Short Tesla? Try CRSH for a Huge Yield Instead.

Just be aware that you're mainly getting your own money back

At the time, investors were impressed by its robust sales in China, its gress in the autonomous driving and robotaxi, and expectations for fewer restrictive regulations -- especially regarding autonomous vehicles -- under the Trump administration

Elon Musk's close relationship with President Trump also sparked a massive post-election rally for Tesla's stock last November

Musk's divisive actions in Washington exacerbated that pressure by sparking tests and boycotts against Tesla, and his acrimonious split with President Trump over government spending cast more clouds over its future

Some analysts are even removing Tesla from the "Magnificent Seven. " Image source: Tesla

As Tesla faces these challenges, it seems tempting to short its stock

To short a stock, you borrow someone else's s on the open market, sell them, then buy them back at a lower price (hopefully) and return them to pocket the difference

But shorting a stock is risky for three reasons: its price could soar and force you to buy it back at a much higher price, you need to pay borrowing fees every day before those s are returned, and you're charged daily compounded interest on your margin account until that position is covered

To avoid those issues, CRSH doesn't actually borrow any Tesla s

Instead, it simultaneously buys puts and calls on Tesla to create a "synthetic short position" which moderately rises if Tesla's stock declines

However, it's mainly designed to generate passive income instead of fully mirroring a real short position in Tesla's stock

Its puts will generate income if Tesla's stock trades sideways or declines, while its calls will cap its losses if Tesla's stock abruptly rallies

CRSH generates its options income with a slight twist on the cash-secured put strategy for generating passive income

When you write a cash-secured put, you earn a premium by agreeing to buy a stock below its current trading price at a future date -- but you must lock up enough cash to cover that trade until the put expires

CRSH writes its puts on Tesla's stock, but it collateralizes that trade with its U

Treasuries -- which generate interest as it waits -- instead of simply setting aside cash retail investors do

Options on volatile stocks Tesla net higher premiums than more stable ones, since they're more ly to hit their strike prices

That payout is further reduced by its high gross expense ratio of 0

That might be appealing to investors who are bearish on Tesla and want to earn a little extra income

That said, CRSH is also rapidly reducing its own net asset value (NAV) by funding most of its distributions with an ROC instead of its options or interest income

For most investors, it might be smarter to simply stick with one of those blue chip dividend stalwarts than bet against Tesla with this ETF

Leo Sun has no position in any of the stocks mentioned

The Motley Fool has positions in and recommends Tesla

The Motley Fool has a disclosure policy.