The most common and most likely answer to this crossword clue is the 3 letter word VEE
I've seen this crossword clue in The Times
V
E
E
Buddy explains!

The straight part
We know that "Letter spelled out" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case letter spelled out = vee.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does VEE mean?
VEE noun- The name of the Latin-script letter V.
- Something with the shape of the letter V.
- The arc of the field, forward of the batsman, from cover to midwicket, in which drives are played
- A polyamorous relationship between three people, in which one person has two partners who are not themselves romantically or sexually involved.