Alphabet Options Imply 6% Earnings Swing, Big Bets Diverge

Options traders are pricing in a nearly 6% swing in Alphabet's stock after its earnings report Wednesday, more than double the company's median post-earnings move over the past two years, according to CNBC. Hours before the close, traders placed large, opposing bets on the stock, including one position targeting a 13% rally and another positioning for a 9% drop.

What the options trades on Alphabet show

Options traders took contrasting views on Alphabet as the hyperscaler gets set to report earnings after the close. Just before noon, a trader bought 2,271 contracts of the 350/365 call spread for about $4.4 per contract, targeting a move higher to $365, a 13% jump from its current price. Based on the reported contract count and premium, that position would have cost approximately $1 million if executed as described, a Payney calculation from the figures CNBC reported. The trade is a bet that in the near term, the worst is behind Alphabet, which has seen its shares fall nearly 20% from its all time highs reached back in May.

Some traders are taking a different tack into the print. A separate trader put on a bearish 3x1 put diagonal, collecting $1.9 million by selling 9,000 of the Nov. 20 expiration 290-strike puts at $4.15 per contract while buying 3,000 of the Jan. 15, 2027 expiration 300-strike puts at $2.15 per contract, for a total debit of $2.5 million, as CNBC described the trade. The structure looks to take advantage of high near-term volatility in Alphabet's shorter-dated puts, with the goal of those short-dated puts expiring worthless while the trader holds the longer-dated 300-strike puts, looking for a roughly 9% move lower through mid-January.

Why Wednesday's earnings are being called a test for the market

The market's mini rally faces a key test after the bell when Alphabet and Microsoft report, and the technical set-up and options expectations for the two stocks could not be more different. Microsoft was less than one percent below its closing record reached earlier this month, while Alphabet remained well off its own high. Current options prices were implying a nearly 6% move for Alphabet, well above its eight-quarter median move of 2.6%.

Other options data providers put similar but not identical numbers on the two stocks that day. Options traders were pricing post-earnings moves of 5.09% for Microsoft and 5.99% for Alphabet, according to TipRanks. Benzinga Pro data showed options pricing in a 4.69% move for Microsoft around the print, which with the company at $3.93 trillion in market value, put about $184 billion of market value at stake, while Benzinga listed Alphabet's implied move at 5.25% against a roughly $3.8 trillion market value. The gap between CNBC's near-6% figure and the 5.25%-5.99% range from TipRanks and Benzinga likely reflects differences in which options chains and timestamps each provider used that day; all three describe the same underlying signal, that traders expected an unusually large move, without agreeing on it to the decimal point.

What Wall Street analysts expect from the actual results

Separate from the options positioning, TipRanks reported the consensus analyst estimates heading into the releases. Wall Street expected Microsoft to post earnings per share of $4.73, up 14% year over year, on revenue of $90.62 billion. For Alphabet, analysts forecast EPS of $3.03, up 5.6%, while revenue was expected to rise about 25% to $127.9 billion. These are forecasts compiled ahead of the releases, not reported results, and the options trades described above are separate bets on share-price movement rather than on whether those specific estimates are met.

What this means for readers watching the trade

An "implied move" is a market-derived estimate of how far options traders expect a stock to swing in either direction by a given date, built from the prices of options expiring around that date. It is a probability-weighted market estimate, not a prediction, and it says nothing about direction on its own, which is why Alphabet's near-6% implied move coexisted with both a bullish call spread targeting a 13% gain and a bearish put position targeting a roughly 9% decline. The size of a single reported trade, such as the roughly $1 million bullish call spread or the multimillion-dollar put diagonal, reflects the premium and structure one trader used and does not represent the net positioning of the overall options market, which includes many other participants on both sides.

The consensus EPS and revenue figures from TipRanks are analyst estimates compiled before the releases, not the companies' reported results. Readers should not treat an options trader's strike-price target, such as the $365 or $300 levels referenced in the Alphabet trades, as a price forecast endorsed by the companies or by Wall Street analysts; it reflects one trader's risk position. Because both earnings were scheduled for after the market close on the same day, none of the sourced reporting above includes the actual reported results, only positioning and estimates ahead of the release.