I Made $18,000 in ‘Free Money’ Selling Call Options on 200 Tesla Shares: Here’s How the Strategy Works

On a recent episode of the Rich Habits Podcast titled “169: Our Favorite Passive Income Strategy (2026),” co-host Austin Hankwitz called covered calls “one of the simplest options strategies in investing” and “the freest money that exists.” His receipt: “In 2024, 2025, I’ve made north of $18,000 in premium income on my 200-ish shares of Tesla stock.”

Here is how the trade works, using his Tesla example.

The Mechanics, In Plain English

You own at least 100 shares of Tesla (NASDAQ:TSLA | TSLA Price Prediction). Hankwitz used a purchase price of $220 per share. Through your brokerage, you sell someone the right to buy those 100 shares at a higher strike, say $250, by a set expiration date. The buyer pays you a cash premium up front, say $500. The call is “covered” because you already own the shares backing it. One contract equals 100 shares, so 200 Tesla shares means two contracts.

Three things can happen by expiration:

• Tesla finishes below $250. The contract expires worthless. You keep the shares and the $500. Next month, you write another one.
• Tesla finishes right at $250. Same outcome. You keep the shares and the premium.
• Tesla rockets past $250 to $300. You are obligated to sell at $250, giving up $50 per share of upside. You still bank $30 per share in capital gain plus the $500 premium.

Co-host Robert Croak framed the bargain directly: “You’re trading some of your upside potential for guaranteed income today.” When the stock stays below the strike, he added, you “do it again and again and again.”

Why Tesla Specifically

Tesla is a favorite for covered-call writers because option premiums scale with volatility, and Tesla has plenty. The stock carries a beta of 1.793 and has traded in a 52-week range of $273.21 to $498.83. Shares closed at $443.30 on May 14, 2026, up 21.72% in the past month. That kind of move is exactly what call writers fear (capped upside) and love (fat premiums) simultaneously.

Tesla pays no dividend, so long-term holders extract regular cash by selling premium against the position. Tesla’s Q1 FY2026 results (filed in an 8-K with the SEC on April 22, 2026) showed revenue of $22.39B and free cash flow of $1.44B, with 2026 catalysts including Cybercab, the Tesla Semi, Megapack 3, and an Optimus ramp at Fremont. Each is a reason a covered call could get blown through to the upside.

The Trade-Off, And The ETF Shortcut

The risk Hankwitz glossed over is opportunity cost. If Tesla runs from $220 to $400 in a single cycle, the covered-call writer caps out at the strike. Investors who do not want to manage contracts themselves now have covered-call ETFs that run the strategy on individual names and broad indexes. The premium income is real. So is the ceiling you agree to in exchange for it.