Options Markets Price Divergent Risks for Tesla, Alphabet and IBM Earnings
Derivatives traders are bracing for sharp post-earnings swings in Tesla, Alphabet and IBM, though the options market reveals strikingly different risk appetites for each stock heading into the results.
Tesla, Alphabet, and IBM report second-quarter earnings after Wednesday's closing bell. However, the options market is telling three distinct stories about what comes next. Implied volatility is elevated across the board, but the underlying drivers range from outright bearish bets to defensive hedging.
IBM presents the most unusual derivatives profile. The company already released its quarterly numbers on July 14, posting $17.2 billion in revenue that missed forecasts and triggering a record 25% single-day plunge. Yet, implied volatility for Friday's expiry sits above 86%, making IBM the priciest of the three. Traders are not paying for the earnings release itself, but for protection against bleak forward guidance after CEO Arvind Krishna admitted, "This quarter we faltered."
Tesla options point to a move of about 5.6% by Friday, expanding to 7.4% a week out. That implies a trading range between $356 and $399, notably wider than the 4.4% average swing seen over the last four reports. The sentiment leans heavily negative. Put options outnumber calls in the nearest expiry, with roughly $550 million in net bearish bets placed against the stock. Investors are focused on margin pressures and robotaxi developments.
Alphabet stands in stark contrast to both. Options price a 5% move, but bullish calls outnumber puts almost five to one. The optimism stems from April's surprise, when Alphabet reported earnings of $5.11 per share against an expected $2.65. That beat drove a 10% stock surge that added $421 billion in market capitalization, marking the second-largest one-day gain in history. The immediate focus is now on cloud growth and AI expenditure.
The divergence in options pricing underscores a broader market dynamic where actual earnings numbers are losing relative power to move stocks compared to forward-looking guidance. Alphabet's April shock and IBM's July collapse both proved that expected moves are estimates, not hard limits.
Still, traders must treat options flow with caution. The data is anonymous, meaning it reveals the size of directional bets rather than the identity of the players. Hedge fund positioning remains opaque until regulatory filings arrive 45 days after the quarter ends, and public sentiment was already fractured after Jim Cramer dumped tech stocks days before these reports.
