Options Signal Bigger Moves in 25Q1 Earning Season with TSLA, GOOG, and BA Reports This Week
by Jinta HONG, CFA
Last week, the three major US stock indexes fell with the $Dow Jones Industrial Average (.DJI.US)$ and $Nasdaq Composite Index (.IXIC.US)$ dropped more than 2.6%, while the $S&P 500 Index (.SPX.US)$ fell 1.5% for the week. As we enter into 25Q1 earning seasons, we saw the options market is now pricing in higher implied volatility compared to historical level since 20Q1 in covid amid the uncertainty surrounding Trump's tariff policies continued to dominate market sentiment. The average implied earnings-day move for stocks in the Russell 1000 is currently 8.1%, significantly higher than the 5.9% average realized move over the past three years. This suggests that options traders are expecting larger price swings around earnings announcements than usual.
Earnings Date: April 22 (Tuesday) after market close
Options Implied Move Post Earning: ±9.89% (highest since 22Q1)
Earnings Preview: Analysts expect revenue of $21.54 billion, a slight 1.12% increase YoY, and an adjusted EPS of $0.37, up 8.24%. However, recent estimate cuts reflect concerns over weakening fundamentals and slumping auto sales. Q1 vehicle deliveries fell 12.96% to 336,700 units, the lowest in three years, due to both production halts and weakened demand across major markets. Wedbush analyst Daniel Ives, once one of Tesla's most optimistic analysts, reduced Tesla's target price by 43% to $315 as he was concerned about a brand crisis and boycotts in China (accounted for over 20% of Tesla's total revenue) caused by Trump's trade policies.
Options Strategy: Tesla’s stock has declined 40% YTD, and recent analyst downgrades highlight worsening sentiment. Looking into volatility skew, the implied volatility of Tesla's put options expiring this week is relatively high, indicating that market sentiment tends to be bearish. Long Put is a considerable strategy allows for significant profit if Tesla’s stock declines sharply post-earnings, while the maximum loss is limited to the premium paid for the put option.
Earnings Date: April 24 (Thursday) after market close
Options Implied Move Post Earning: ±6.01%
Earnings Preview: Google's Q1 digital ad trends appear stable, likely benefiting its upcoming earnings report. However, a slowdown in e-commerce and macro pressures could lead to a deceleration in Q2. While a 100-200bps Easter tailwind may provide some support, consensus estimates may face downward revisions later this year. Google's reliance on search, particularly in tariff-sensitive sectors like travel and financial services, which account for around 26% of its search revenue, makes it vulnerable to slowing transaction growth and potential consumer cutbacks due to tariffs. In the cloud segment, revenue grew 30% YoY to $119.55 billion in Q4, but fell short of estimates due to cautious enterprise spending. Additionally, Google's plan to invest $75 billion in AI infrastructure by 2025 has concerned investors, despite improved cloud margins to 17%.
Options Strategy: Compare implied earnings day move to the average earnings day move that has historically been delivered by the stock, It shows google have a rich implied move compared to the move in past earnings days. Google also have a high put skew indicating the market sentiment is bearish. Historical data shows that actual post-earnings volatility for Google ranges from 5.57% to 6%, while expected volatility has been 6.35%, indicating that options tend to overestimate actual volatility. Short straddle could be an effective strategy. This involves selling both a call option and a put option at the same strike price, typically at-the-money, and with the same expiration date. This strategy is beneficial if you expect Google's stock price to remain relatively stable following the earnings report. The goal is to profit from the premiums received from selling the options, with the expectation that the actual price movement will be less than the implied move of ±6.01%. The strategy would be profitable if the post-earnings price movement remains within the range of the premiums collected.
Earnings Date: April 23 (Wednesday) pre-market
Options Implied Move Post Earning: ±5.8% (highest in past 4 years )
Earnings Preview: JP Morgan analysts hold a cautiously optimistic stance on Boeing, acknowledging significant short-term challenges but a promising long-term recovery. In the near term, Boeing faces operational hurdles such as production delays for the 737 and 787, supply chain strains, and the impact of tariffs with possible foreign retaliation. These issues contribute to negative earnings projections through 2026. However, Boeing's long-term outlook is supported by its duopoly with Airbus, a substantial backlog of over 6,000 aircraft, and increasing global aviation demand, particularly in Asia. As airlines seek to modernize fleets for fuel efficiency and Airbus remains fully booked, Boeing's strategic importance is reinforced.
Options Strategy: Based on rallies of 15% from recent lows and the high put skew, put spread collars would be effective strategy, which includes selling an OTM call to cut the cost of the purchase of a put spread (buy a put option and sell a put option with a lower strike price). This strategy can provide downside protection while taking advantage of the high put skew, while reducing the overall cost of hedging through the premiums collected.
Disclaimer: Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options (https://j.moomoo.com/017y9J) before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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74946297 : tesla will crash what elon musk did to s.s
I,many other stupid things he cut to american peoples
HyperionZ 74946297 : he cut crap that I didn’t want my tax money going to.
74419220 74946297 : l the CURSE of people whom are sffurering now after working hard and planning pennies after pennies for just a meal on their table. Saw their hope snatched by people who were blessed with everything. But above us, there is someone highest who has the last word.
Heliosfearik HyperionZ :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
kNotSmart_ 74946297 : Be as specific as possible about what "stupid" cuts were made to S.S. and how this has effected you personally?
Tiggerpepper : optomistic
Edozz 74946297 : the problem with your statement is ignorance. this is only what you have been told to believe and not reality. i hope you do more research in stock than politics or you are just throwing away your money.
lpfc1926 : Musk cut not working people administration eat your money and pensions they stollen for 300 ears old and death
74151297 : The only way you hate the cuts he made is if you benefited from the stealing of dollars from American taxpayers. And a lot of people did. Waste fraud and abuse is what went away.
Maxxdog : only 1 ignorant person commenting, Thank God for Musk![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
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