Hedging Tesla and AMD With Covered Calls

Why It Matters

The strategy shows how covered calls and collars can lock in income and limit downside, offering a replicable risk‑management tool for investors holding large tech positions.

Key Takeaways

• Investor uses covered calls to generate premium on Tesla holdings
• Potential to repurchase cheaper calls if Tesla price declines further
• Considering collar strategy: using call premium to buy protective puts
• Similar covered‑call approach applied to large AMD position for income
• Holds high 12‑month price targets: $550‑$600 Tesla, $350 AMD

Summary

The video explains how the investor is hedging sizable Tesla and AMD positions by selling covered call options, turning stock exposure into a source of premium income.

He sold the calls months ago, collecting roughly $25 per contract on Tesla, and now watches the options’ value decline, giving him the option to buy them back at a lower price. He also contemplates a collar, using part of the call premium to purchase puts for additional downside protection. A similar covered‑call overlay is in place on his AMD holdings, where the premium offsets potential share pull‑in.

The speaker cites price targets of $550‑$600 for Tesla and $350 for AMD within the next year, indicating that even if the calls are exercised, the underlying positions remain sizable. He emphasizes that the premium received already exceeds his required return, and the strategy aligns with his long‑term bullish outlook.

By combining income generation with optional protection, the approach illustrates a pragmatic way for individual investors to manage volatility while preserving upside potential, a tactic increasingly relevant as equity markets remain erratic.

Original Description

Hedging with covered calls and collars, targeting AMD at $350 and Tesla at $550–$600 over 12 months, with Victor Dergunov, The Financial Prophet.

Full episode: https://seekingalpha.com/l/aud5cf