Tesla is set to report its third-quarter 2025 earnings with strong expected numbers. Estimated earnings per share are $0.55, up 37.5% from the previous quarter, while revenue is projected at $26.46 billion, marking an 18% increase. Despite these figures, Tesla’s future guidance holds more importance for its market perception as a growth company.

Several indicators suggest potential challenges ahead. Inventory has been accumulating, as production surpasses sales since late 2024, indicating a possible decline in demand. Revenue growth turned negative in Q2 2025 and has been decelerating since Q3 2024. Earnings before taxes have been decreasing by about 11% each quarter since Q3 2024, while restrictions on rare-earth exports from China pose supply chain challenges.

Tesla’s stock is currently consolidating between $411.6 and $448.2, a range significant for gauging market sentiment. A breakout from this range could signal renewed investor confidence, while failure may suggest a fading growth narrative. As Tesla’s results are closely watched, the company faces the test of sustaining its growth in light of rising interest rates, competitive pressure, and shifting global demand patterns.

With Tesla’s earnings report due today, October 22, 2025, we are anticipating a significant price move. While headline estimates for Q3 look strong, implied volatility on near-term options is sitting above 90%, suggesting traders are positioned for a surprise. The key will be the company’s forward guidance, which could break the stock out of its recent tight consolidation between $411 and $448.

Any hint of weakness in the outlook could confirm fears that the growth era is fading. High interest rates, with the Federal Reserve holding the federal funds rate at 5.5% through September 2025, have already made financing new vehicles more expensive. A disappointing forecast would likely see us test the lower end of the range at $411.60, making long put strategies or bear put spreads attractive.

Conversely, if management provides a confident growth forecast, it could trigger a powerful short squeeze. A credible plan to counter rising inventory, which climbed to 18 days in Q3 2025 from single digits in 2023, could be the catalyst we need. In this scenario, we would watch for a break above $448.20, making bull call spreads a viable way to play a move toward the previous high of $470.54.

We cannot ignore the competitive pressure, which is a major factor for derivative positioning beyond this week. BYD solidified its market leadership in China last quarter, capturing over 35% of domestic EV sales, while global EV sales growth has slowed to 15% year-over-year from over 30% in 2024. This ongoing battle suggests that even with a positive report, any rally could be capped as traders remain cautious about long-term margin compression.

Given the binary nature of this event, strategies that profit from a large move in either direction, like long straddles or strangles, are worth considering to play the immediate post-earnings volatility crush. After the initial reaction, we will be looking for confirmation of a new trend outside the current range. The direction it takes will dictate our options strategy for the remainder of the fourth quarter.