Earnings Preview · Tesla and Alphabet
Options Break-Even Analysis
I. Earnings Preview · Tesla and Alphabet
Two of the market's largest names report into the same 7/24 expiry, and both carry the same quiet tell. Retail is leaning into calls on each, yet the structure that prices best is the put spread, a defined risk position that pays if the print disappoints the bulls. The straddles imply roughly 5.6% on Tesla and 5.7% on Alphabet, and in both cases the setup targets the downside toward technical support rather than chasing the upside the crowd is paying for. Take a look at our charts also:
TRADING BIAS · PUT SPREAD
LONG 370 ($7.00) SHORT 350 ($1.70) = NET $5.30
BE $364.70 MAX $14.70 R/R 2.77
Tesla reports with the stock at $377.50, pinned below its rising averages near $392 and $408 and holding just above the $363 shelf it has defended all summer. Consensus wants $0.55 on $25.36B. The 370/350 put spread breaks even at $364.70, right at that shelf, and pays if earnings finally crack support.
TRADING BIAS · PUT SPREAD
LONG 342.5 ($7.65) SHORT 325 ($2.20) = NET $5.45
BE $337.05 MAX $12.05 R/R 2.21
Alphabet is the stronger chart, riding a clean uptrend at $347 with support stacked at $333. The number is large, $2.87 on $101.22B of revenue. The 342.5/325 put spread breaks even at $337.05, just above support. Against a trend this firm the spread is more hedge than call, a cheap way to fade a miss without fighting the primary direction.
As the hyperscalers report, keep one figure in view: roughly $1.65 trillion of AI related debt that never reaches a reported balance sheet, more than the $1.35 trillion these firms actually disclose. Meta and Oracle are confirmed by Nikkei at $420B and $273B of hidden obligations; Amazon, Microsoft, and Alphabet are estimated near $350B, $350B, and $250B. The financing sits in special-purpose vehicles (SPVs), leases, and circular compute and vendor commitments, which is exactly why reported leverage understates the real exposure behind the AI trade.
It is the lesson we keep returning to, when the obligation is fixed and the asset is volatile, the leverage matters most precisely when it is least visible. Worth listening for on this week's calls, right beside the headline the options market is already hedging. Magnelibra has consistently warned of this circular money supply and honestly it probably doesn’t matter in the long run, because its quite obvious that bailouts if necessary are always in the arsenal of the U.S. Treasury and Federal Reserve. We have watched decade after decade after decade of this.
The MEGA9 held its ground: a $25,595B aggregate cap and a flat +0.22% on the day, with the hedged book +12.84% YTD against the tracker's +2.52%, the QQQ overlay again carrying the difference. Apple (+20.55% YTD) and Nvidia (+11.15%) lead the pack while Microsoft (-17.76%) and Tesla (-15.74%) still lagging behind.
The overlay's backdrop: QQQ at $707.50 pressing weekly resistance at $725, with the bull/bear pivot and support at $685. With support underneath at $675. We are still working cheap puts above but no go this week thus far in the MEGA9 model.
The program sits +77.51% YTD ($443,768 on a $250k base, a 2.17 annualized Sharpe) but took a -2.11% hit on 7/21, driven by its short metals: silver (-$10,180) and gold (-$6,050) ran against the book, and the short Nikkei (-$10,325) piled on, partly offset by long copper (+$5,288) and long equities. Posture stays net long risk, short metals, and short yen.
The curve nudged higher across the board, the 30Y settling 5.131 and looking as if the yield will continue on pressing, now back at the cycle-high red line it has failed at twice before. The bear-steepening bias (2s30 still +87bp) keeps the long end the pressure point, and it ties straight back to Section II: a fixed, growing off-balance-sheet debt load meeting a long end that will not settle. Maybe the U.S. government debt is a real problem and not one that can just be covered up by continued printing?
Ok guys get ready for this afternoon, we should see some decent post earnings action. If you haven’t checked out our new FTS Signal please check out this mornings post. Those of you with some capital to put to work and want a strategy to build off of or at least track one that is already built and ready to scale, then think about subscribing to our Founder Signal tier level.
Cheers!
