The bearish Tesla set-up we flagged ahead of Wednesday’s report has delivered most of what it can.The bearish Tesla set-up we flagged ahead of Wednesday’s report has delivered most of what it can.
The bearish Tesla set-up we flagged ahead of Wednesday’s report has delivered most of what it can. Two ways forward: bank the entire gain, or press the same playbook against another priced-for-perfection name reporting in two weeks.
Heading into Tesla
Which brings us to the less glamorous but more important part of trading: what to do when a position works. Our bearish structure has captured the bulk of its maximum potential value. When most of the possible profit is already in hand, the math flips against you — what’s left to earn is small relative to what you’d give back if the stock snaps back (a possibility I consider quite unlikely). So that leaves us with a couple reasonable paths:
Path one: take the money and run. Close the position, book the gain, and wait for another fat pitch. There is never anything wrong with this. There’s an old saw in investing: “One never loses money taking profits.” Platitudinous admittedly, but we’ll reserve a more nuanced approach for another day.
Path two: bank most of it, and press. Make a similar play with “house money”. Somewhat emboldened, redeploy a portion of the profits toward another high-multiple pioneering company whose valuation and price action make it vulnerable to disappointment: Palantir
The counterpoints on Palantir
Palantir is a remarkable company, one of my favorites actually. But several counterpoints deserve weight heading into the print. The stated ambition to grow revenues tenfold without scaling the sales force is, to put it charitably, ambitious. Competition among LLM providers is likely to intensify, and enterprise customers increasingly look to deploy large language models directly rather than through an intermediary platform. The total addressable market, while large, is finite — and international sales are likely to be constrained by the understandable preference for local vendors wherever national security is concerned.
The numbers, while good, were less good last quarter. Commercial backlog growth slowed to 12% in the first quarter, per Bloomberg, down from 21% in the fourth quarter of 2025. And even net of its recent declines, Palantir trades at a material premium to its software peer group — and well above its own historical EV/sales average.
For context, the average move in Palantir from one week before earnings (about where we are now) through two weeks after (consistent with August regular way expiration) is approximately 26%!
The options market is pricing a one-day earnings move of 9.5% — larger than the past four quarters delivered, but substantially below the long-term average of more than 14%. That suggests August options, expensive as they appear at 65% implied volatility, may be reasonably priced, particularly if you use spreads, selling one expensive option against another to neutralize the volatility premium.
So, what to do.
Step 1: Close the TSLA position — sell the August 360/330 put spread, banking at ~$23, well more than a double from the price at which we put it on.
Step 2 (for those pressing): Buy the PLTR August 21st $120/$95 put spread for ~$6.50, funded with a portion of the TSLA proceeds.
Risk is defined to the debit paid.
Max profit: the $25 spread width less the debit, if PLTR closes at or below $95 at expiration — a decline of roughly 23% from current levels, in line with the historical three-week earnings window.
The short $95 put materially offsets the 65% vol premium embedded in the long strike.
Like the Tesla trade, the Palantir put spread offers defined risk, and for those using the proceeds from the winner in Tesla, less than the “house money” (profits) collected on the first trade.
