Market Overview
Wall Street indexes closed lower on Thursday (July 23) with Nasdaq sinking more than 2% as the latest earnings updates from large technology companies revived concerns about heavy AI spending, while soaring oil prices amped up inflation worries, lifting bond yields.
Regarding the options market, a total volume of 60,634,656 contracts was traded, of which 54% were call options.
Top 10 Option Volumes
Top 10: TSLA, NVDA, VIX, AMZN, SPCX, AAPL, INTC, MU, GOOG, MSFT
Source: Tiger Trade app
Tesla Motors declined 14.52% on Thursday, the sell-off was triggered by the company's Q2 earnings report revealing a significant profitability shortfall despite strong revenue growth. Tesla reported Q2 adjusted EPS of $0.33, missing analyst estimates of $0.50 by over 35%. Operating profit plunged 57% year-over-year to $3.98 billion, yielding a razor-thin operating margin of just 1.4%. Gross margin fell to 16.3%, well below the 19.4% consensus. Free cash flow turned negative for the first time in two years, exceeding negative $1 billion, as capital expenditure surged 142% YoY to $57.9 billion driven by massive AI infrastructure, robotics production lines, and autonomous driving investments. Morgan Stanley lowered its price target to $400 from $417, while Canaccord Genuity cut its target to $410 from $450.
A premium-collecting double-short PUT combination worth $99.23 million was the largest displayed trade, consisting of the sale of 3,998 August 21, 2026 $500 puts and the sale of 3,998 July 24, 2026 $390 puts. This is a same-direction two-leg short put structure that brings in a net credit, with both legs established below the current stock price reference only in strike terms but classified here as in-the-money, reinforcing that the seller is taking on downside assignment risk in exchange for premium income. Strategically, this trade reflects a volatility-selling stance and a bet that TSLA will remain relatively stable or avoid a deeper downside move severe enough to make the short puts materially worse, though the in-the-money short put exposure gives it a mildly bearish undertone rather than a clean bullish premium-sale profile. TSLA 20260821 500.0 PUT TSLA 20260724 390.0 PUT
Source: Tiger Trade app
Unusual Options Activity
Alphabet declined 6.89% in regular trading on Thursday. Multiple headwinds converged during the session. While Alphabet reported Q2 revenue of $119.8 billion (up 24% YoY) and Google Cloud revenue of $24.8 billion (up 82%, beating the $22.3 billion estimate), the company's single-quarter capital expenditure of $44.9 billion pushed free cash flow to negative $5.9 billion — the first time in decades. The company further raised full-year capex guidance to $195-205 billion from a prior $180-190 billion range.
A massive $99.92 million calendar put spread and a $6.90 million bearish combination defined the session as options flow turned overwhelmingly defensive. Total bearish large-trade premium reached $51.45 million against just $0.78 million in bullish flow, leaving a stark $50.67 million net bearish difference that signals institutional caution.
A calendar-style PUT combination worth $99.92 million was the largest trade of the day, built as an 8-leg cross-expiry structure using multiple in-the-money puts from July 2026 through January 2027. The position mixes short 480, 410, 380, 350, and 347.5 puts with long 400, 395, and 345 puts, creating a layered put spread and roll structure across maturities rather than a simple outright downside bet. Because the package contains more premium-rich short in-the-money puts than long legs, it reads as a net credit-style adjustment or financing trade, likely aimed at premium collection and downside positioning management rather than pure speculation. Strategically, this kind of structure suggests a sophisticated investor is expressing a cautious-to-bearish view while shaping risk through spreads and term dispersion, potentially monetizing elevated put premium and managing downside exposure over time.
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Risks
Implied volatility typically contracts rapidly after earnings, a phenomenon commonly referred to as IV crush, which can significantly reduce the value of long option positions even if the stock moves in the anticipated direction. In addition, time decay accelerates as options approach expiration. Investors should carefully assess the risk profile of any options strategy before establishing positions.
Disclaimer: This analysis is based on publicly available market data and is provided for informational purposes only. It does not constitute investment advice. Options trading involves substantial risk, and investors may lose more than their initial investment.
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