Introduction

SpaceX's recent earnings surge is fueling bullish sentiment for Meta and Tesla ahead of their Wednesday-after-bell reports. With call buying outpacing puts and unusually large positioning, traders are signaling strong confidence ahead of these key releases.

What Happened

Both Meta and Tesla are set to report Wednesday after the bell, and options activity has leaned heavily bullish for both names. A significant rally in SpaceX following its earnings is providing a catalyst, lifting optimism that carries over into Meta and Tesla trades. Data from Cboe LiveVol and SpotGamma shows that call volume and dollar-weighted buying have dominated across both stocks, reflecting trader expectations of meaningful moves.

  • Meta saw more than 30,000 calls trade at or above the ask, compared to under 17,000 puts, with nearly $22 million of bullish intent versus $7.5 million seeking downside.
  • The stock's put-call ratio of open contracts sits at 0.5, the lowest level since March, indicating two calls for every one put.
  • Market-makers are pricing a roughly 6.5% move after Meta's report, below the four-quarter average of 9%. The most actively traded contract is the 800-strike call expiring Friday, priced at $1.40, which would require a 14% rally into the weekend.
  • Tesla's options flow also skews bullish, though with less conviction. Of 520,000 contracts traded, 315,000 were calls, with 88,000 bought and 65,000 puts sold.
  • Traders spent over $200 million on call premiums compared to $84 million on puts, according to SpotGamma.
  • The put-call ratio of open contracts is 0.75, still bullish but less pronounced than Meta's.
  • Notably, 83,000 call contracts were likely sold, and seven of the top ten trades by dollar amount were call sales.
  • Market-makers price a 5.5% move after Tesla's report, above the four-quarter median of 3.5%, though last quarter's results triggered a 14% selloff, making the average move 5.5%. The most heavily traded strikes are the 385 and 400-strike calls expiring Friday, with buyers favoring the cheaper 400-strike and sellers targeting the 385-strike level.

Why This Matters

The options activity ahead of Meta and Tesla's reports serves as a real-time gauge of trader confidence and expected volatility. Bullish positioning often precedes price movement, and the disproportionate call buying suggests market participants are positioning for upside momentum rather than downside protection. For investors, these flow patterns offer insight into where sentiment sits ahead of earnings, helping to contextualize potential price action and risk ahead of the reports.

Key Takeaways

  • Meta and Tesla both face Wednesday-after-bell reports with bullish options momentum already built in.
  • A SpaceX strong earnings rally is acting as a sentiment booster for peers.
  • Meta shows stronger call dominance with a 0.5 put-call ratio and $22M bullish vs $7.5M downside.
  • Tesla's call buying is heavier in volume but less concentrated, with $200M+ in premiums vs $84M puts.
  • Traders are pricing roughly 6.5% moves for Meta and 5.5% for Tesla, though historical reactions vary widely.
  • Key strike levels and contract flow offer early signals of where positioning may shift post-earnings.

Conclusion

As Meta and Tesla prepare to report, the unusually bullish options flow highlights a market-wide expectation of significant movement. Whether the optimism translates into sustained gains will depend on the companies' actual results and how quickly traders adjust their positions. For now, the pre-earnings data paints a clear picture: call buying is dominant, volatility is priced in, and all eyes will be on the post-bell disclosures for directional clues.