Tesla Options Imply 8% Move Post Earnings Amid Bearish Signals in SPY Options

Jinta HONG CFA joined discussion · Oct 17 16:23

$Tesla (TSLA.US)$ sets to report earnings result on Wednesday, Oct. 22, after the close. Options data on moomoo indicate an implied move of roughly 8%. Historically, Tesla has tended to under-deliver relative to what options price in: in 8 of the past 15 earnings events, the stock's move was smaller than the implied move.

Bearish Signals in SPY Options

As shown in chart below, key options sentiment indicators for the $SPDR S&P 500 ETF (SPY.US)$ —elevated put/call skew ratio(blue curve) and put/call open interest ratio(orange curve)—currently signal bearish outlook and heightened investor anxiety.

Historically, when these 2 ratios peak simultaneously, the S&P 500 often experiences a stall or a pullback.

Bearish Signals in SPY Options

Therefore, if index pullback happens, it could not only dampen any positive momentum from Tesla's earnings but also exacerbate a negative reaction, leading to a deeper downside move.

What Tesla Options Data is Saying Now

• Flow and positioning: In the last session, 2.16 million Tesla options contracts changed hands—about 9% higher than activity seen a week before the previous earnings cycle. Calls totaled roughly 1.2 million, puts 959,000, for a volume put/call ratio of 0.80. The open interest put/call ratio sits at 0.86. Taken together, positioning is balanced-to-slightly bullish.

• Implied volatility: IV is around 69%, which lands in the 61% percentile. That’s fairly high—so if volatility falls after earnings, option sellers could benefit—but it‘s not unusually high for Tesla.

Tesla Volatility Analysis

• Put Skew: The 25-delta put skew is about -0.7. In this framework, positive values indicate put options is more expensive; negative values indicate call options is more expsenvice. A modestly negative skew is a slightly bullish tell: demand for deep downside protection isn’t strong, and the market is not aggressively pricing tail risk or a blowout move in either direction.

Tesla Put Skew

• Open interest map: Put interest is clustered around the $400 strike and call interest around $450, suggesting $400 as a support level and $450 as a resistance level in short term, since traders often take profits and close positions when the price nears those strikes.

Tesla Open Interest Map

• Most Outstanding Tesla Options expired next week:

Most Outstanding Tesla Options expired next week

Tesla Options Strategy

If you are expecting $Tesla (TSLA.US)$ shares trading within a range:

– Short strangle: sell a put and a call (pick strikes around the +/-8% implied move). You collect premium and aim to benefit from IV dropping and TSLA stays rangebound after earnings.

– Risk: An up or down move over 8% could trigger losses.

Build Short Strangle Strategy for Tesla Options

If you are worried about a pullback:

– If you don't own the stock: sell call above the resistance level you think.

– If you own the stock: write a covered call (own shares + sell call) near to the resistance level you think to collect premium. Be ready to have shares called away if Tesla go up above resistance level.

– Keep size small around earnings and avoid naked short calls unless you have strict risk controls.