So, we intend to capture a simple trade with a straightforward expectation. That is, the stock stays within the bounds of the short strikes of a call spread and put spread. These act as bounds for the position, as we expect the stock to move and stay between these bounds by Friday. However, as always, the main goal of any earnings trade is to capture the elevated premiums in options. With that objective in mind, we typically square off the trade within a couple of days, on-demand in profit, if the stock manages to stay within the bounds.

Context

Visa enters its earnings release with the stock near $398.50, following a strong advance through October and a modest pullback into the announcement. The options market implies a move of approximately ±$10.88, or 2.72%, pointing to an expected post-earnings range of roughly $389.70–$410.20.

The key question is whether the earnings result generates a move large enough to break the market’s expected range, or whether the stock consolidates as event volatility comes out of options.

1. Gamma positioning: $390–$405 defines the range

The available gamma data shows positive aggregate gamma of approximately +$9M, with a call wall at $405 and a put wall at $390. These levels provide a useful framework for assessing potential resistance and support, although neither guarantees that price will revert to mean.

Visa is trading between these two concentrations. The $405 area is the first meaningful upside reference, while $390 is the key downside level. A sustained move beyond either level would warrant reassessing the positioning map, particularly if the earnings reaction is accompanied by a change in implied volatility.

The gamma-flip readings differ across the supplied charts, at $394.55 and $402.06. These may reflect different expiry selections or calculation methods, so they should not be treated as interchangeable. The immediate $390–$405 range and the actual post-earnings price reaction are more useful than relying on a single flip level.

2. What the options flow suggests

The session data shows approximately $3.0M in call premium versus $1.3M in put premium. This indicates greater call-premium activity in the displayed flow, but it does not establish bullish positioning on its own. Without knowing whether the trades were bought or sold and how they were hedged, premium flow should not be interpreted as a direct directional signal.

Net delta positioning is also negative in the supplied session view. Taken together, the data suggests active positioning ahead of earnings, but not a sufficiently clear directional consensus to justify an outright bullish or bearish trade based on flow alone.

3. The Iron Condor: defined risk outside the expected move

The position shown is an October 30 iron condor:

Put spread: Short $387.50 put / long $385 put

Call spread: Short $412.50 call / long $415 call

Credit received: $0.92 per share, or $92 per contract

Maximum profit: $92

Maximum loss: $158

Breakevens: $386.58 and $413.42

Both short strikes sit outside the options-implied earnings range. The $387.50 put is below the projected $389.70 lower boundary, while the $412.50 call is above the projected $410.20 upper boundary. The structure is therefore positioned to benefit if Visa remains relatively contained and the post-earnings volatility premium contracts.

The trade has a defined maximum loss, but the risk-reward is asymmetric: $92 of potential profit against $158 of maximum loss. The displayed 95% probability of profit is a model estimate, not a reliable guarantee of the outcome. A sharp overnight gap can move the stock through a short strike before the position can be adjusted, and the actual fill and available exit liquidity matter.

4. Scenarios to monitor after the release

Base case: Consolidation. Visa remains within the implied range and below $405, with volatility declining after the event. This is the most favorable environment for the iron condor, assuming the stock stays away from the short strikes.

Bull case: Upside surprise. A sustained move through $405 would challenge the initial resistance zone. A stronger-than-expected reaction could carry the stock toward or beyond the $410–$412.50 area, increasing risk to the call spread.

Bear case: Downside repricing. A break toward $390 would test the put-wall area. If the stock moves below $389.70, it would be outside the initial implied range; a further decline toward $387.50 would put the short put at risk.

Technicals

The lower bound coincides with a key support level on 4-hour chart and the overall trend has been slowly shifting bearish as can be seen from the weekly chart. This is a typically retracement and mean-reversion behavior ahead of the earnings, as investors book profits on earlier gains the stock made for a series of weeks this month.

Market Positioning and Key Analytics

Gamma positioning

Strike Profile

Premium Flow

Trade

Takeaway

The setup favors a range-bound thesis rather than a directional earnings bet, with $390 and $405 as the principal gamma references and $389.70–$410.20 as the market-implied move.

The iron condor is structured to capture a contained reaction and volatility contraction, not to predict the earnings outcome. The priority after the release is to reassess the stock against the implied range, monitor the short strikes, and avoid treating gamma walls as guaranteed support or resistance.

Options involve substantial risk. The figures above reflect the supplied screenshots and model estimates; they are not guarantees of future price behavior.

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The Numbers That Changed the Story

In the third quarter of 2026, SpaceX reported $14.6 billion in revenue, up 161% year over year. Net income swung to $4.4 billion. The breakdown matters more than the top line:

• Super Intelligence (AI): $7.6 billion (roughly 52% of total revenue)

• Connectivity (mostly Starlink): $5.2 billion

• Space/launch: $1.8 billion

AI is no longer a side project. It is the largest segment. Management guided to $33–37 billion in revenue for Q1 2027 alone, well above the prior consensus, and Musk stated that the annualized run rate by the end of 2027 could land between $500 billion and $1 trillion. That is not guidance in the traditional sense; it is a statement of ambition tied to a specific physical build-out.

Compute Is the New Rocket

SpaceX is already deploying GPUs at a scale few expected. Nameplate compute capacity stood at 1.7 GW in the quarter and is on track for 2.5–3 GW by year-end. Management is “highly confident” of adding another 10 GW in 2027 (reaching roughly 13 GW total) and has said there is a non-zero chance of exceeding 20 GW. The limiting factor, Musk has repeatedly emphasized, is no longer chips. It is power and cooling.

This is where SpaceX’s operational culture shows up. The same organization that achieved dominant market share in mass-to-orbit is now applying that execution intensity to power infrastructure, electrical equipment, and thermal systems. Large multi-year contracts with Anthropic, Google, and at least one other major customer are already converting that capacity into revenue measured in billions of dollars per month.

Grok Bot and the Demand Side

On the product side, Grok Bot (the agent that can operate its own cloud computer and handle multi-step workflows) has grown faster than anything Musk says he has seen. Paid weekly users reached 800,000 and more than doubled in a single month. Enterprise adoption is accelerating, and Musk has noted that Grok Bot itself may end up consuming a large share of the company’s Super Intelligence compute. When usage per user rises over time instead of declining, the unit economics become more interesting.

The Orbital Bet

The longer-term thesis is that the cheapest place to run AI will be in space. SpaceX has detailed its AI1 satellite design: large solar arrays for continuous power and deployable radiators that reject heat directly into the vacuum of space. Early versions target roughly 120–175 kW of sustained compute per satellite; comparable to a high-end terrestrial rack, with a modular compute bay that can accept different chips. An FCC filing contemplates up to one million such satellites under the Starmind constellation.

The physics arguments are straightforward. In the right orbit, solar power is nearly continuous. There is no land cost, no grid interconnection queue, and no water or air-cooling plant. The hard parts- radiative thermal design, radiation-hardened systems, launch cadence, and satellite lifetime- are the ones SpaceX has spent years practicing with Starlink. Starship’s reusability is the enabling technology: the volume of mass that must go up is large, and only a fully reusable heavy-lift vehicle makes the economics plausible at scale.

What Has to Go Right

The path is not frictionless. Capex is rising sharply (Q4 guidance was $35–40 billion). Power and cooling lead times remain long. Orbital systems face real engineering constraints around heat rejection, micrometeoroids, radiation, and the inability to easily service hardware. Regulatory and orbital debris concerns will grow with constellation size. Competition for both terrestrial power and AI customers is intense.

Even so, the combination of existing compute contracts, rapid product growth in Grok Bot, proven high-volume satellite manufacturing and operations, and a credible (if still early) orbital architecture gives SpaceX a set of advantages that few other companies can match. The market is still pricing a lot of this as optional. The company’s own spending and customer commitments suggest it is treating the AI infrastructure opportunity as core.

The unthinkable outcome is no longer that SpaceX becomes a major AI player. It is that the company best known for rockets ends up as one of the primary suppliers of the compute that powers the next wave of AI agents; both on Earth and above it.

Summary

SpaceX is repositioning from a rocket and Starlink business into an AI infrastructure business.

The figures from the video I watched:

• AI compute spending is roughly 13x rocket investment in recent quarters

• AI revenue has already passed the launch business after the xAI integration

• Multi-year deals with Anthropic ($1.25B/month), Google ($920M/month) and another customer (~$1.11B/month)

• That third deal alone could exceed $30B annually, more than double recent Starlink run rates

• Musk has projected $500B to $1T ARR by end-2027

The edge comes from three things: full rocket reusability and launch cadence (~80%+ of global mass to orbit), a lead in power and cooling build-out (10 to 13 GW of compute targeted by end-2027), and rapid enterprise adoption of GrokBot as an AI agent.

The longer-term bet is orbital data centers. Continuous solar power and radiative cooling into vacuum bypass the land, grid, and cooling limits on Earth. If Starship delivers low-cost mass launch, space could become the cheapest venue for AI compute within a few years.

What part of this trajectory do you find most (or least) plausible? The power build-out, the orbital systems, or the product-side growth in agents?

Historically, as shown in the chart, the index surged back to the 18-20 zone each time it hit these levels. This doesn't mean we'll see a rapid move immediately next week, but potentially within a month or two ahead of mid-terms.

Chart

Analysis

This is a basic pattern-based read on how equities react to external events when trading at all-time highs. $SPX surged over 6% in August from July lows. That's a fairly outsized move considering the rest of the tech sector $QQQ is still lagging behind.

Part of the reason is stronger than expected earnings, with better guidance for the upcoming quarters for the majority of the companies in S&P500. About 90% of the companies beat analyst expectations.

I checked the options premiums on $VIX, and naturally the surface is skewed. Even a 50 delta put trades around the 18-19 level, deep in-the-money, with at-the-money calls carrying around 90 delta already. This distorts standard pricing theory and makes it a good example of practice beating theory in markets and life in general.

Not many option traders know this, but VIX options are priced and hedged off the corresponding VIX futures, not spot VIX. Spot VIX is usually below the futures in contango. A strike that looks ATM or only mildly OTM versus spot is therefore ITM versus the future, so its delta is high, often 70-90+ in strong contango. Extreme positive call skew, the structural feature of VIX and VXX options, amplifies this. OTM calls are bid up hard by hedgers, which further shifts the delta surface.

Deltas above 100% are not normal under standard pricing relative to the futures. Call deltas stay in the 0-1 range. Quoted spot-referenced deltas or certain model adjustments can appear that high in extreme basis and skew regimes.

Basically, the market is already pricing a lot of upside in VIX, so the ATM call is expensive and behaves more like a high-delta instrument.

This removes any benefit for late entrants thinking VIX is low at sub-14 now, so I'll buy call options.

So, how am I playing this?

Trade Idea

Because the skew is already extreme and ATM-to-spot calls carry high deltas, buying near-the-money and and selling the rich upside with defined risk is usually more attractive than buying it naked. Buying far-OTM calls means overpaying for an already expensive tail.

I’ve a better idea, buying at-the-money call spreads:

• Buy high-delta near the money calls

• Sell further OTM calls

This captures the skew premium and theta while keeping the risk defined. This is a standard way professional option traders harvest the structural call skew. The main advantage of buying call spreads is that you’ll have less theta headwind compared to buying a call option instead.

Here’s an example of our call spread position opened last week in VIX September series.

Exit Plan

I intend to square off the position in profit when the VIX spikes to 19-20 level in the coming days. That translates to a correction in SPX of about 3-4% which could happen over a course of sessions instead of a single sell-off, although it’s a likely scenario as well.

That said, one could also let the position expire if willing to carry it throughout the September if there’s an elevated levels of fear in the market.

But, I expect the equities to stay higher and don’t see a major crash ahead of the midterms, as the current administration may put efforts in keeping the stock markets highs bolstering sentiment for their test in November.

Alternative perspective

If considering $VXX instead, the same long call spreads can work, and the underlying's typical contango drag provides a mild additional tailwind to short-call positions.

After the spike, or at elevated levels of VIX above let’s say 25, long puts or put spreads can work well because of the drag if you expect the contango to persist, and expect VIX to drop later, which ad you know, it eventually does as it’s an oscillating indicator of fear in the market. The ETN trends lower even if spot VIX is stable.

$VIX options are generally cleaner and preferable for expressing views on extreme call skew. $VXX and similar ETNs/ETFs can work for short-term tactical trades but they come with structural drag that changes the risk/reward.

Basically, extreme call skew and high ATM-to-spot call deltas favor defined-risk short-call structures. Avoid buying calls now.

How are you trading VIX at these levels? Let me know. 👇

Also this is my first article here on Substack. It would be great if you could provide some feedback on how can I improve it further. I’ll incorporate your suggestions in my next writings. ✍️

Happy to hear your thoughts. 🤝

Educational purposes only. Not financial advice.

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