In a year dominated by pessimism, Tesla has plunged 54% from its December highs, reflecting the deeply bearish sentiment that currently surrounds the stock. As a sentiment-driven name, extreme negativity often sets the stage for unexpected upside surprises—and that’s where the real risk can lie for those on the sidelines. A glance at TSLA’s three-year weekly chart shows the stock trading near a long-term support zone, a level that has historically attracted buyers. On the upside, the next major resistance area sits around $265. Looking ahead, TSLA is scheduled to report earnings on Tuesday after the market close. In the lead-up to such events, options premiums tend to rise as traders position for volatility. This phenomenon, driven by anticipation rather than actual movement, is captured in the concept of implied volatility (IV) — often referred to as the added “juice” in short-dated options surrounding earnings. From the options chain above, there are two key insights that stand out: Implied volatility (IV) is significantly elevated, which means the options are carrying extra premium—often called “juice”—ahead of earnings. This inflated premium is expected to drop sharply on Wednesday morning, right after the earnings announcement. The options market is currently pricing in a $27 move in either direction for TSLA post-earnings. This gives a clear sense of the expected magnitude of the move, even if the direction remains uncertain. While the direction of the move is still a wildcard, this particular trade setup doesn’t depend on guessing it. The two pieces of information above are sufficient to construct a strategy that can benefit regardless of whether TSLA moves up or down—as long as it moves enough. Enter the earnings Iron Condor Selling an Iron Condor is an options trading strategy where you simultaneously sell out-of-the-money call spreads and put spreads. Since you are selling spreads rather than selling naked calls and puts, your risk and reward are both defined at the time of entry. To construct this trade, all I need to do is figure out two things: Which strikes to choose to sell the call spread? Which strikes to choose to sell the put spread? Once I have this information, all I have to do is enter this entire trade as 1 single unit also known as an Iron Condor. Most trading platforms will allow one to sell an Iron Condor with minimal effort. To construct the put spread that I will be selling, here is what I need to do: The option chain above shows that 227 (current price) – 27 (expected move) is 200. This means that TSLA is not expected to drop below 200. However, given the fact that TSLA has already been beaten down so much and is at a multi-year support zone, I intend to sell a $205 put and buy a $200 put for protection. This is slightly aggressive as I am not too defensive on the downside. If one wants to add more buffer, they can always sell a $200 put and buy a $195 put for protection. For the call spread side of the equation, I am more careful here as I feel the real risk lies to the upside which is common when sentiment is so overwhelmingly negative. Again, the option chain above shows that 227(current price) + 27 (expected move) is 254. This means that TSLA is not expected to pop above 254. Because I am more concerned of the upside risk, I am adding some more room for TSLA to go all the way up to 265. This wraps up the call side of the equation. By doing this, I have constructed an unbalanced Iron Condor, where I am more aggressive on the put side but extra careful on the call side. As mentioned earlier, most trading platforms will allow you to put this trade as one unit by selecting “Sell Iron Condor” as the trade structure. Trade structure and analysis: SELL -1 TSLA 265-270 C/205-200 P Iron Condor Credit (also max profit): $140 Max loss: $360 Trade execution: Post-earnings trades are designed to be quick. Traders typically enter these positions one to two hours before the market closes on the day of the earnings release. This timing helps maximize the premium collected, as implied volatility peaks just before the announcement. You’ll often notice the premium increasing the closer you get to the close, which works in your favor as a seller. On this particular trade, the put side carries an 80% probability of success, while the call side sits at around 90%—very favorable odds. But as with any high-probability setup, the risk is greater than the potential reward, so it’s critical to have a well-defined risk/reward plan in place before entering. Because this is a high-probability strategy, you can reasonably expect to win 8 out of every 10 trades. And when managed well, those winners can add up quickly over time. If TSLA’s post-earnings move exceeds the expected range—something that does happen occasionally — it’s common to see the stock retrace part of that gap during the first hour of trading. That’s typically the window where I’d look to exit the trade early, limiting the loss rather than letting it go to max loss. With an 80% win rate, even if I close the rare losing trades at 60% – 70% of the risk, I can still come out ahead after a sufficient number of trades, allowing the probabilities to play out in my favor. I explore many such setups in depth in my book, Mean Reversion Trading , and hundreds of trade examples on my website https://tradingextremes.com . -Nishant Pant Founder: https://tradingextremes.com Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? 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