$NVIDIA(NVDA)$
Arbitrage institutions are selling next week’s $177.5 call and $180 call:
These are being hedged with the $185 call and $187.5 call.
For this week’s expiration, the $175 call has seen an open interest exceeding 100,000 contracts, hitting a critical level. If the stock price fails to rise further, consider doing a last-minute sell call at $175:
It’s almost certain NVIDIA will close above $170 today, so selling a $170 put for next week’s expiration is also a viable strategy:
Currently, there’s no clear bearish sentiment, so continue to follow the bullish trend. Avoid leveraging at high levels; stick to a disciplined approach. With call open interest extending up to a $200 strike price, maintaining a small bullish position can help manage emotions and stay objective.
$Tesla Motors(TSLA)$
No wonder the bearish traders closed half of their positions. Institutions engaging in options arbitrage seem to have a positive outlook for next week’s earnings, significantly raising their strike prices for selling calls, from $317.5 this week to $345 next week, hedged by $372.5:
Typically, for earnings reports with a bearish bias, sell call strikes are set around $320 or $325. This time, the sell call strikes align with the upper limits of implied volatility, which shows some confidence in Tesla’s earnings report. It seems like institutions are betting on volatility-driven opportunities.
Q2 Earnings Outlook:
Data is expected to remain weak, with lower sales forecasts, margin pressures, and a significant downgrade in earnings forecasts. The consensus EPS for 2025 has been reduced sharply from over $3.20 at the start of the year to $1.84.
The focus will be on whether the Robotaxi expansion plan and Model YL delivery targets can offset these negatives.
In addition to arbitrage institutions, there are also bullish traders betting on Tesla’s rebound, using a butterfly strategy with strikes at $330, $360, and $390. They expect Tesla’s stock price to recover to $360. The total trade volume for this strategy is modest, around $1 million.
On the bearish side, some short sellers are boldly betting on Tesla’s stock dropping to $210 after earnings, with trade volumes ranging from $300,000 to $400,000. These types of bets are fairly common during earnings season.
Suggested NVIDIA Trades
Sell Call:
$NVDA 20250718 175.0 CALL$
Selling the $175 call carries some risk. Those looking for covered call strategies could consider the $180 call expiring next week instead.
Sell Put:
$NVDA 20250725 170.0 PUT$
Selling the $170 put seems relatively safe with minimal downside risk.
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