To The Moon

$Tesla Motors(TSLA)$

Down 8.8% post-earnings, those 300 calls are likely dead unless we see another miraculous 50% rally over the next couple of weeks. If you ended up with short puts that are now in-the-money, either close them out or convert to a call sale - no need to overthink it in this pullback environment.

The first question post-print is whether TSLA could revisit the 220 area?

The results weren't necessarily disastrous - top-line growth deceleration was expected, cash flows remain robust. However, the robotaxi delay to Oct 2024 was disappointing, though Tesla's new initiatives rarely hit initial timelines.

The 8% plunge reflects expectations simply getting too frothy, requiring a reset lower. Conveniently timed with the broader pullback, the selloff may not retrace all the way back to the lows, but could prove painful for recent chasers.

As for 220 downside, it's hard to say for certain, but one of yesterday's largest TSLA flows was an outright bearish put spread:

Buy $TSLA 20240816 220 PUT$ 
Sell $TSLA 20240816 200 PUT$ 

The 200 strike has the highest put open interest for August 16th expiry.

If unsure of how to use puts offensively or defensively here, one perfect hedge is simply selling calls! With limited near-term upside, bleeding premium by selling calls above 270 could be an option, adding a protective call wing if afraid of a blow-up.

Speaking of the pullback, a quick $SPDR S&P 500 ETF Trust(SPY)$ note -

While tech heavyweights are reporting next week, the broader selloff blame will likely fall on Powell's 8/2 FOMC rhetoric per usual pundit routine.

Some dealers started positioning for this scenario on Tuesday via SPY iron condors, with strikes like:

Buy $SPY 20240802 530 PUT$ 
Sell $SPY 20240802 535 PUT$ 
Sell $SPY 20240802 570 CALL$ 
Buy $SPY 20240802 575 CALL$ 

Essentially short strangles with put and call wings for protection in a 535-570 range.

Similar QQQ 455-460/500-505 iron condors were also initiated as a reference.

Not much of note in NVDA's flows on Tuesday.

$Alphabet(GOOG)$ did see a 10k lot bullish trade, with someone buying an outright call spread ahead of earnings:

Buy $GOOG 20240920 195 CALL$ 
Sell $GOOG 20240920 210 CALL$ 

GOOGL saw a similar flow:
Buy $GOOGL 20240816 195 CALL$ 
Sell $GOOGL 20240816 205 CALL$ 

Pre-earnings call spread buys could be viewed as premature celebrations. With GOOG's multiple reset lower, selling puts into any weakness seems more appropriate than new call positions this pullback cycle.

Other flows for consideration:

DoorDash (DASH): Buy DASH 20240816 90 Puts, Sell 2x DASH 20240816 85 Puts

Uber (UBER): Sell UBER 20240823 57 Puts

Boston Scientific (BSX): Buy BSX 20240816 77.5 Puts, Sell 2x BSX 20240816 72.5 Puts

Kohl's (KSS): Buy KSS 20240823 20 Puts