Should You Buy TSLY With It’s 62% Distribution Yield?

YieldMax TSLA Option Income Strategy ETF (NYSEARCA:TSLY) has a distribution rate of 62.14% as of November 17, 2023. That makes it a possible investment for those seeking to maximize their current income, above all else. TSLY achieves that distribution rate via a covered call-writing strategy. Before considering an investment in TSLY one should understand covered call writing and ideally be aware of the way in which TSLY executes its strategy. Detailed explanations and examples are shown in this article.

Covered call writing is a way for investors to receive income from selling call options against securities that they own. In return for that income, the investor gives up the possibility of the gain on any increase of the securities above the strike price of the security. An example would be buying Telsa (TSLA) at the November 17, 2023, closing price of $234.30 and selling a call option on TSLA call option with a strike price of $250 expiring on December 15,2023 at the November 17, 2023, closing price of $6.05.

If TSLA closes at or above $250 on December 15, 2023, then the investor gains $15.70 from the difference between the TSLA prices $234.30 and $250 plus the $6.05 proceeds from the sale of the TSLA call option with the strike price of $250. That is a gain of $21.75. The cost to establish that covered call position would have been $228.25, which was the TSLA price of $234.30 less the $6.05 proceeds from the sale of the call.

The investor does not participate in any TSLA price increase above $250, since the TSLA stock will be called if TSLA is above $250 at the call expiration. Thus, the best case for that covered call strategy would be, when TSLA closes at or above $250 on December 15, 2023. The gain of $21.75 on an investment with a cost of $228.25, or 9.53% over the 28 days. Without any compounding, that is an annual rate of 124.2%.

If TSLA is unchanged over the period and closes at $234.30 on December 15, 2023, then the gain over the period would only be the $6.05 proceeds from the sale of the TSLA call option. On an investment of $228.25, the $6.05 over the 28 days is a return of 2.65%. Without any compounding, that is an annual rate of 34.6%.

If TSLA closes at $228.25 on December 15, 2023, the investor breaks even, as the $6.05 proceeds from the sale of the TSLA call, offsets the loss on TSLA share. Any close below $228.25 results in a loss that increases dollar for dollar from any further decline in TSLA.

Writing covered calls with shorter times to expiration can also generate high premium income on an annualized basis. An example would be buying TSLA at the November 17, 2023, closing price of $234.30 and selling a call option on TSLA call option with a strike price of $250 expiring on November 23,2023 at the November 17, 2023, closing price of $1.10. For giving up any TSLA appreciation above $250 and incurring almost all of the risk of a decline in TSLA, for a one-week period, the call writer receives $1.10. That is 0.47% of the initial cost of 233.20. Without any compounding, that is an annual rate of 24.6%.

Covered Call ETFs and ETNs

The math of covered call writing suggests that an individual or an ETF or ETN could generate double-digit returns over an extended period by simply collecting the option proceeds over and over again after each expiration. However, the total return on any strategy of repeatedly writing covered calls is very path-dependent. A strategy of repeatedly writing covered calls involves writing a new call after the expiration of each call, using the same underlying security when the previous call expires worthless. If the underlying security is above the strike price at the expiration and the underlying security is sold at the strike price, the proceeds are used to buy the underlying security and write a new covered call.

In practice, covered call ETFs such as TSLY typically close out option positions just prior to the expiration. Thus, a short position in a way out-of-the-money option would be bought back at $0.01, rather than letting it expire worthless. Likewise, A deep in-the-money option would be closed out at its intrinsic value, rather than allowing it to be exercised. This allows new option positions to be created, without there ever being a not precisely covered situation.

The path dependency of a covered call strategy means that the total return over any holding period, during which a number of call expirations has occurred, depends not necessarily as much on the change in price of the underlying security over the entire holding period, but on the path taken. This is because a decline in the price of the underlying security reduces the delta of the call option, which is the amount of change in the option value for each dollar change in the price of the underlying security. An increase in the price of the underlying security increases the delta of the call option.

To illustrate the path dependency risk of a covered call strategy, imagine a simple portfolio consisting of 1000 shares of a stock selling at $100 per share, and repeatedly selling calls at 10% above the then current stock price. At the end of the first period, there are only two possibilities. Either the stock is above the $110 strike price or not. If the stock is not above the strike price, then the premium from the initial call is taken out of the portfolio and a new call is written at 10% above the then current stock price. However, if the stock were to close at $125 at the initial expiration period, the call would be exercised. At that point, the portfolio would consist of no shares of stock and $110,000 in cash. With the stock now selling at $125, the $110,000 will only buy 88 shares. Thus, every time the underlying stock closes above the strike price there will be fewer shares in the portfolio to write calls against. ETFs and ETNs that employ a covered call writing strategy, generally distribute the premium income.

There are a number of ETNs and ETFs that employ a covered call writing strategy. YieldMax TSLA Option Income Strategy ETF has a strategy of repeatedly writing covered calls on synthetic TSLA shares. A synthetic share consists of a long call position combined with a short put position with identical strike prices and time to expiration. This replicates the price change in the underlying shares. The sum of the absolute values of the deltas for the call and put portion of a synthetic share is always close to or exactly equal to 1.0. Thus, any change in the value of the underlying share results in a close to or identical change in the value of the synthetic share.

Using synthetic shares rather than actual shares would only be of any significance if TSLY were to use leverage, which it does not appear to do. Rather than holding TSLA shares, TSLY in addition to the synthetic shares, holds an amount of shorter-term US Treasury notes that would have been used to purchase the TSLA shares. Currently, TSLY holds Treasury notes due 12/31/2023 and 11/15/2024 priced to yield about 5%.

To further illustrate the importance of the path taken by the underlying security to the total return on a covered call writing strategy, consider the results of a purchase of TSLY on May 26, 2023, and hold it until October 30, 2023. The choice of those two dates is because TSLA went from $193.17 to $197.36 over that period. One might assume that a small increase of the underlying security over the holding period would have been ideal for a strategy of repeatedly writing covered calls, such as that employed by TSLY.

TSLY went from $14.80 on May 26, 2023, to $10.93 on October 30, 2023.TSLY did pay $3.86 in distributions over the period. However, that resulted in a loss of 0.06% over the period which is a loss of 0.14% on an annualized basis. This occurred while TSLA, which does not pay dividends, had a gain of 2.17% over the same period which is a return of 5.04% on an annualized basis. If we assume reinvestment of dividends, TSLY did even worse, with a loss of 5.71% over the period which is a loss of 13.27% on an annualized basis.

TSLY is for Those who Prioritize Very High Current Yields Above All Else

Even with the dramatic increase in interest rates by the Federal Reserve, opportunities to obtain double-digit current yields are now few and far between. The flattening of the yield curve has removed much of the attractiveness of leveraged instruments such as the mREITs and leveraged ETNs, that took advantage of the differences between short and long-term interest rates. Only junk bonds with the most dismal prospects now have current yields above 15%. This has created a challenging environment for current yield-seeking investors. As I said in the June 2019 More Candidates For The 15%+ Current Yield Portfolio

.. I have written about a portfolio where the most important constraint is to only include securities with current yields above 15%. Other constraints are the typical retail IRA account restrictions which preclude the use of short-selling, margin borrowing, most options strategies and futures contracts. Some brokerage firms also impose additional constraints on IRA accounts. I suspect that there are many individuals, particularly those either partially or totally retired, who either have somewhat similar constraints or they might possibly benefit from adopting them. There is nothing magic about the 15%+ current yield threshold. Originally, in 2001, it was a 10% current yield threshold. It reached 30% in 2008 and 60% in March 2009…

ETNs and ETFs that employ covered-call option writing are one of the few remaining sources of current yields that can exceed 15%. I discussed the X-Links ETNs, which notionally write covered calls on commodity-based ETFs in the October 2021 REML – A 16% Current Yield That You Can Understand. The X-Links Gold Shares Covered Call ETN (GLDI), X-Links Crude Oil Shares Covered Call ETN (USOI) and X-Links Silver Shares Covered Call ETN (SLVO) were sponsored by Credit Suisse, which has now been taken over by UBS (UBS).

My problem with the X-Links ETNs was that I was unable to fully understand and replicate their monthly dividend calculations. While typically called dividends, the payments from ETNs are technically distributions of interest payments on the ETN note based on the dividends paid by the underlying securities that comprise the index, pursuant to the terms of the indenture. That inability to replicate the monthly dividends is still a problem. As I complained in the abovementioned article.

… There does not appear to me to be an easy way to explain the severe reduction the monthly dividends and the current yields for the covered-call commodity ETNs.

The CS website says with regard to calculating the monthly coupon on SLVO.

… How will the Coupon Amounts be determined for the ETNs?

On each Coupon Payment Date, for each $20.00 stated principal amount of the ETNs, we in accordance with the following steps: • First, on the Index Calculation Day (as defined herein) preceding the first Roll Date of each month, the strike price of the new Option is determined. The strike price will be the lowest listed strike price that is above 106% of the price per Share as of the 4:00 p.m. New York City time on such date of determination. Then, the Index will roll its monthly exposure over the next five (5) consecutive Index Calculation Days. The roll percentage is the proportion of the expiring position being rolled into a new position on each Roll Date and generally will equal 20%. In the event that one or more roll disruptions result in there being fewer than five (5) scheduled Index Calculation Days prior to Option expiration, the roll percentage will be greater than 20%, and in the event of an extraordinary roll disruption, the roll percentage may be up to 100%. • At the end of the first Roll Date, and on each successive Roll Date of such Index Rebalancing Period, the Index will notionally sell the new Option. Additionally, as of the end of each such Roll Date, the Index will hypothetically close out through repurchase 20.00% (or such greater amount in the event roll disruptions) of the Options notionally sold during the previous Index Rebalancing Period (the expiring Options); the Index will notionally liquidate SLV Shares Units in an amount sufficient to fund the notional repurchase. Finally, on the last Roll Date of such Index Rebalancing Period, the Index will determine the amount of the notional Option premium, which will, on the close of the last Roll Date of the next following Index Rebalancing Period, be subtracted from the Index as a Distribution and paid to holders of the ETNs in the form of…..

So far, I have not been able to replicate or fully understand exactly how the SLVO coupons are calculated. I think it is relevant that my education consists of a dual field (economics and finance) PhD, an MBA in finance and, a BS in Nuclear Engineering, all from New York University. It is also relevant that my doctoral dissertation was in contingency claims (options) theory. The title of my doctoral dissertation was IMPLICATIONS AND APPLICATIONS OF ORGANIZED OPTION MARKETS FOR FINANCIAL THEORY. If you are so inclined, you can order a copy of the 208-page dissertation from Proquest at ProQuest Dissertation Express – Welcome!…

Understanding how the dividends are derived for the YieldMax Option Income Strategy ETFs is much easier. Table I below shows various statistics for five of the YieldMax Option Income Strategy ETFs, that I own. These are: YieldMax TSLA Option Income Strategy ETF, YieldMax NVDA Option Income Strategy ETF (NVDY), YieldMax APPL Option Income Strategy ETF (APLY), YieldMax ARKK Option Income Strategy ETF (OARK) and YieldMax NFLX Option Income Strategy ETF (NFLY).

Table I

Created by the author from data from YieldMax, Fidelity and Yahoo.

As can be seen from Table I, the published annualized distribution rates from Yieldmax and Fidelity do not match. YieldMax notes:

….*The Distribution Rate is the annual yield an investor would receive if the most recently declared distribution, which includes option income, remained the same going forward. The Distribution Rate is calculated by multiplying an ETF’s Distribution per Share by twelve (12), and dividing the resulting amount by the ETF’s most recent NAV. The Distribution Rate represents a single distribution from the ETF and does not represent its total return…

Fidelity notes:

…Estimated distribution rate/yield is typically calculated by first annualizing the most recent distribution and then dividing that by the most recent close price. Other funds use the sum of distributions from the trailing twelve months…

I prefer using the most recent three-month distribution rates, annualized that are shown in the last column of Table I. The 59.61% three-month distribution rates, annualized for TSLY, stands out. The monthly compounded annualized rate is even higher. Assuming reinvestment of monthly dividends, results in an annualized yield of 78.92%. A $100,000 investment with a monthly compounded yield of 78.92% would initially generate $78,920 per year and be worth $1,833,609.18 at the end of five years.

Obviously, there are significant risks involved. Covered call writing involves collecting premiums for accepting the risk associated with the underlying security. As Table I indicates, TSLY the YieldMax ETF with the highest volatility of its underlying security TSLA, has the highest distribution rate. Likewise, APLY the YieldMax ETF with the lowest volatility of its underlying security AAPL, has the lowest distribution rate.

There are two ways of calculating volatility, as shown in Table I, implied volatility is calculated by observing the market price of an option and determining the value of the volatility which corresponds to the market price. The theoretical “fair market” value of an option is a function of – the value of the underlying security, the strike price of the option, the time to expiration, the risk-free interest rate, and the volatility of the underlying security. Since all of the inputs except the volatility of the underlying security are easily observable, plugging in the observed market price of the option into the equation, generates an implied volatility. Table I shows the average of the implied volatilities of the options in each of the YieldMax ETF’s portfolios on November 9, 2023

An estimate of the volatility of the underlying security can also be computed by calculating the standard deviation of the returns of the underlying security. The observed volatility of the underlying securities shown in Table I, are from the standard deviation of daily returns for the underlying security for the 12-month period ending on November 9, 2023. The annualized figures shown in Table I are computed using the fact that the variance of the sum is equal to the sum of the variance. Since there are 252 trading days in the 12-month period, the annualized is obtained by multiplying the daily standard deviation by the square root of 252.

The annualized volatility depends on which time period is chosen. For example, for the 3-month period ending on November 9, 2023, the observed annualized volatility for TSLA was 52.32%. For NVDA it was 41.79%. For APLY it was 20.45%. For NVDA it was 41.79%. For ARKK it was 37.18% and for NFLX it was 42.55%.

Good Days and Bad Days for Covered Call Writing

Aside from the obvious risk that declines in the price of the underlying security will reduce the value of an instrument employing a covered call strategy, is the asymmetrical response to increasing magnitudes of price changes of the underlying security. Delta is the ratio of the change in the price of an option to the change in the price changes of the underlying security. As the price of the underlying security increases, the delta of a call option increases. Likewise, when the price of the underlying security decreases, the delta of a call option decreases.

The best scenario for a covered call strategy is for an increase in the price of the underlying security, with little fluctuation. A large increase in the price of the underlying security will cause the delta of the call to increase enough to bring the delta close to 1.0. When the delta of the call reaches 1.0, any increase in the price of the underlying security will be offset by an increase in the price of the short call option position. A large decrease in the price of the underlying security will cause the delta of the call to decrease enough to bring the delta close to 0. When the delta of the call reaches 0, any decrease in the price of the underlying security will be not offset by a decrease in the price of the short call option position.

Tables II and III below show the TSLY portfolio for two consecutive days November 7, 2023 and November 8, 2023. On both days there were 34,755 short TSLA put contracts with and the same amount of long TSLA call contracts both with strike prices of $190 expiring January 19, 2024. These positions comprised the synthetic TSLA shares. Notice that the absolute value of the delta for the puts was 0.2008 on November 7, 2023 and 0.2022 on November 8, 2023. The absolute value of the delta for the calls was 0.8021 on November 7, 2023 and 0.8007 on November 8, 2023. Thus, the sums of absolute values of the delta of the short put and long call positions was: 1.0029 on November 7,2023, and also 1.0029 on November 8, 2023.

November 7, 2023 was a good day for TSLY. The price of TSLA increased by $2.84 to $228.18 an increase of 1.3% while TSLY increased by $0.13 to $12.29 an increase of 1.1%. The reason TSLY did relatively better on November 7, 2023, was that the short TSLA call contracts with strike prices of $190 expiring November 10, 2023, started the day with a delta of 0.379. In Tables II, III, IV and VI the first column of the ETFs portfolio securities prices is the previous day’s close, and the price shown after the Delta is the close.

Table II

Created by the author from data from YieldMax, Fidelity and Yahoo.

In some cases, a small decline in the price of the underlying security can actually result in a gain on a covered call instrument. An Example of a gain on TSLY on a day when TSLA declines can be seen in Table III above. On November 8, 2023, where TSLY increased in value from the $12.29 price on November 7, 2023 to $12.3346 (the $11.75 + $0.5846 ex-dividend). The NAV of TSLY also showed a gain and increased in value from the $12.2196 price on November 7, 2023 to $12.3034 (the $ 11.7188+ $0.5846 ex-dividend). In this case, the decay in time value of the short TSLA call contracts with strike prices of $190 expiring November 10, 2023, offset the decline in the TSLA price. With very short-duration TSLA call contracts, time can be your friend.

As Table IV below shows, October 19, 2023, was an example of a very bad day for TSLY as well as TSLA. By the end of the day the deltas of the TSLA call options expiring on October 20, 2023, were negligible as were their prices. Thus, the short TSLA calls gave almost no offset to the decline in TSLA. TSLA declined 9.3% from $242.68 to 220.11. The NAV of TSLY fell 9.1% from $13.0915 to $11.909.

Table IV

Created by the author from data from YieldMax, Fidelity and Yahoo.

Since professionals can buy or sell YieldMax Option Income Strategy ETFs at NAV the market price generally will be very close to the NAV. As new money comes into TSLY from professionals, the manager buys new calls and sells puts with a strike price close to the market. That creates additional synthetic shares. Then they sell short a like number of calls with very short times to expiration at strike prices about 5% to 15% above the TSLA market price.

These transactions are shown in Table. 710 TSLA January 19, 2024 puts with a strike price of $190 were sold and 710 call contracts were bought. Each option contract represents 100 shares. Those together will replicate the movement in value of 71,000 shares of TSLA. To “cover” the synthetic equivalent of the 71,000 shares of TSLA, 710 TSLA calls with a strike price of $225 expiring November 10, 2023 were sold short.

Table V

TSLY Portfolio Transactions 11-6-2023

Click to enlarge

Created by the author from data from YieldMax, Fidelity and Yahoo.

As Table V indicates, the 710 TSLA calls with a strike price of $225 expiring November 10, 2023, were sold short with an execution price of $2.06. By the end of the day TSLA calls with a strike price of $225 expiring November 10, 2023, closed on 11-6-2023 at $2.34. Thus, at the end of the trading day there was an unrealized loss of $2.34-$2.06 = $0.28 on each short call contract. On November 10, 2023, TSLA closed at $214.65. TSLY’s entire short position of TSLA calls with a strike price of $225 expiring November 10, 2023, was closed by covering the short with a purchase executed at $0.01.

On November 10, 2023, when the 34755 TSLA calls with a strike price of $225 expiring November 10, 2023, that had been sold short and covered at $0.01 caused a realized profit equal to the difference between the proceeds of the short sale and the covering purchase at $0.01. Those types of profits are the primary source of the monthly distributions paid by TSLY. On November 10, 2023 a new short position of 34755 TSLA calls with a strike price of $217.50 expiring November 17, 2023, were sold short at $2.16, to replace the 34755 TSLA calls with a strike price of $225 expiring November 10, 2023 that had been covered at $0.01. At the close on November 10, 2023, those calls were at $4.18

The TSLY managers have discretion in terms of which short-term call option to sell and when to cover them. They target the shortest expiration date and strike prices between 5% to 15% above the then current price of the underlying shares. The managers also have discretion regarding the purchase and sale of the options used to create the synthetic shares and when and which treasury securities to buy for the portfolio. This discretion means that the performance of the ETF can depend on the skill, luck and possibly the integrity of those who manage the portfolios.

Regarding the individuals who manage the YieldMax ETFs, the Statement of Additional information says:

Each Fund is managed by Mick Brokaw Chief Compliance Officer and Director of Trading of the Sub-Adviser, Jay Pestrichelli Co[1]founder and Managing Director of the Sub-Adviser, Charles A. Ragauss, CFA, Portfolio Manager of the Adviser, and Qiao Duan, CFA, Portfolio Manager for the Adviser.

The portfolio managers’ management of “other accounts” may give rise to potential conflicts of interest in connection with their management of the Funds’ investments, on the one hand, and the investments of the other accounts, on the other. The other accounts may have similar investment objectives or strategies as the Funds. A potential conflict of interest may arise as a result, whereby a portfolio manager could favor one account over another. Another potential conflict could include a portfolio manager’s knowledge about the size, timing, and possible market impact of trades by a Fund, whereby a portfolio manager could use this information to the advantage of other accounts and to the disadvantage of any Fund. For instance, the portfolio managers may receive fees from certain accounts that are higher than the fees received from the Funds, or receive a performance[1]based fee on certain accounts. In those instances, a portfolio manager has an incentive to favor the higher and/or performance-based fee accounts over the Funds. To mitigate these conflicts, the Adviser has established policies and procedures to ensure that the purchase and sale of securities among all accounts the firm manages are fairly and equitably allocated.

When and Which Covered call Securities to Buy

For many investors, the answer to the question of when to buy these securities is: Never. However, for those who prioritize very high current yields above all else, the choice of which to buy would be primarily based on which has the highest distribution rate. Currently, that is TSLY. Diversification is always important, which leads me to include in my high current yield portfolio, the five YieldMax ETFs listed in Table I above, as well as the X-Links commodity-based covered call ETNs, described above, which notionally write covered calls on commodity-based ETFs.

Ideally, you would want to buy covered call securities when you think that the volatilities of the call options used to cover the underlying shares will be lower than the volatilities that are implied by the current market prices of the call options. A comparison of the market-determined implied volatilities of the underlying shares with actual observed historical volatilities as shown in Table I, could be used. However, the actual observed historical volatilities of the underlying shares depend on which historical period is used. The shorter the observation period is, the less statistically significant the computed observed volatility will be. A longer observation period could be problematic if recent market movements in the underlying shares are the result of factors that may not have been present earlier in the observation period.

In the very short term, the implied volatility of the underlying shares can surge as critical market events approach. This is logical as market participants correctly assume that events such as earnings announcements, can result in large movements in the shares of the underlying securities.

Table VI below shows the NVDY portfolio going into August 23, 2023, earnings announcement. The market implied volatilities of the short call options being used to cover the synthetic shares were in the 160% range. That could have been seen as a buying opportunity since those levels of implied volatilities were unsustainable.

Table VI NVDY portfolio going into the August 23, 2023 earnings announcement.

Created by the author from data from YieldMax, Fidelity and Yahoo.

If one has a strong opinion on the underlying shares, then the deltas of the short call options being used to cover the synthetic shares could be considered when buying or selling. When a call option is sold short with a strike price 5%% to 15% above the market price of the underlying security, the delta of the option is near 0.5. That means that a $1 change in the price of the underlying security, will result in about a $0.50 change in the option. However, if the market price of the underlying security increases, then the delta of the option will increase. Likewise, if the market price of the underlying security decreases, then the delta of the option will decrease.

As shown in Table IV, the short TSLA calls gave almost no offset to the decline in TSLA, as declines in the price of TSLA had reduced the value of the deltas of those calls to near zero. Thus, if you are bearish on the underlying stock, you should probably not buy the covered call security if the deltas of the short calls are much lower than 0.5. If you are bullish on the underlying stock, in the short term, deltas on the short calls much lower than 0.5 would make the covered call security more responsive to an increase in the underlying stock.

Summary and Conclusion

In general, once a covered call position is created, the passing of time is your friend, as each day forward reduces the value of the short calls in the position, all else equal. Likewise, volatility is your enemy, since once a covered call position is created an increase in volatility increases the value of the short calls in the position. However, it is more lucrative to employ covered call strategies when the underlying shares are more volatile and option premiums are higher. For those who prioritize very high current yields above all else, TSLY is one of the highest current yields available in securities that are not at immediate risk of default. That TSLA does not pay any dividends, makes analysis of the options included in the TSLY portfolio simpler. The very high volatility both observed and implied by the option prices, is very well deserved since the prospects for TSLA encompass both extreme highs and lows.

Those considering investing in TSLY should at least keep in mind, the prospects for TSLA. The possible risks to TSLA include but are not limited to: unionization, problems in China, competition from other electric vehicle manufacturers, and possible new technologies. The extreme upside potential for TSLA revolves around the possibilities of self-driving vehicles. Advances in artificial intelligence, along with less publicized advances in robotics, could result in a future where the software component in a vehicle comprises a greater portion of the total cost than the rest of the vehicle.

In this future scenario, all new vehicles will come with the connections in place for autonomous driving. A vehicle owner could also purchase a robot that could drive the vehicle. Any software or robot combination that could drive a vehicle under all surfaces and conditions, could also perform most of the tasks done by humans now. TSLA is the furthest along in electric self-driving vehicles and has made large investments in artificial intelligence. I can envision a future, where someone can summon their autonomous vehicle to pick them up in the city, drive them home in the suburbs and then the robot will get into the autonomous vehicle and drive itself to an office building or mall and work through the night as a janitor, providing it’s owner with revenue.

If one is very bullish on TSLA, TSLY might not be the appropriate vehicle to invest in. Buying TSLA outright or just call options would do better than TSLY since it is possible that the total return on TSLY could be negative even if TSLA rises if the path is very volatile.