Three of the biggest names in tech — Tesla, Alphabet, and IBM — are all due to report second-quarter earnings after the closing bell Wednesday. Options markets are already pricing in significant moves, with traders positioning for everything from a modest swing to a potential rout.
Tesla's options market tilts bearish
According to OptionCharts data, Tesla options are pricing a roughly 5.6% move by Friday, widening to 7.4% a week out. That's above the company's recent average: CNBC notes Tesla has moved an average of 4.4% after its last four earnings reports. But the options flow leans bearish. Put options on Tesla outnumber calls in the July 24 expiry, with about $550 million in net bearish bets. That suggests some traders are bracing for disappointment, even as the stock has rallied this year.
Alphabet's bullish options signal
Alphabet's options are pricing a 5% move, but the sentiment is far more optimistic. Bullish calls outnumber puts almost five to one. That confidence may stem from the company's last earnings report in Q1, when it beat expectations — $5.11 per share versus roughly $2.65 — and the stock jumped 10%, adding $421 billion in market value, per Bloomberg. Investors are hoping for a repeat performance.
IBM's already disappointing quarter
IBM already reported its Q2 earnings on July 14, and the news wasn't good. Revenue of $17.2 billion missed forecasts, triggering a 25% one-day drop — its worst on record, according to CNBC. CEO Arvind Krishna said, 'This quarter we faltered,' attributing the miss to large deals slipping past quarter-end. Despite the earnings being in the rearview, IBM options still show implied volatility above 86% for Friday, the highest among the three stocks. That suggests traders expect more turbulence ahead, possibly from the broader market reaction or further fallout from the miss.
Options data is anonymous — but someone is betting big
Options data is anonymous. Hedge fund positions only become public 45 days after each quarter ends, so it's impossible to know exactly who is placing these bets. But the sheer size of the bearish Tesla position and the bullish Alphabet skew are hard to ignore.
Jim Cramer dumped tech stocks days before
Adding to the intrigue, Jim Cramer dumped tech stocks just days before these earnings reports. The CNBC host's moves often draw attention, though whether his selling was a signal or just portfolio rebalancing is unclear.
With all three reports hitting after the close, Wednesday evening could set the tone for tech stocks heading into the rest of the week. The big question: will the options market's bets prove prescient, or will the actual numbers surprise everyone?
