How to Profit from Tesla's Q2 Earnings with Options
Next Tuesday, $Tesla (TSLA.US)$ will release its Q2 earnings after the market closes! Could this spark another rally for Tesla, which has been trading sideways recently?![]()
Contents:
Stock Price Movement Around Earnings
What is IV and IV Crush?
What is a Calendar Spread?
What is IV and IV Crush?
What is a Calendar Spread?
1. Stock Price Movement Around Earnings
Long-term analysis (Technical, Policy, and News):
Long-term analysis (Technical, Policy, and News):
From the technical perspective, Tesla's candles have had long upper shadows for several days, indicating strong selling pressure. However, it hasn't broken below the 20-day moving average, suggesting a minor consolidation phase. Overall, I remain bullish.
From a policy standpoint, if Trump returns to office, it could benefit Tesla. Following the Trump shooting incident, Tesla's stock rose due to Musk's support for Trump.
From a news perspective, the sideways movement is mainly due to the postponement of the RoboTaxi event to October. This delay shows Tesla's commitment to RoboTaxi. Additionally, Citibank has significantly raised Tesla's price target to $274, so I am bullish on Tesla in the long term and will continue to hold my position.
Short-term analysis around earnings:
Before the earnings announcement, the anticipation of a Fed rate cut has caused a decline in stocks like $NVIDIA (NVDA.US)$ and $Meta Platforms (META.US)$ , while value stocks like $UnitedHealth (UNH.US)$ and $Home Depot (HD.US)$ have risen. According to market consensus, Tesla's Q2 revenue is expected to be $24.695 billion, a YoY decrease of 0.93%, with EPS at $0.49, down 37.46% YoY. Thus, I expect Tesla's stock to remain subdued around earnings.
Before the earnings announcement, the anticipation of a Fed rate cut has caused a decline in stocks like $NVIDIA (NVDA.US)$ and $Meta Platforms (META.US)$ , while value stocks like $UnitedHealth (UNH.US)$ and $Home Depot (HD.US)$ have risen. According to market consensus, Tesla's Q2 revenue is expected to be $24.695 billion, a YoY decrease of 0.93%, with EPS at $0.49, down 37.46% YoY. Thus, I expect Tesla's stock to remain subdued around earnings.
2. What is IV?
Calculating IV:
IV is typically calculated using the Black-Scholes model, which derives the IV of the underlying asset from the current market price of the option.
Calculating IV:
IV is typically calculated using the Black-Scholes model, which derives the IV of the underlying asset from the current market price of the option.
Despite its assumptions (e.g., no jumps in the asset price, no transaction costs), it's widely used, making IV values comparable.
What is IV Crush?
Generally, before earnings, stock prices are uncertain, leading to high IV. After the earnings release, with price direction clear, IV drops, causing options prices to fall—this is known as IV Crush.
Generally, before earnings, stock prices are uncertain, leading to high IV. After the earnings release, with price direction clear, IV drops, causing options prices to fall—this is known as IV Crush.
As shown in the chart, Tesla's IV has already declined somewhat. However, I remain bullish on Tesla's long-term prospects. To profit from IV Crush, I opt for a calendar spread to earn short-term returns and hedge against IV Crush.
3. What is a Calendar Spread?
Suitable scenario:
Bullish on the stock long-term, but expecting short-term IV Crush, ideal for short-term IV shorting.
Suitable scenario:
Bullish on the stock long-term, but expecting short-term IV Crush, ideal for short-term IV shorting.
Calendar Spread = Sell a near-term call + Buy a long-term call
Due to expected short-term volatility and initial IV Crush, high IV benefits options sellers. I sell a high-IV near-term call to earn premium, then buy a low-IV long-term call, betting on the stock's long-term rise.
How to execute? ![]()
Tesla reports earnings on the 23rd. As of writing, the stock price is $249.
Tesla reports earnings on the 23rd. As of writing, the stock price is $249.
Given Citibank's $274 target but short-term subdued expectations, I conservatively choose a $255 strike price. The call expiring on July 26 has an IV of 82%.
Thus, I sell a short-term call (July 26, strike $255) and buy a long-term call (August 30, strike $255).
Profit analysis:
Scenario 1: Stock price < $255 by July 26
The sold call expires worthless, earning a $10.05 premium. The long-term call's value decreases but still has time, allowing for future decisions on closing or holding.
The sold call expires worthless, earning a $10.05 premium. The long-term call's value decreases but still has time, allowing for future decisions on closing or holding.
Scenario 2: Stock price between $255 and $286.15 by July 26
The strategy is profitable, with gains decreasing as the stock price rises (short call limits long call's profits).
The strategy is profitable, with gains decreasing as the stock price rises (short call limits long call's profits).
Scenario 3: Stock price > $286.15 by July 26
If Tesla's stock price approaches $286.15, it's time to decide whether to take profits or continue with the position. A 15% increase in a week is significant.
If Tesla's stock price approaches $286.15, it's time to decide whether to take profits or continue with the position. A 15% increase in a week is significant.
If the stock price nears $286.15, you can close both the short call and the long call, securing an overall profit from the strategy.
If Tesla's stock rises sharply post-earnings, consider closing the short call to avoid unlimited losses and keep the long call to continue benefiting from the stock's upward momentum.
These are my basic thoughts on this options strategy. If you have different opinions, feel free to share in the comments!![]()
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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被祝福的账户 : This analysis
Leandro Dos Santos : Tesla will dump and it will be bad !
lol it’s already up 30+% that the preparation for the big dump you guys don’t leaned