Tesla plunged after its earnings report—what’s the outlook ahead?

港股窩輪Jenny

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Sharp rallies and steep declines occur simultaneously: Tesla is oversold, Apple hits a new high—how to choose stock warrants?

Individual US stocks showed highly divergent performance in today's trading session.

Tesla fell to $309.22, with its short-term RSI dropping into extremely oversold territory; Nvidia declined nearly 5%, breaking below $200; on the other hand, Apple rose to $336.91, continuing to approach its all-time high, while Palantir surged 7% in a single day.

However, this product list reflects a fairly significant phenomenon:There are far fewer warrant products available for individual stocks than for indices, and many warrant terms are significantly out-of-the-money with elevated implied volatility.

Therefore, when considering individual stocks, one should not simply compare which underlying stock has the largest price swings, but first assess whether there are truly suitable warrant products available in the market for that directional view.

Tesla$Tesla (TSLA.US)$ : The underlying stock is extremely oversold, yet put warrants have become closer to being at-the-money.

Tesla closed at $309.22, with a recent low of $304.28 and an RSI(9) of only about 13, indicating extreme short-term oversold conditions.

Key technical levels to watch:

– Support: $304, $300

– Resistance: $318–$320, $340

Currently, there is only one Tesla call warrant available, with a strike price as high as $490, approximately 55% out-of-the-money, with an effective leverage of about 9.2x, a delta of only around 7%, and an implied volatility of approximately 61%.

The issue with these terms is straightforward: even if Tesla rebounds from $309 to $320—a gain of about 3.5%—the product’s actual response to the underlying stock may still be limited. The high gearing figure primarily stems from its deep out-of-the-money status and low price, and does not indicate that it is a highly sensitive product.

In contrast, there are two Tesla put warrants available, with strike prices of $330 and $340, both already in-the-money, featuring deltas of approximately 46% to 49%, implied volatility around 54%, and effective gearing of about 3x.

If Tesla continues testing the $300 level, the in-the-money put warrants should offer more stable directional tracking. However, the underlying stock is already extremely oversold, so short sellers should remain cautious of a technical rebound. In other words, while the current warrant structures favor bearish positions, the stock’s current level makes blind shorting inadvisable.

Nvidia $NVIDIA (NVDA.US)$ : $200 acts as a pivotal level, and call warrant terms are relatively aggressive.

Nvidia closed at $196.51, hitting an intraday low of $195.44, breaking below the support near $200.

Key levels to watch in the short term:

– Support: $195, $190

– Resistance: $200–$201, $208–$210

The existing Nvidia call warrants have a strike price of $275, approximately 31.7% out-of-the-money, with a delta of around 25%, an effective gearing of 6.2x, and an implied volatility of about 47.7%.

If investors only expect Nvidia to rebound from $196 to $205, this call warrant is not ideal, as the strike price remains far away, resulting in limited participation in the underlying stock’s short-term rebound.

There are two put warrants available, with strike prices at $130 and $168, both out-of-the-money, with deltas ranging from roughly 7% to 19%, effective gearing of approximately 4.5x to 5x, and implied volatilities as high as 53% to 61%.

In other words, whether bullish or bearish on Nvidia, existing products are not particularly close-to-the-money. In such cases, it is generally more important to wait for the underlying stock to confirm its direction than to hastily select deeply out-of-the-money products just to participate.

Apple $Apple (AAPL.US)$ : The underlying stock remains strong, but call warrants have already become low-leverage, in-the-money instruments.

Apple closed at $336.91, reaching a high of $339.57, still in an uptrend, with an RSI of approximately 72, indicating short-term overbought conditions.

Key technical levels to watch:

– Support: $330, $317

– Resistance: $340, $346

Apple call warrant with a strike price of $300 is approximately 10% in-the-money, with a delta of about 78%, an effective gearing of 6.2x, and implied volatility around 36%.

The advantage of this product is its high sensitivity to the underlying stock’s price movements. For every 1% move in Apple's share price, the warrant typically exhibits a more stable directional response compared to deep out-of-the-money warrants. The downside is that its leverage isn’t particularly high, and the underlying stock is already approaching near-term resistance.

If investors are bullish on Apple breaking above $340, this in-the-money call warrant better suits tracking needs than low-priced, deep out-of-the-money warrants. However, if one simply chases the stock at resistance due to recent strength, caution is warranted regarding potential consolidation in the underlying stock and time decay.

Apple put warrant with a strike price of $248 is approximately 26% out-of-the-money, with a delta below 5%, effective gearing of about 11.8x, and implied volatility around 45%. This type of product requires a sharp and significant drop in Apple’s share price to generate a noticeable reaction and is not well-suited for scenarios where the stock is only expected to pull back from $340 to $330.

Microsoft $Microsoft (MSFT.US)$ : The product’s terms are relatively balanced.

Microsoft closed at $389.10, reclaiming the Bollinger Bands midline, with RSI rising back to around 50.

Watch for:

– Support: $380, $371

– Resistance: $400 to $404

Microsoft call warrant with a strike price of $450, approximately 17% out-of-the-money, with an effective leverage of 9.9x, delta around 24%, and implied volatility around 43%.

If the stock price only rebounds to around $400, the upside potential of the call warrant may not be particularly strong; a clear breakout above the $400–$404 resistance zone is needed for the product's sensitivity to improve.

Put warrant with a strike price of $390, slightly in-the-money, with a delta of approximately 49% and effective leverage of 6.3x. This product will react more directly if the stock price falls below $380, and its terms are clearly closer to the current market price compared to the call warrant.

Therefore, Microsoft’s current warrant structure is not fully symmetrical: bearish instruments are closer to the money, while bullish instruments require a stronger breakout move.

Palantir$Palantir (PLTR.US)$ The underlying stock surged sharply, but the implied volatility of its warrants is already very expensive

Palantir rose 7% in a single day, closing at $131.53, reclaiming the Bollinger Bands midline, with near-term resistance around $140.

Watch for:

– Support: $125, $118

– Resistance: $140, $150

Palantir call warrants have a strike price of $200, are approximately 61% out-of-the-money, with a delta of only 8.5%, implied volatility as high as around 70%, and a premium exceeding 60%.

This is a classic case of 'the underlying stock being very active, but the derivative product not necessarily cheap.' Even if the underlying stock surges sharply in a single day, deeply out-of-the-money call warrants still face low delta, high implied volatility, and time decay simultaneously.

The put warrants have a strike price of $140, already in-the-money, with a delta of approximately 50%, but implied volatility is similarly close to 67%, resulting in an effective leverage of only about 2x.

Although bearish products are closely tracking the market, their prices embed a very high volatility premium. If Palantir merely declines from $132 to $125 and market implied volatility drops concurrently, the gain in the put warrants may fall short of what the underlying stock’s decline would suggest.

AMD$Advanced Micro Devices (AMD.US)$ and Micron $Micron Technology (MU.US)$ High volatility does not equate to high value-for-money potential

AMD closed at $494.95, down 5.17% in a single day. Current call warrants have a strike price of $700, are approximately 30% out-of-the-money, with implied volatility as high as 83% and a premium of about 43%.

Micron closed at $900.20, with implied volatility on related call and put warrants approaching 100% to 115%.

The main issue with these two sets of products is not insufficient leverage, but ratherthe market has already priced in a very high cost for future large swings. When implied volatility is at such levels, even if you get the direction right, the underlying stock must move quickly and significantly enough to offset the impact of declining volatility and time decay.

Three key points to watch in the current single-stock derivative products

First, the limited number of products means suitable instruments may not exist for every directional view. Terms for Nvidia, Tesla, and Palantir show clear deviations from current spot prices.

Second, in-the-money warrants may seem less exciting but are often more practical. Apple call warrants, Microsoft put warrants, and Tesla put warrants have relatively high delta, offering clearer directional tracking.

Third, for products with high implied volatility, leverage alone shouldn't be the sole focus. AMD, Micron, Palantir, and Tesla generally exhibit elevated implied volatility, meaning that entering these positions effectively involves betting on both direction and market volatility.

Among current stock trends, Tesla is worth watching for a potential oversold bounce, Apple for whether it can break above $340, and Nvidia for whether it can reclaim the $200 level. However, at the product level, what truly matters is still:Whether the terms currently available in the market can effectively capture the specific price movement you anticipate—not merely whether the underlying stock itself is popular.

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