Options Market Expectations for TSLA and GOOGL Earnings

After today’s close, we expect to hear earnings results from Tesla (TSLA) and Alphabet (GOOG, GOOGL).  TSLA is historically among the most active stock and option classes on the IBKR platform, though the recent IPO of its corporate cousin SpaceX (SPCX) took some of its attention.  GOOGL has never captured traders’ imagination in the same way, but it is a key player in the AI buildout.  Let’s see how options markets are pricing potential outcomes for each of these companies. 

The role of these companies in major indices is significant.  The combination of GOOG + GOOGL represents just under 6% of the S&P 500 (SPX) and a bit more than 6% in the Nasdaq 100 (NDX).  Meanwhile, TSLA is a bit more than a 1% weight in SPX but just over 3% in the modified cap-weighted NDX. 

That said, it is fair to assert that their roles in investors’ mindshare exceed even those values.  

Elon Musk remains a fascinating and polarizing figure, and now that he helms two major public companies, his comments on either company could resound more loudly in both. 

Meanwhile, we should all recognize that much of the market’s recent and longer-term success has been predicated on the phenomenal levels of spending on the hardware required to make AI a ubiquitous feature in our personal and professional lives.  It seems fair to consider the ramifications that would occur if GOOGL’s management announced that it intends merely to maintain that pace of spending, let alone even hint at slowing it.

When we look at the probability distribution for TSLA, it appears relatively normal.  The peak probability for options expiring at the end of this week is centered just below the current stock price of $377, and there is no obvious upward or downward bias.  Meanwhile, the 5.34% implied daily volatility for at-money options is not outlandish when compared to the 4.28% average of the stock’s moves after its past six quarterly reports (-3.56%, -3.45%, +2.28%, -8.2%, +5.37%, +2.87%).  Bearing in mind that the stock had four straight double-digit percentage moves (+21.92%, -12.33%, +12.06%, -12.13%) in the four quarters prior to the recent streak of relatively modest moves, pricing in a bit of extra volatility does not seem inappropriate.

IBKR Probability Lab for TSLA Options Expiring July 24^th, 2026

Source: Interactive Brokers, past performance is not indicative of future returns.

Skews for near-term TSLA options are also relatively typical, especially when compared with valuations seen ahead of recent results.  They are relatively flat for about $50 around the current price, then show a fairly standard left-tail asymmetry outside the stock’s typical range.  It is no surprise to see those skews exaggerated in this week’s options, then diminishing as the time to expiration increases.

Skews for TSLA Options Expiring July 24^th (green), July 31^st (purple), August 21^st, 2026 (yellow)

Source: Interactive Brokers, past performance is not indicative of future returns.

Moving on to GOOGL, we see a wider set of peak probabilities, although those are also centered around the current stock price of $348.  The 5.17% implied daily volatility for at-money options is a bit above the six-quarter post-move average of 3.83% (+9.96%, -0.54%, +2.52%, +1.02%, +1.68%, -7.29%), but that seems to reflect last quarter’s big move and the relative paucity of mid-quarter guidance that GOOGL offers.

IBKR Probability Lab for GOOGL Options Expiring July 24^th, 2026

Source: Interactive Brokers, past performance is not indicative of future returns.

Meanwhile, options skews are flat for roughly $75, or about 20%, around the current at-money level.  This indicates that traders view the risks of significant upside and downside moves as similar to those of even modest moves.  Quite frankly, options traders don’t know what to expect. 

Skews for GOOGL Options Expiring July 24^th (blue), July 31^st (purple), August 21^st, 2026 (peach)

Past performance is not indicative of future returns.
As of now, we can assert that traders are showing some modest concern about the prospects for both companies ahead of earnings.  In the case of GOOGL, it is reasonable to suggest that the risks might extend beyond just the company itself.  But on a day when we see major indices once again shrugging off higher oil prices and bond yields, stock traders don’t seem too perturbed by the risk that GOOGL today, or one of its fellow big spenders next week, might throw some cold water on the hopes for continued AI largesse.