Earnings Season Preview
$META$
Meta plunged about 8% on Thursday, triggered by an announcement to increase its Texas AI data center investment to $10 billion — the project was previously only $1.5 billion.
Isn't this exactly what capital expenditure looks like in earnings reports? And Meta is showing the market that not only will capex not shrink this year, it will keep growing.
That explains why Google, Microsoft, and Amazon all sold off along with it. Meanwhile, Apple $AAPL$ held up — sure, iPhone sales expectations are down due to higher hardware costs, but Apple's annual capex is in the tens of billions, not hundreds. Oh, and let's not forget Tesla, the cash-burning heavyweight, so it got dragged down too.
Then, as luck would have it, Trump also felt the market hadn't dropped enough. Geopolitics plus AI spending — and everything just blew up.
Preliminary expectations: Meta pulls back to levels seen in April 2025. Microsoft similar. Google likely tests 270. Amazon could hit 190. That said, I'd rather bottom-fish chipmakers. Until business models mature, betting on the shovel sellers is the safer play — even though the internet giants are the ones funding it all. It's a rising tide lifts all boats kind of thing — or sinks them.
Looking at Meta call options, though, someone's already jumping in with a butterfly spread:
Sell $META 20270115 750.0 CALL$ x2 — 186k contracts
Buy $META 20270115 700.0 CALL$ — 92.8k contracts
Buy $META 20270115 800.0 CALL$ — 92.8k contracts
The trader expects the stock to trade between 700 and 800 by early next year, with max profit at 750. Given past post-crash rebounds, this seems reasonable — Meta peaked at 744 this earnings cycle. The business isn't broken. The real question is: when will the market accept the negative cash flow narrative?
$AMZN$
Amazon saw a similar butterfly, likely from the same institution, targeting a rebound to 250–300 next year:
Sell $AMZN 20270115 275.0 CALL$ x2 — 193k contracts
Buy $AMZN 20270115 250.0 CALL$ — 96.9k contracts
Buy $AMZN 20270115 300.0 CALL$ — 96.8k contracts
$NVDA$
Next week's institutional spread: sell 177.5 call $NVDA 20260402 177.5 CALL$ , buy 182.5 call $NVDA 20260402 182.5 CALL$ . Expectation is a range of 160–175 next week.
One thing worth noting with this market: options have limitations — no pre-market or after-hours trading. So even with their leverage, the restricted trading hours can limit their effectiveness in certain moves. Something to keep in mind.
$MU$
Micron positioning is very bearish. Put flows are pricing a pullback to 300 next week.
$SPY$
Come Monday, 630 is on the table. And odds are it won't stop there — next test is 620.
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