Next week, several companies will report their earnings, kicking off an exciting earnings season. Tesla and Alphabet are set to make announcements, while the big players like Amazon, Apple, and Meta will report the following week. On Monday, Verizon and Domino’s Pizza will share their earnings before the market opens. NXP Semiconductors will report later that day. Tuesday will feature early reports from Lockheed Martin, Coca-Cola, Philip Morris, General Motors, D.R. Horton, and Northrop Grumman. Texas Instruments, SAP, Intuitive Surgical, and Capital One will report later in the day. Wednesday brings reports from AT&T, GE Vernova, Freeport-McMoRan, and General Dynamics in the morning. In the afternoon, we’ll hear from Tesla, Alphabet, ServiceNow, IBM, and Chipotle. Thursday starts with announcements from American Airlines, Nokia, Dow, Southwest, and Honeywell, with Intel expected later on. The week wraps up on Friday, with Centene sharing their earnings before the market opens. This variety of reports spans different sectors, including technology, automotive, health care, and consumer goods. We expect next week’s earnings to shake up a market that has been fairly calm. The VIX, which measures market fear, has recently traded below 13, far less than its historical average. This suggests that options premiums are not reflecting the potential for surprises. Traders should prepare for a spike in implied volatility (IV) for individual stocks as earnings reports approach. We’ll be closely watching the technology earnings from Tesla and Alphabet on Wednesday, as they will shape the rest of the tech earnings season. After Tesla’s Q2 delivery miss of 444,000 vehicles, the options market is predicting a stock move of more than 8% in either direction. We’ll pay special attention to guidance on profit margins. For Alphabet, we’re looking for insights on cloud growth and costs tied to AI integration, as these will impact sentiment across the sector. NXP, Texas Instruments, and Intel will provide important data for the semiconductor industry, which is a key part of the global economy. Although the Semiconductor Industry Association reported a 15.8% year-over-year increase in global sales for May 2024, we remain cautious about the automotive and industrial sectors, which are showing signs of weakness. We think using straddles could be a good way to trade the potential for large price movements in these stocks, regardless of direction. Reports from traditional companies like General Motors, Coca-Cola, and Verizon will give us a different perspective on the market. Following a disappointing 0.1% increase in June’s retail sales, we’ll scrutinize these reports for indications of declining consumer demand. Any downward guidance from these companies could suggest broader economic issues. For derivatives traders, a key strategy will be managing the usual post-earnings “IV crush.” High-beta stocks like Chipotle tend to have their implied volatility spike, with the market currently predicting a nearly 7% move for its earnings report. We believe that selling premium through strategies like iron condors could be profitable if the actual stock movement is less dramatic than anticipated. Lastly, reports from American Airlines and Southwest will provide a clear view of consumer health. Recent TSA data shows strong travel demand, with checkpoints often clearing over 2.8 million passengers daily. However, we’re concerned about how rising fuel costs might affect profitability. Buying protective puts could be a smart hedge if strong revenue numbers are overshadowed by rising expenses.

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