When Tesla (NASDAQ:TSLA) steps into the earnings limelight this Wednesday, TSLA stock could be headed for a big move. The problem is that predicting that move could prove difficult at best. Given Wall Street’s souring mood, the obvious need to raise capital and Tesla’s cult following, this could be a rather bumpy ride.

Let’s start with the numbers. Wall Street is anticipating a second-quarter loss of $2.81 per share from Tesla. That figure is down sharply from a loss of just $1.33 in the same quarter last year. Revenue, however,  is expected to surge 42.1% to $3.97 billion.

Expectations may be even lower, though. EarningsWhispers.com puts the whisper number at a loss of $2.90 per share, underscoring the brokerage bunch’s belief that Tesla is hemorrhaging cash. This issue will be the main point of contention in this week’s trip to the earnings confessional, and any confirmation from CEO Elon Musk or other Tesla officials that the company needs more cash could spark a selloff.

Or … it may not. The financial media and the brokerage community have crowed for quite some time about how Tesla will eventually need more cash to continue ramping up Model 3 production. Currently, only eight of the 23 analysts following TSLA stock rate the shares a “buy” or better. What’s more, the 12-month consensus price target rests near $295, just above TSLA’s current trading range.

Click to Enlarge This pessimism is not limited to the brokerage community. Short sellers currently hold more than 27% of Tesla’s float short, and the August put/call open interest ratio rests at a lofty reading of 1.68. In short, practically everyone is betting against TSLA stock right now.

Combine this with the fact that Tesla remains in a long-term uptrend (albeit just barely), and it piques my interest in a potential contrarian play ahead of earnings. After all, TSLA stock could very well climb this wall of worry … instead of crashing into it.

It’s a risky play, and not for the faint of heart, but with August implieds pricing in a potential 12% or greater move from TSLA stock, the payoff could be worth it.

2 Trades for Tesla Stock

Bull Call Spread: Again, this trade is risky given TSLA’s volatility ahead of earnings and the potential for Elon Musk to scuttle a solid report with comments during the conference call. Traders willing to take that risk might consider an Aug $310/$320 bull call spread.

At last check, this spread was offered at $3.03, or $303 per pair of contracts.  Breakeven lies at $313.03, while a maximum profit of $6.97, or $697 per pair of contracts, is possible if TSLA stock closes at or above $320 when August options expire.

Bear Put Spread: If things go bad, they could go really bad. While Wall Street is expecting Tesla to raise more cash, if the amount is more than expected TSLA stock could crash. As such, traders looking to follow the broader market’s lead might want to consider an August $250/$260 bear put spread.

At last check, this spread was offered at $1.55, or $1.55 per pair of contracts.  Breakeven lies at $258.45, while a maximum profit of $8.45, or $845 per pair of contracts, is possible if TSLA stock closes at or below $250 when August options expire.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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