TXN Options Are Screaming

The Signal

The options market is not being subtle about Texas Instruments right now.

As of July 21, the July 24th weekly call implied volatility on TXN clocked in at 128. August sits at 88. TXN’s 52-week IV range is 24 to 71. Let that land for a second. The front-week options are pricing volatility nearly double the top of the entire prior year’s range, in the shortest-dated contracts available. That is not background noise. That is the market flagging something it believes is consequential.

The July 24th weekly straddle has been priced for a move of approximately 12%, implying roughly a $35 swing from recent levels around $291. The call-to-put ratio sits at 1.1-to-1, essentially neutral. There is no strong lean toward calls or puts. The elevated premium is not a directional call. It is a bet on magnitude. The market does not know which way TXN goes tonight. It just believes it goes somewhere significant.

Pre-earnings options volume has been running at roughly 3.3 times normal. That kind of participation level in a name like TXN, which is not a meme stock or a speculative biotech, demands a closer look.

Why This Is Not Normal for TXN

Texas Instruments has been around for 90 years. It makes analog chips and embedded processors. Its customers span industrial, automotive, data center, and consumer markets. It is not the kind of company that generates pre-earnings options frenzy. It is the kind of company that quietly delivers and moves a few percent.

Which is exactly what makes the current IV environment so unusual.

When a franchise this mature, this diversified, this structurally low-volatility sees its front-week options priced at more than 80% above the ceiling of its 52-week IV range, sophisticated participants are not treating it like a routine check-in. They are treating it like an inflection point. That distinction matters because it shapes how you think about the options premium being paid right now, and whether it is rational or excessive.

There is another layer worth noting. Analyst EPS estimates heading into tonight range from $1.66 to $2.04 across a broad Wall Street consensus. That is an unusually wide spread for a company of this size and history. Wide estimate dispersion typically signals genuine disagreement about the business trajectory, not just modeling drift. The options market, in pricing for a 12% move, is essentially agreeing with that uncertainty.

The Company Behind the Signal

Texas Instruments reports Q2 2026 results after the close today, July 22. Wall Street consensus sits at non-GAAP EPS of approximately $1.91 to $1.95 on revenue of $5.24 billion, which would represent year-over-year growth of roughly 17.5%. Management’s own Q2 guidance set the range at $5.00 billion to $5.40 billion in revenue and EPS of $1.77 to $2.05. The current consensus is near the upper end of that guided earnings range. That is not nothing. Wall Street is not just expecting TXN to meet guidance. It is expecting the company to run close to the ceiling of it.

The reason expectations climbed this high goes back to Q1 2026. TXN reported GAAP EPS of $1.68, beating estimates by $0.31 to $0.32. Revenue of $4.83 billion came in $300 million above consensus and grew 18.7% year over year. Analog revenue reached $3.9 billion, up 22% year over year. Embedded Processing rose 12%. Industrial revenues grew more than 30% year over year. Data center revenue surged roughly 90% year over year. It was broad-based acceleration, not a one-segment story. That Q1 result triggered a roughly 19.4% single-day gain in the stock.

The stock has since pulled back from its all-time high and is currently trading near $291, still up approximately 69% year to date.

Free cash flow has been the other driver of attention. Trailing twelve-month FCF reached $4.4 billion at the end of Q1, up from $1.7 billion a year earlier. Capital expenditures declined to $676 million in Q1, down from $1.1 billion in the same period a year ago, as the heaviest phase of TXN’s multi-year capacity buildout across its Sherman, Texas and Lehi, Utah fabs begins to moderate. CEO Haviv Ilan has projected $8 in free cash flow per share for full-year 2026. The FCF math is starting to work in a meaningful way.

On the analyst side, the direction has been one-way. KeyBanc raised its price target to $390 on July 14. TD Cowen raised to $360 on July 13. UBS raised to $350 on June 29. That cluster of institutional upgrades in the weeks immediately before tonight’s report reflects real conviction, not just routine target maintenance. Over the last two years, TXN has beaten EPS estimates seven times while missing once. Revenue has topped estimates five times and missed three times.

There are legitimate counterweights. Industrial demand, despite its sharp recovery, still sits roughly 15% below its 2022 peak. Integration of recent acquisitions introduces complexity. The stock’s trailing valuation multiples are elevated relative to their five-year historical range. And insider selling has been notable over recent months. These are not reasons to dismiss the bull case. They are reasons to hold it with some discipline.

What the Options Market Is Actually Pricing

Here is where it gets interesting.

The July 24th straddle has been pricing a move of approximately 12%. The median actual post-earnings move for TXN over the past eight quarters is 6.1%. The options market is implying a move roughly double the historical median. At first glance, that sounds like the market is overreacting.

But the historical context cuts the other way. Over those same eight quarters, TXN has actually exceeded the implied move in five of the eight instances. In April 2026, the stock moved nearly 19.4% on earnings day, against an implied move that was a fraction of that. In January 2026, shares moved 12.8% against an implied of 5.8%. In July 2025, TXN fell 15.4% when the options market was only pricing a 4.9% move. The market has been caught flat-footed repeatedly, and options traders appear to have adjusted their pricing behavior accordingly.

The 1.1-to-1 call-to-put ratio confirms the directional neutrality. This is not a bull bet or a bear bet. It is a volatility bet. Sophisticated participants are paying elevated premium because they have seen what happens when TXN earnings day arrives and the implied move turns out to be far too conservative.

EPS consensus has been revised upward meaningfully over the past several months, with the bar rising from around $1.57 at the start of the revision cycle to $1.91 to $1.95 currently. Revenue forecasts have seen a sustained string of upward revisions over that same period. That kind of sustained upward revision cycle sets a high bar. Tonight, that bar either gets cleared, or it becomes a ceiling.

Strategic Considerations

The IV environment fundamentally shapes what kind of options position makes sense right now. When implied volatility is running at 128 on weeklies against a 52-week ceiling of 71, simply buying calls or puts outright is expensive. You are purchasing optionality at a significant premium to the stock’s typical volatility range. If TXN delivers its historical average earnings reaction rather than the outsized move the market is pricing, time decay destroys that premium regardless of direction.

That does not eliminate opportunity. It just means the structure of the position matters more than usual.

For traders with directional conviction and an expectation of a large move: A debit spread reduces the cost of entry by selling premium at a further out-of-the-money strike. A bull call spread using the July 24th expiration, buying a call near the current stock price and selling a call at a higher strike, captures upside while limiting how much elevated IV you pay for on the long leg. The maximum loss is defined to the premium paid. The challenge in high-IV environments near earnings is wider bid-ask spreads, so execution quality and limit orders matter. This structure makes sense if you expect TXN to beat, guide higher, and move above the upper strike. It makes less sense if you expect a modest or muted reaction.

For traders who believe the implied move is overpriced: An iron condor, selling an out-of-the-money call spread and an out-of-the-money put spread simultaneously, collects premium while defining the maximum loss on both sides. Given that TXN’s front-week IV is running well above its annual ceiling, there is a reasonable argument that the market is overpricing uncertainty relative to base-case outcomes. The risk is that TXN has exceeded its implied move in five of the past eight quarters. Any short-premium structure here must use defined risk. An undefined short strangle in front of a stock that has moved 15% to 19% on a single earnings day is inappropriate. Keep the wings tight, keep size modest, and do not fight the history.

For traders without a directional view who want to stay in the position post-earnings: A calendar spread, selling the July 24th expiration and buying an August contract at the same strike, takes advantage of the steep term structure created by July weekly IV at 128 versus August at 88. This structure collects the premium difference between the front and back month while keeping longer-dated exposure. The risk is that if the stock moves sharply through the strike in either direction, the calendar loses value quickly. This approach is most appropriate for traders who believe the stock will not move as violently as implied but who want continued positioning after the event.

None of these approaches should be entered without accepting the fundamental reality: TXN has moved 15% to 19% on a single earnings day in recent quarters. Any structure that does not define maximum loss before entering is inappropriate for this specific event.

Key Risks

The primary risk to the bull case is valuation. When a stock has run 69% year to date and analyst EPS consensus has been revised 22% or more higher over the past several months, the margin for a guidance miss narrows considerably. If management guides Q3 below the current consensus midpoint, the reaction could be sharp, not because the business is broken, but because the stock has already absorbed a great deal of optimism.

Industrial demand is recovering but remains 15% below its 2022 peak. A deceleration in that recovery rate, particularly following a Q1 where industrial revenues grew more than 30% year over year, creates a difficult comparison problem through the second half of 2026.

On the short-premium side, the principal risk is the stock repeating its Q1 2026 behavior and moving nearly 20%, or its July 2025 behavior and falling 15%. Short volatility trades in front of TXN’s earnings have been punished repeatedly in recent quarters by underestimating the magnitude of the move.

Worth a brief mention: the broader semiconductor sector has been dealing with its own volatility this month, with sector-wide pressure on several names. That backdrop can amplify selling in a stock that has already run aggressively year to date, even when the company’s results are solid. Sector context matters here.

What to Watch Tonight

The Q2 earnings call is scheduled for 3:30 p.m. Central time today. The headline EPS and revenue numbers matter. But they are rarely the whole story with Texas Instruments.

• Analog revenue vs. the $4.12 billion analyst estimate. Polymarket traders assign an 80.5% probability that analog revenue clears $4 billion. Clearing $4.12 billion is a separate and higher bar.
• Q3 guidance range and midpoint. Management has a pattern of conservative guidance followed by beats. If Q3 guidance comes in below the current consensus range, the stock will likely react negatively regardless of how Q2 looks. Guidance framing has historically moved TXN more than the reported numbers themselves.
• Data center revenue commentary. The roughly 90% year-over-year growth in Q1 was exceptional. Any sign of moderation, or any sign of further acceleration, will shape expectations for the second half.
• Gross margin direction. Margins have been tracking near 57% to 58% as factory utilization rises. A step toward 60% would be a meaningful signal. Any compression would raise questions about whether the margin inflection is tracking as expected.
• Free cash flow per share trajectory. CEO Haviv Ilan’s $8 FCF per share target for 2026 is central to the long-term investment case. Any commentary that introduces risk to that target would likely outweigh a solid Q2 beat on its own.
• Industrial demand tone. With industrial still 15% below its 2022 peak, the key question is whether the recovery is accelerating into the second half or beginning to plateau at current levels.

After tonight, IV crush will be substantial regardless of what the stock does. August IV at 88 will compress sharply, likely toward the mid-30s range, within days. The premium embedded in these options right now evaporates quickly. Whether the underlying move is large enough, in the right direction, to offset that decay is the core question for anyone long options going into the close.

The options market has not answered that question. It has only told us how much uncertainty it is willing to price, and right now, it is pricing more uncertainty in TXN than at any point in the past year.

That alone is worth paying attention to.

Quick Reference

• July 24th weekly IV: 128. August IV: 88. 52-week range: 24 to 71. Front-week IV is running above the annual ceiling by a wide margin.
• July 24th straddle priced for approximately a 12% move as of July 20.
• Historical median post-earnings move over the past eight quarters: 6.1%. TXN exceeded its implied move in 5 of those 8 quarters.
• Q2 consensus: non-GAAP EPS approximately $1.91 to $1.95; revenue $5.24 billion, representing roughly 17.5% year-over-year growth.
• Call-to-put ratio: approximately 1.1-to-1. No strong directional skew. Elevated premium reflects uncertainty about magnitude, not direction.
• Pre-earnings options volume running at approximately 3.3 times normal.
• Defined-risk structures are appropriate given TXN’s history of large earnings reactions in both directions.
• Directional traders: debit spreads reduce the cost of elevated IV compared to buying outright options.
• Neutral traders: an iron condor defines maximum loss but requires strikes wide enough to account for a potential 15% to 19% move.
• Q3 guidance midpoint is the single most important number on tonight’s call. Watch it closely.
• IV crush post-earnings will be rapid. Positions long premium must account for this decay regardless of the stock’s direction.
• The stock has run approximately 69% year to date. The margin for error on guidance tone is narrow.

Good options analysis does not tell you where TXN will trade tomorrow morning. It tells you what the market has already decided to price, and asks whether that pricing is reasonable.

At IV of 128 on a stock that spent the prior 52 weeks between 24 and 71, the options market has made its view clear. Someone believes this quarter is categorically different from the ones before it.

By morning, we will know if they were right.

Options Trading Report