Tesla Stock Options Strategy in Case of Further Price Fluctuations

Tesla's first-quarter financial results for 2025 highlighted a notable downturn in the company’s performance compared to the same period a year ago. Revenue came in at $19.3 billion, a 9% year-over-year decline, and well below what analysts on Wall Street had projected. The biggest drag came from Tesla’s core automotive division, which saw sales drop 20% to $14 billion.

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This weakness, however, was partially cushioned by a strong performance in the company’s energy generation and storage segment, which surged by 67% to $2.73 billion.

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Profits were hit even harder. Tesla’s net income plunged by 71% year over year to $409 million, reflecting both weaker demand and growing concerns around the company’s public image and leadership.

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CEO Elon Musk’s increasingly political role has drawn criticism and appears to have affected customer sentiment. His position as the head of the so-called Department of Government Efficiency (DOGE) under President Donald Trump, along with his outspoken political views, has alienated a portion of Tesla’s traditional customer base — particularly progressive buyers who are historically strong supporters of electric vehicles.

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The fallout has included acts of protest, vandalism of Tesla vehicles and stores, and organized boycotts.

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Potential Tesla buyers now face not only concerns about the company’s product lineup but also apprehensions about the CEO’s political affiliations and the controversy surrounding them. These external factors may influence some to reconsider their purchasing decisions, especially amid reports of increased hostility towards the brand.

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In response to mounting criticism from both investors and the public, Musk recently announced plans to reduce his involvement in the DOGE initiative. Starting in May 2025, he will limit his time to one or two days per week, shifting his primary focus back to Tesla.

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While Musk said he will continue supporting DOGE throughout Trump’s term to fight government inefficiency and fraud, he reassured shareholders that Tesla is his top priority. Investors appeared to welcome this move, as Tesla’s stock rallied following the announcement and earnings release, signaling renewed optimism.

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To assess the broader implications of Musk’s dual roles and their impact on Tesla’s brand and public perception, Eric Schiffer — chairman of Reputation Management Consultants — offered his insights. Schiffer, whose firm specializes in helping public figures and companies navigate crises, acknowledged the challenges but remained confident in Musk’s ability to adapt.

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“Elon’s genius is unquestionable,” Schiffer said. “He will find a way to balance his goals for the country with his responsibilities at Tesla. He’ll adjust in a way that reflects his core values and reorganize when needed. That’s part of who he is. We haven’t seen the last of his visionary work — it’s that vision that drives him, and it’s his greatest asset.”

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While some investors share Schiffer’s faith in Musk’s leadership, others remain cautious. The options market, in particular, shows lingering doubt. Although Tesla shares rebounded post-earnings, option traders are still hedging their bets. Put volume has stayed elevated, and implied volatility for Tesla’s two-month options remains high.

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On Wednesday, the implied volatility closed around 66% — roughly 1.5 standard deviations above the two-year average of 53.5%. This suggests that while sentiment has improved slightly, significant uncertainty remains.

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As for managing the volatility ahead, especially with Tesla’s next earnings report not expected until late July, some investors are exploring ways to generate returns despite the bumpy outlook. One such strategy is selling covered calls to take advantage of the elevated premiums in the options market.

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For example, shareholders might consider selling the May 30 weekly $300 strike calls. With Tesla stock trading near $250, these calls are about 20% out of the money and could yield a premium of approximately $5.70 per share, or $570 per contract (since each contract covers 100 shares). That translates to more than 2% of Tesla’s current share price in just over a month — a decent return for a stock that doesn’t pay dividends.

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In summary, Tesla is navigating a complex mix of financial pressure, political controversy, and shifting customer loyalty. While Musk’s partial withdrawal from his political duties may calm investor nerves, regaining the brand’s momentum — especially with its core buyers — could take time. Between now and the next quarterly update, volatility is likely to persist, and investors will be watching closely to see whether Musk’s refocus on Tesla can reignite growth and restore confidence.

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