A bearish options trade on Tesla delivered substantial gains after the electric vehicle maker’s second-quarter earnings disappointed, and the strategist behind the position is now considering a similar play on Palantir Technologies ahead of its upcoming report.
Tesla shares fell approximately 14.5% following its quarterly results on Wednesday, as the company missed earnings expectations despite beating on revenue. While Tesla reported revenue of $28.2 billion, up 26% year-over-year and ahead of estimates, adjusted earnings of 34 cents per share fell well short of the 50-cent consensus. Operating margin compressed to just 1.4%, and a 142% surge in capital spending pushed free cash flow into negative territory.
The trader’s bearish put spread structure captured most of its maximum potential value, presenting a choice about how to proceed. With the bulk of possible profit already realized, the risk-reward equation shifts — leaving little upside relative to what could be lost if the stock rebounds.
Two Paths Forward
According to CNBC’s reporting, the strategist outlined two reasonable approaches: close the position entirely and bank the gain, or redeploy a portion of the profits into a similar trade on another high-multiple stock vulnerable to disappointment.
The trader is now eyeing Palantir, the data analytics company that reports earnings on August 3rd. Despite calling Palantir “a remarkable company,” the analysis points to several headwinds that could weigh on the stock around its earnings release.
Concerns Around Palantir’s Valuation
Chief among the concerns is Palantir’s ambitious goal to grow revenues tenfold without proportionally scaling its sales force. Additionally, intensifying competition among large language model providers and enterprises’ growing preference to deploy AI models directly rather than through intermediary platforms could pressure the company’s growth trajectory.
The data shows momentum may already be slowing. Commercial backlog growth decelerated to 12% in the first quarter, according to Bloomberg, down from 21% in the fourth quarter of 2025. Even after recent declines, Palantir trades at a premium to its software peers and well above its own historical average valuation metrics.
Historically, Palantir has been a volatile stock around earnings, with an average move of approximately 26% from one week before earnings through two weeks after. The options market is currently pricing a one-day earnings move of 9.5%, larger than the past four quarters but below the long-term average of more than 14%.
The Trade Structure
The proposed strategy involves first closing the Tesla position by selling the August 360/330 put spread at around $23, representing more than a double from the initial entry price. For those choosing to press the bet, the approach involves buying the Palantir August 21st $120/$95 put spread for approximately $6.50, funded with a portion of the Tesla profits.
This structure would profit if Palantir closes at or below $95 at expiration, representing a decline of roughly 23% from current levels and aligning with historical three-week earnings window moves. The short $95 put helps offset the elevated 65% implied volatility premium embedded in the options.
Like the Tesla trade, the Palantir position offers defined risk, with the maximum loss limited to the premium paid for the spread. For traders using profits from the Tesla trade, the risk would be less than the “house money” already collected.
Source: www.cnbc.com — https://www.cnbc.com/2026/07/24/trader-who-successfully-shorted-tesla-into-earnings-now-sets-sights-on-this-high-flyer-.html
This article is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Do your own research and consult a licensed professional before making financial decisions.
