Tesla, Inc. (TSLA) reported $3.9 billion in free cash flow in Q3, representing 14% of sales. YTD, its FCF margin was 6.86%, suggesting an undervaluation of over 15% at $502 per share if FCF remains robust next year. Stock closed at $433.72 on Oct. 24, down from recent highs.

Tesla’s Q3 revenue rose 11.6% YoY to $28.095 billion, with strong free cash flow of $3.99 billion. YTD FCF margin was 6.85%. Analysts forecast $110.32 billion in 2026 revenue, boosting FCF to $5.738 billion. This could push stock value over $500 per share.

Investors can consider shorting out-of-the-money put options on TSLA, offering a 3.0% yield. Another strategy is the poor-man’s covered call (PMCC) play, involving buying ITM long-term calls and shorting OTM calls. This method can provide attractive returns even if TSLA stays flat over the next six months.

Read more at Barchart: Tesla’s Strong FCF Margins Could Imply TSLA Stock is Worth Over $500