How a Put Ratio Spread Can Profit from Tesla’s Stock Stability
A put ratio spread is an advanced options strategy that traders use to profit from stable or slowly declining stock prices. This approach involves buying one put option while selling multiple puts at a lower strike price. It can generate returns in up, down, or sideways markets but carries specific risks.
The strategy works by collecting a net credit upfront. For example, a trader might buy one January 16 put on Tesla (TSLA) with a strike price of €430 while selling two January 16 puts at a €420 strike. This setup results in an initial credit of €235, which is the maximum profit if TSLA stock stays above €430 by expiration.
The trade’s profit zone forms a tent shape between €410 and €430, with the highest gain of around €1,250 occurring if the stock lands at €420. A drop in implied volatility can further boost returns, and even an early upward move in the TSLA stock can be profitable. However, the main risk is a sharp early decline in the stock price, as the trade’s delta starts at 10—equivalent to owning 10 shares of the stock. On December 30, 2025, Tesla’s stock traded at €392.85, down 5.56% over the prior week. While the strategy offers flexibility, its complexity makes it unsuitable for beginners. The exact stock price ten days later, on January 10, 2026, remains uncertain, as it depends on future market conditions.
The put ratio spread provides a way to profit from stable or slightly falling stock markets while collecting premium upfront. However, traders must manage the risk of an early price drop, which could lead to losses. The strategy’s success hinges on careful strike selection and market timing.
