How an Investor Made $18K Selling Covered Calls on Tesla Stock

In a recent episode of the Rich Habits Podcast titled "169: Our Favorite Passive Income Strategy (2026)," co-host Austin Hankwitz discussed selling covered calls on Tesla (TSLA) shares as a passive income strategy. He described covered calls as "one of the simplest options strategies in investing" and "the freest money that exists."

Details

Hankwitz revealed that in 2024 and 2025, he generated over $18,000 in premium income from selling call options against his roughly 200 Tesla shares. The strategy involves selling call options on shares already owned, collecting a premium upfront while retaining the shares unless they are called away.

Context

Covered calls are a popular strategy for investors expecting stable or slightly rising stock prices. The seller receives a premium for granting the buyer the right to purchase the shares at a strike price within a specific timeframe. If the stock stays below the strike, the seller keeps the premium and shares. If it rises above, the seller may have to sell the shares at the strike price.

What This Means for Investors

This strategy can generate additional income from existing holdings, but it caps upside potential if the stock surges. Investors must own the underlying shares and be comfortable with the risk of selling at a predetermined price.