takeover rumour, or a crowded short. Selling calls into an inverted skew pays better than usual and is riskier than usual for exactly the same reason. The term structure is flat inside 1.5% between the two captured expiries, so there is no calendar edge to harvest and no event visibly priced into one month over the other.

At 46% ATM implied vol, the Aug 28 options are pricing a one-standard-deviation move of $39.20 over 27 days — roughly −12.6% to +12.6%, or $272.01 to $350.41. The structure above sells the part of that distribution the market thinks it will not reach. Whether that is a good trade is entirely a question of whether 12.6% is too much or too little for TSLA over 27 days — the delta table cannot answer that, and neither can we.

What actually goes wrong here, as opposed to in general: Treating a 60% IV as 'rich'. On this name that is the middle of the range, and the wings price fairly for a reason.