Overview
Options traders have concentrated a notable wager ahead of AeroVironment Inc.'s (AVAV) scheduled earnings release. With 11,456 contracts recorded as changing hands and the stock up 3.28% to $149.40 as of Sep 8, 2:38 PM EDT, market participants are placing two distinct bearish put-oriented structures that both expire on Sep 11 - two days after the company reports on Sep 9 after the close. Because of that timing, these trades give holders roughly a 48-hour window to realize any gains tied to the post-earnings move.
What the market is pricing
Options-implied pricing indicates an expected move of about 13% in either direction around the earnings event. Historically, AVAV has exceeded that implied range in 2 of its last 8 reports, including a +25.9% jump in June 2025. The current structures, however, are explicitly skewed toward the downside.
Structure 1 - The Tight Bear Put Spread
A first large block consists of a $150/$142 put spread, totaling 1,160 contracts split as 580 contracts on each leg, expiring Sep 11. With the underlying at $149.40, the $150 put is already slightly in-the-money. The spread reaches maximum profit if AVAV closes below $142 on the Sep 11 expiration, which would represent about a 4.9% decline from the current price.
This spread is a limited-risk, limited-reward construct that can function either as protection for an existing long equity position or as an expression of a modest post-earnings fade thesis. Open interest on the two legs is low - 22 on one leg and 206 on the other - suggesting the activity is new positioning rather than a rollover of existing contracts.
Structure 2 - The Surgical Put Butterfly
The second notable trade is a $140/$130/$120 put butterfly, consisting of 800 contracts arranged as 200/400/200 for the wings and body, expiring Sep 11. Open interest across those legs reads as follows:
- $140 put (wing) - 200 contracts executed, open interest 186
- $130 put (body) - 400 contracts executed, open interest 468
- $120 put (wing) - 200 contracts executed, open interest 61
That butterfly is structured to reach maximum profit if the stock is pinned at $130 upon expiration - roughly a 13% decline from the Sep 8 price. The 13% target aligns with the implied earnings move derived from options pricing, indicating this trade is not merely bearish but focused on a specific landing zone. Practically, the butterfly is a low-cost, high-conviction instrument with constrained upside - a directional lottery ticket that pays off if the company posts a sharp miss.
Volatility and skew signals
Implied volatility dynamics show modest easing ahead of the print. Three-month implied volatility fell by 1.06 percentage points to 71.89%. The 90/110 skew sits at -1.66 percentage points, down 1.15 percentage points. This negative skew means out-of-the-money calls carry higher implied volatility than out-of-the-money puts, indicating the broader options market still assigns greater upside tail risk than downside.
The juxtaposition between the negative skew - a tilt toward upside tail risk - and the concentrated put-heavy trades is notable: it reflects two distinct camps operating on the same underlying security ahead of earnings.
Fundamental context
Fundamentally, AeroVironment has recent contract announcements that support a bullish view: a $465 million Army laser contract announced on Sep 2, a NASA Mars helicopter contract in August, and a $51 million Switchblade 600 order. In addition, a sell-side firm, Stifel, maintains a Buy rating with a $220 price target, which implies roughly 47% upside from current levels.
Despite these positive developments, the put buyers in the options market appear to be wagering that the recent 3.28% pre-earnings move has outpaced fundamentals or that the coming earnings release could disappoint relative to heightened expectations embedded in option prices.
Quick snapshot
AVAV: $149.40 (+3.28%, as of Sep 8, 2:38 PM EDT) || Total options volume: 11,456 contracts || Call/Put ratio: 1.08x (nearly balanced) || 3M IV: 71.89% || Implied earnings move: ±13%
Bottom line
Two concentrated, put-centered option structures expiring Sep 11 underline a segmented market view ahead of AeroVironment’s Sep 9 earnings report. One set of traders is using a tight put spread to hedge or express a modest downside, while another is deploying a precision butterfly that targets a roughly 13% drop. Meanwhile, three major contract announcements provide a substantive bullish counterpoint. The net result is a market that is simultaneously leaning toward downside bets in options and acknowledging a material fundamental tailwind.