Tesla and Alphabet Kick Off Big Tech Earnings Season: What the Options Market Is Pricing In

Two Bellwethers, One Wednesday Night

Tesla and Alphabet both report second-quarter 2026 results after the market closes on Wednesday, July 22, with Tesla's webcast starting at 5:30 p.m. ET and Alphabet's call at 4:30 p.m. ET. They're the first two of the so-called Magnificent Seven mega-cap tech stocks to report this earnings season, with Microsoft, Meta, Amazon, Apple, and Nvidia following in the weeks ahead (Apple reports July 30).

That makes Wednesday a real-time gauge of how the market is pricing the broader AI-spending trade — and a live example of something every options trader eventually has to understand: implied move and IV crush.

What Each Company Is Walking Into

Tesla heads into the print on the back of a strong operating quarter, though estimates for the numbers themselves are unusually uncertain:

• Deliveries: a record 480,126 vehicles in Q2, up about 25% year-over-year
• Energy storage: 13.5 GWh deployed, its second-largest storage quarter on record, just behind Q4 2025's 14.2 GWh
• Margins: automotive gross margin excluding regulatory credits was 19.2% in Q1 2026, though that figure included roughly $230 million in one-time warranty and tariff-relief benefits the company hasn't fully broken out
• Watch items: the pace of the Cybercab and robotaxi rollout following its Miami launch, and full-year capital spending guidance already raised above $25 billion
• Estimates: consensus EPS ranges unusually widely, from $0.36 to $0.54, on revenue near $26.4 billion — a spread that itself signals uncertainty about the print

Alphabet arrives with a mix of AI-driven growth and fresh regulatory friction:

• Cloud: Google Cloud growth ran at 63% year-over-year in Q1; the question is how much that decelerates
• Spending: capital expenditure guidance raised to $180 billion to $190 billion for the year
• Cash flow: free cash flow fell 47% year-over-year last quarter as AI infrastructure spending ramps
• Regulatory overhang: a finalized €4.1 billion EU antitrust fine tied to Android, a new EU Digital Markets Act order requiring it to open several Android features to competitors by 2027, and a confirmed delay to its Gemini 3.5 Pro model
• Estimates: consensus EPS near $2.90, on revenue near $116.8 billion

What Options Are Pricing In: The Implied Move

Here's the part that's easy to skip past but genuinely useful: the options market publishes its own forecast for how much a stock will move, before anyone knows the actual numbers.

That forecast is called the implied move, or expected move — roughly the value of the at-the-money straddle (buying the call and put at the closest strike to the current price, both expiring right after earnings), scaled down slightly because a straddle's full value overstates the range the stock is expected to travel.

As of this week, options were pricing an implied move of about 7.6% for Tesla — notably larger than the stock's own trailing four-quarter average post-earnings move of 4.4%. That gap suggests the market expects this report to be more consequential than usual. For Alphabet, a snapshot from earlier in the week showed an implied move closer to 5.3%, a more moderate figure consistent with a steadier, larger-cap profile. Both numbers are point-in-time snapshots that can shift by Wednesday's close — Alphabet's, in particular, was a few days old as of this writing — so treat them as illustrations of relative positioning, not precise forecasts.

Why the gap between the two? Implied move size reflects a stock's volatility profile, valuation multiple, and how much genuine uncertainty is attached to the outcome. Tesla trades at a much richer multiple with a wider range of bullish-to-bearish narratives (robotaxi timeline, margin trajectory) layered on top of the actual quarterly numbers. Alphabet's business, while not without its own overhangs, is generally viewed as more predictable quarter to quarter.

The Part That Trips People Up: IV Crush

Implied volatility, or IV, is the market's estimate of how much a stock will move, embedded in an option's price. Heading into a known, scheduled event like earnings, IV on short-dated options gets bid up: everyone knows something big is coming, so uncertainty — and option premium — rises.

The moment that uncertainty resolves, when the earnings numbers hit the tape, that inflated IV has no reason to exist anymore, and it tends to collapse fast. Front-month implied volatility — the volatility priced into the nearest-expiration options — commonly drops 30% to 60% for large-cap names within a day of earnings. This is IV crush, and it's one of the most common ways new options traders lose money on an earnings trade despite being right about the direction.

Here's the mechanic: say you buy a call on a stock ahead of earnings, and the stock does go up the next morning, just as you expected. You can still lose money on that call, because so much of what you paid for was the volatility premium. Once that premium evaporates, the option's price can fall even as the stock rises, if the move wasn't big enough to outrun the crush.

Two Different Ways Traders Approach This

Buying premium (long calls, puts, or straddles) going into earnings means betting the stock's actual move will be larger than what's priced into the implied move — big enough to overcome IV crush and still turn a profit. This is a directional, often high-conviction bet, and it can lose money in more than one way: wrong direction, or right direction but not enough magnitude.

Selling premium (credit spreads, iron condors, short strangles) flips the trade around: these strategies are structured to benefit from IV crush itself, profiting if the stock stays within — or doesn't move dramatically outside of — the priced-in range. Defined-risk versions, like credit spreads and iron condors, cap the maximum loss at the width of the spread. Undefined-risk versions, like naked short strangles, do not; a large enough surprise move can produce losses well beyond the premium collected, and leverage embedded in any short-options position can amplify losses quickly if the trade moves against you.

Neither approach is inherently correct. They're different bets on the same underlying question: will the actual move be bigger or smaller than what the options market has already priced in?

The Takeaway

Tesla and Alphabet's Wednesday-night reports are a real-time example of a pattern that repeats every earnings season across thousands of stocks: options prices bake in a specific, calculable expectation for how far a stock will move, and that expectation tends to deflate fast once the news is out. Understanding implied move and IV crush won't tell you which way Tesla or Alphabet will trade Thursday morning, but it explains why the options on either stock can behave in ways that surprise traders who are only watching the share price.

This article is educational commentary on public market events, not personalized investment, trading, or tax advice.