By Ainvest in options-flow — 24 Nov 2025

TEM $5.8M Collar Trade - AI Healthcare Pioneer Hedges Post-IPO Rally! ️

$2.6M whale trade on TEM. Someone just executed a sophisticated $5.8 MILLION collar strategy on Tempus AI this morning at 10:55:39! This institutional-level trade sold 2,500 call contrac Complete analysis reveals technical setup, catalyst drivers, and actionable entry points for

💎 TEM $5.8M Collar Trade - AI Healthcare Pioneer Hedges Post-IPO Rally! 🛡️

📅 November 24, 2025 | 🔥 Unusual Activity Detected

🎯 The Quick Take

Someone just executed a sophisticated $5.8 MILLION collar strategy on Tempus AI this morning at 10:55:39! This institutional-level trade sold 2,500 call contracts at $100 strike while simultaneously buying 2,500 puts at $40 strike, both expiring January 15, 2027. With TEM trading at $73.40 and up +45.6% YTD since its June 2024 IPO, smart money is locking in gains while protecting against downside - classic de-risking on a high-growth AI healthcare stock that's already doubled from IPO levels. Translation: Big players are taking chips off the table after the massive post-IPO run!

📊 Company Overview

Tempus AI Inc (TEM) is revolutionizing precision medicine through AI-powered diagnostics and data analytics:
- Market Cap: $12.5 Billion (IPO'd June 2024 at $37)
- Industry: Medical Info Systems / AI Healthcare
- Current Price: $73.40 (trading near recent highs after November spike to $76)
- Primary Business: AI-powered genomics testing, real-world clinical data analytics, precision oncology diagnostics

💰 The Option Flow Breakdown

The Tape (November 24, 2025 @ 10:55:39):

Time	Symbol	Side	Buy/Sell	Type	Expiration	Premium	Strike	Volume	OI	Size	Spot	Option Price
10:55:39	TEM	ASK	SELL	CALL $100	2027-01-15	$4.2M	$100	2.5K	15K	2,500	$73.40	$16.60
10:55:39	TEM	ASK	BUY	PUT $40	2027-01-15	$1.6M	$40	2.5K	11K	2,500	$73.40	$6.30

🤓 What This Actually Means

This is a defensive collar on a substantial long position - the hallmark of institutional profit-taking! Here's what went down:

💼 Collar Structure: Sold $100 calls for $4.2M premium, used $1.6M to buy $40 puts → Net credit of $2.6M received
🎯 Upside cap: $100 strike (36.3% above current price) - willing to give up gains beyond this level
🛡️ Downside protection: $40 strike (45.5% below current price) - hardcore insurance against disaster scenarios
⏰ Long-term hedge: 417 days to expiration (14 months) captures Q1 2025 earnings (May), Q2-Q4 earnings, Ambry Genetics integration, multiple FDA approval catalysts
📊 Size matters: 2,500 contracts represents 250,000 shares worth ~$18.4M at current prices
🏦 Sophisticated positioning: This is classic "lock in profits but keep some upside" institutional strategy

What's really happening here:
This trader likely accumulated TEM shares during or shortly after the June 2024 IPO around $37-45 and has now seen the stock nearly double to $73.40. Rather than sell outright and trigger capital gains, they're implementing a zero-cost collar (actually collected $2.6M net premium!) that:
1. Caps upside at $100 (27% additional gain if stock rallies there)
2. Protects downside below $40 (45% cushion against disaster)
3. Allows them to hold shares through 2025-2026 (deferring taxes, maintaining position for long-term gains)
4. Generates $2.6M in net premium to reduce cost basis

Think of it like selling your house but keeping the right to live there for 14 months while someone else pays you rent and guarantees to buy it at a floor price if values crash. Pretty smart when you've already doubled your money!

Unusual Score: 🔥 HIGHLY UNUSUAL (2.49 Z-score on calls, 2.36 Z-score on puts) - Both legs showed 2-3 times typical activity levels. While not as extreme as mega-cap trades, this represents significant positioning for a $12.5B IPO stock with limited trading history. The simultaneous execution of identical size on both legs confirms this is one coordinated institutional strategy, not random activity.

📈 Technical Setup / Chart Check-Up

YTD Performance Chart

TEM has delivered solid returns since the June 2024 IPO - up +45.6% YTD with current price of $58.60 (chart shows earlier data point). Started the year at $40.25 after initial post-IPO trading, experienced a brutal -39.4% max drawdown in the summer consolidation period (dropping to ~$24.40), then staged an impressive recovery to current levels around $73-76.

Key observations:
- 🚀 Post-IPO volatility: Classic pattern of initial enthusiasm (spike to $72 in August/September), profit-taking correction, then sustained rally in November
- 📉 Summer consolidation: Sharp drawdown to $24-26 range represented healthy digestion after IPO euphoria - tough time for early buyers
- 📈 November breakout: Explosive move from $43 to $76 (77% gain in 3 weeks) on Ambry Genetics acquisition announcement and Q3 earnings beat
- 🎢 Extreme volatility: 129.4% annualized vol shows this is NOT a sleepy healthcare stock - this moves like high-beta tech
- 📊 Volume spikes: Massive institutional interest during IPO period (6M daily volume) and November catalyst period (3-4M volume)
- ⚠️ Recent consolidation: After hitting $76 resistance, pulled back to $73-75 range - near-term indecision

Gamma-Based Support & Resistance Analysis

Current Price: $74.75 (as of November 24, 02:17 PM)

The gamma exposure map reveals critical price levels that will govern near-term action heading into year-end:

🔵 Support Levels (Put Gamma Below Price):
- $75 - Immediate support with moderate put gamma (current battle line!)
- $70 - Secondary support zone with significant put gamma accumulation
- $65 - Major structural floor with strong put gamma (psychological level + options interest)
- $60 - Deep support with substantial put gamma (round number + prior resistance turned support)
- $40 - DISASTER FLOOR with massive put gamma (exactly where this trader bought puts! Not coincidental)

🟠 Resistance Levels (Call Gamma Above Price):
- $80 - Immediate ceiling with MASSIVE call gamma exposure (strongest single level - this is THE wall)
- $75 - Current price area showing mixed gamma (transition zone between support/resistance)
- $78 - Secondary resistance with moderate call gamma

What this means for traders:
TEM is sitting right at a critical $75 pivot level that's acting as both support and resistance depending on momentum. The chart shows the stock consolidating in a tight $71-75 range after the explosive November rally. The $80 level above current price has ENORMOUS call gamma - this represents the natural ceiling where market makers will sell into rallies to hedge their call exposure. Breaking above $80 would require sustained institutional buying and likely needs a major catalyst (earnings beat, FDA approval, partnership announcement).

Notice anything? The put buyer struck EXACTLY at $40 where there's huge put gamma support and represents the IPO area floor. They're positioning for catastrophic downside protection - this level only gets tested if the AI healthcare thesis completely breaks or company-specific disaster occurs (lawsuit loss, FDA rejection, accounting scandal). The $100 call strike sits well above current resistance, giving them 27% upside participation before getting called away.

Net GEX Bias: Mixed/Neutral - Call and put gamma relatively balanced, suggesting range-bound trading between $70-$80 until a major catalyst emerges.

Implied Move Analysis

Options market pricing for upcoming expirations:

📅 Weekly (Nov 28 - 4 days): ±$3.82 (±5.1%) → Range: $71.17 - $78.83
📅 Monthly OPEX (Dec 19 - 25 days): ±$9.82 (±13.1%) → Range: $65.18 - $84.82
📅 Yearly LEAP (Dec 18, 2026 - 389 days): ±$71.96 (±95.9%) → Range: $3.04 - $146.96

Translation for regular folks:
Options traders are pricing in a 5.1% move ($3.82) by this Friday for weekly expiration - that's pretty tame for a stock with 129% volatility. However, the monthly OPEX through December 19th has a 13.1% implied move ($9.82), reflecting uncertainty around year-end positioning and potential catalysts.

The LEAP implied move is absolutely WILD - ±96% over the next 13 months means the market thinks this stock could literally trade anywhere from $3 to $147 by year-end 2026! This reflects extreme uncertainty typical of newly public companies in emerging AI sectors. Some investors think TEM becomes the next $30B+ AI healthcare giant, while others see competitive pressure and profitability concerns driving it back toward IPO levels or below.

Key insight: The collar trade's $100 call strike sits at the upper end of reasonable outcomes (36% gain from current levels), while the $40 put strike protects against worst-case scenarios. The trader collected $2.6M net premium to implement this range, essentially getting paid to cap their upside and protect their downside. That's smart institutional risk management on a volatile post-IPO name.

🎪 Catalysts

🔥 Immediate Catalysts (Next 30 Days)

Piper Sandler 37th Annual Healthcare Conference (December 3, 2025) 🎤

TEM management presenting at the Piper Sandler Healthcare Conference in New York City on December 3rd. Key items to watch:

📊 Management commentary on Q4 2024 preliminary results and 2025 guidance trajectory
🏥 Updates on Ambry Genetics integration progress (completed February 2025)
🧬 xT CDx test national launch adoption metrics (FDA-approved in January 2025)
💰 Data partnership pipeline commentary (GSK $70M deal, AstraZeneca $200M agreement)
🎯 Path to profitability updates (targeting $5M adjusted EBITDA in 2025)

Why this matters: First major public appearance since Ambry Genetics acquisition closed and xT CDx launched nationally. Management tone and guidance confidence will set the stage for year-end positioning. Positive commentary could push stock toward $80 resistance; cautious tone could trigger test of $70 support.

Year-End Position Squaring (December 2025) 📅

As calendar year-end approaches, institutional portfolio managers will make final decisions on TEM holdings:

💼 Tax-loss harvesting pressure from holders still underwater from summer highs ($72) → potential selling $70-75
🎯 Portfolio rebalancing into winners for year-end statements → potential buying if momentum continues
📊 Window dressing dynamics for quarterly investor letters
⚠️ Low liquidity during holiday weeks (Dec 23-31) can amplify moves either direction

🚀 Near-Term Catalysts (Q1-Q2 2025)

Q1 2025 Earnings (Expected Late May 2025) 📊

The first major earnings test since the $600M Ambry Genetics acquisition closed in February 2025:

📈 Revenue Expectations: ~$316M (based on 79% YoY growth guidance raised in Q4 report)
💰 Key Metrics to Watch:
First full quarter of Ambry Genetics contribution ($300M+ annualized revenue)
Genomics segment growth acceleration (Q4 2024 showed 23.9% acceleration)
Data Services revenue growth (Q4 2024 surged 45%)
Path to positive adjusted EBITDA ($5M target for full year 2025)
Clinical trial enrollment numbers (>40,000 patients identified to date)
xT CDx test adoption rates post-national launch

Upside surprise potential: Management raised 2025 revenue guidance to $1.265B (79% YoY growth), far exceeding consensus of $1.02B. If Q1 results show integration going smoothly and revenue tracking ahead of plan, stock could break out above $80 toward $90-95 analyst targets.

Downside risk factors: Integration hiccups with Ambry Genetics (culture clash, customer attrition), reimbursement delays on new tests, or conservative Q2 guidance could trigger selloff back toward $65-70 support. Company is not yet profitable (targeting only $5M adjusted EBITDA in 2025 despite $1.265B revenue), so any indication of profitability timeline slipping would be negative.

GSK Partnership Expansion (Expected Q1 2025) 🤝

Initial $70M upfront payment for 3-year partnership extension already received
Potential for expanded collaboration beyond initial scope
Focus: Real-world data analytics for GSK's oncology pipeline
Revenue Impact: Data partnerships typically generate $50-200M annually for TEM

Additional FDA Clearances (H1 2025) 🎉

TEM has demonstrated impressive FDA approval velocity with 3 clearances in 12 months:

xT CDx (648-gene NGS test) - January 2025 national launch
Tempus xR IVD (RNA-based gene rearrangement detection) - September 2025
ECG-Low EF (AI cardiac imaging) - July 2025

Upcoming Approvals:
- Potential: Additional companion diagnostic claims for xT CDx across new cancer types
- Probability: 70-75% based on company's track record
- Revenue Impact: Each new indication expands addressable market by estimated $50-100M annually
- Timeline: Expect announcements Q1-Q2 2025

BioNTech TCR Partnership Milestones (Q2 2025) 🔬

Multi-year collaboration leveraging Tempus' 40 million TCR/BCR data points for cancer vaccine development
Focus: Identify enriched T-cell receptors across selected antigens for BioNTech's oncology pipeline
Strategic Value: First-of-its-kind partnership utilizing Tempus' specialized immune system dataset
Probability: 80-85% that partnership produces meaningful milestone payments in 2025

📊 Medium-Term Catalysts (H2 2025 - 2026)

Ambry Integration Synergies (Q3-Q4 2025) 💪

The $600M Ambry Genetics acquisition completed February 2025 represents TEM's largest strategic move:

🎯 Deal Rationale: Adds leader in hereditary cancer screening with >$300M revenue and >$40M EBITDA in 2024
🏥 Market Expansion: Enters pediatrics, rare disease, immunology, women's reproductive health, cardiology
💰 Expected Synergies: $20-30M additional revenue in 2025 from cross-selling opportunities
🔄 Integration Risk: Ambry represents 50%+ of prior Tempus revenue scale - significant execution challenge
📈 Success Metrics: Customer retention rates, technology integration progress, combined test menu adoption

Why this matters for the collar trade: The integration timeline extends well into 2026, creating significant uncertainty that justifies long-term hedging. If integration goes smoothly, stock could reach the $100 call strike as revenue synergies materialize. If integration stumbles (customer losses, technology delays), the $40 put protection becomes valuable.

Deep 6 AI Integration (Q2-Q3 2025) 🤖

Acquired March 2025 for clinical trial recruitment optimization
Access to 750+ provider sites and 30M+ patients
Revenue Impact: Enhanced clinical trial enrollment services could add $50-75M annually
Strategic Value: Strengthens competitive moat in biopharma data services segment

Profitability Inflection (Full Year 2025) 💰

TEM is targeting its first positive adjusted EBITDA of $5M in 2025 (representing $110M improvement from 2024):

📊 Current State: Negative operating cash flow with $726M debt load
🎯 2025 Targets: $1.265B revenue (79% growth), $5M adjusted EBITDA
📈 Path to Profitability: Gross margin expansion (49.7% in Q4 2024), operating leverage as scale increases
⚠️ Risk: Miss on profitability targets could trigger valuation multiple compression (currently trading 17.9x forward sales)

⚠️ Risk Catalysts (Negative)

Securities Litigation Overhang (Ongoing) ⚖️

Active class action lawsuit alleging inflated revenue claims and aggressive accounting:

🚨 Allegations: Overstated revenue, misleading investors about business model and profitability timeline
💸 Potential Impact: $50-150M settlement range
📉 Market Impact: Reputational damage, management distraction, investor confidence loss
🎯 Probability of Material Impact: 40-50%
⏰ Timeline: Could drag into 2026, creating ongoing uncertainty

Reimbursement Headwinds (2025-2026) 💳

New AI-based diagnostic tests face significant payer approval challenges:

⏰ 12-24 month payer approval cycles for novel tests
💰 Compliance costs increasing ~20% per recent SEC filings
📊 Risk: Revenue recognition delays, margin pressure, slower adoption than expected
🎯 Probability: 50-55%

Competition from Deep-Pocketed Players (Ongoing) 🥊

TEM faces formidable competition:

🏢 Foundation Medicine (Roche): Market leader in NGS-based tumor profiling with established reimbursement
🧬 Illumina: 25% market share, leads in sequencing infrastructure
💉 Guardant Health: Strong in liquid biopsy, minimal residual disease testing
🏥 Quest/LabCorp: Traditional lab giants with precision oncology offerings

Competitive Pressure Risk: Pricing wars, customer defection, technology leapfrogging by competitors with superior AI models (especially Google Health, Illumina). Probability: 35-40%

🎲 Price Targets & Probabilities

Using gamma levels, implied move data, and catalyst timeline through the January 2027 collar expiration, here are the scenarios:

📈 Bull Case (30% probability)

Target: $100+ (Calls Get Exercised)

How we get there:
- 💪 Q1-Q4 2025 earnings consistently BEAT with revenue tracking toward high-end of $1.265B guidance
- 🏥 Ambry Genetics integration executed flawlessly - customer retention >95%, cross-selling generates $30M+ incremental revenue
- 🧬 xT CDx test achieves rapid market penetration, becomes standard-of-care in precision oncology
- 💰 Multiple FDA approvals (3-4 additional clearances) expand addressable market significantly
- 🤝 Major pharmaceutical partnerships announced beyond GSK/AstraZeneca (Merck, Pfizer, J&J tier)
- 📊 Profitability inflection BEATS expectations - $10-15M adjusted EBITDA vs $5M guidance
- 🚀 AI healthcare sector momentum continues - sector rotation into growth stocks benefits TEM
- ⚖️ Securities litigation dismissed or settled with minimal financial impact
- 📈 Analyst upgrades drive price targets from $78 average toward $110-120 range

Key metrics needed:
- Quarterly revenue growth sustaining 60-80% YoY through 2025
- Gross margins expanding beyond 50% (proving pricing power)
- Genomics + Data Services both accelerating (diversified growth story)
- Customer retention post-Ambry >95%

Probability assessment: 30% because it requires excellent execution across multiple dimensions over 14 months. The $100 strike represents 36% upside from current $73.40, which is achievable if all cylinders fire. However, post-IPO execution risk, integration complexity, and competitive pressure create significant hurdles. The collar seller clearly thinks 30% odds are fair - they're capping upside here to generate premium and protect downside.

🎯 Base Case (45% probability)

Target: $65-85 range (Collar expires with value split)

Most likely scenario:
- ✅ Solid but unspectacular earnings - revenue meets guidance, profitability roughly in-line with targets
- 📱 Ambry Genetics integration progressing adequately but not spectacular - normal teething issues, customer retention 90-92%
- ⚖️ xT CDx adoption steady but faces reimbursement headwinds - takes full 12-18 months to gain traction
- 🤖 1-2 additional FDA approvals add modest revenue but don't move needle dramatically
- 💼 Securities litigation settles for $30-50M - material but not catastrophic
- 🔄 Stock trades in $65-85 range for most of 2025-2026 - oscillating around $70-75 based on quarterly results
- 📊 Market remains range-bound between $70 support and $80 resistance - volatility persists but no breakout
- 💤 Profitability timeline extends slightly - achieves $3-5M adjusted EBITDA (close to guidance)

Why this is most likely: TEM is executing on a solid business model with real revenue ($700M in 2024, guiding $1.265B in 2025) but faces typical post-IPO growing pains. Integration of 50%+ revenue scale acquisition takes time. Reimbursement cycles are real. Competition is fierce. Most likely outcome is "muddle through" scenario where company makes progress but stock stays range-bound as market digests rapid growth and awaits profitability proof points.

Collar outcome: Stock around $75-80 at January 2027 expiration means:
- $40 puts expire worthless (stock well above $40)
- $100 calls expire worthless (stock hasn't reached $100)
- Trader keeps the $2.6M net premium collected upfront as profit
- Still holds 250,000 shares worth $18.75-20M (25-27% gain from entry around $73)
- Mission accomplished: participated in modest upside, avoided catastrophic downside, collected premium

📉 Bear Case (25% probability)

Target: $40-55 (Puts provide protection)

What could go wrong:
- 😰 Earnings disappoint - revenue growth decelerates below 60%, profitability timeline extends to 2027
- 🚨 Ambry integration disaster - customer defections exceed 15%, technology integration delayed 6-12 months
- ⚖️ Securities litigation escalates - $100-150M settlement or worse, criminal investigation launched
- 💸 Reimbursement rejections for xT CDx from major payers (Aetna, United, Cigna) delay revenue 12-24 months
- 🥊 Competitive pressure intensifies - Foundation Medicine or Illumina launch superior AI-powered test stealing market share
- 📉 Broader market correction hits high-multiple healthcare stocks - sector rotation out of growth into value
- 💰 Cash burn accelerates, forcing dilutive secondary offering at depressed prices
- 🎯 Analyst downgrades cascade - BTIG cuts $96 target, Morgan Stanley cuts $80 target, multiple firms to Sell
- 🔨 Break below $65 support triggers cascade through $60, $55, toward $45-50 range
- 📊 FDA rejects new indication for xT CDx or issues warning letter on manufacturing

Critical support levels:
- 🛡️ $70: Near-term floor, must hold or momentum shifts bearish
- 🛡️ $65: Major gamma support, breaking here opens door to $55-60
- 🛡️ $60: Psychological level and round number - heavy put gamma
- 🛡️ $40: DISASTER FLOOR (where puts are struck) - only reached in catastrophic scenario

Probability assessment: 25% because it requires multiple negative catalysts to align. TEM's fundamentals are solid (79% revenue growth, clear path to profitability, 95% biopharma partnership penetration), but execution risk is real and valuation at 17.9x forward sales offers limited margin for error. The collar buyer paid $1.6M for $40 strike puts, suggesting they think there's a meaningful (20-30%) chance of a severe downturn that tests $50-60 levels.

Put P&L in Bear Case:
- Stock at $50 on Jan 2027: Puts worth $0 (out of money), collar collected $2.6M net premium upfront, still win
- Stock at $40 on Jan 2027: Puts worth $0 (at strike), shares down 45% but put protection kicks in, roughly breakeven after premium collected
- Stock at $30 on Jan 2027: Puts worth $10, offset loss from $73 to $40 ($33 loss) with $10 put gain + $10.40 net premium = effectively sold at ~$53 instead of $30, major disaster avoided

💡 Trading Ideas

🛡️ Conservative: Cash Gang or Small Position into Dips

Play: Wait for pullback to $65-68 range before initiating long stock position

Why this works:
- ⏰ Stock just rallied from $43 to $76 (77% gain) in 3 weeks - due for consolidation
- 💸 High volatility (129%) means patience gets rewarded - stock will give you entry opportunities
- 📊 Gamma support at $70 and $65 provides clearly defined risk levels
- 🎯 Institutional collar at $73 suggests smart money is de-risking at current levels - why buy what they're hedging?
- 📉 Year-end tax loss harvesting could pressure stock as holders from $72 summer highs book losses
- 🤔 Next major catalyst (Q1 earnings) not until May 2025 - no urgency to chase current prices

Action plan:
- 👀 Watch December conference for management tone - positive commentary could prevent deeper pullback
- 🎯 Set limit buy orders at $68 (7% dip), $65 (12% dip), $62 (15% dip) to scale into position
- ✅ If assigned at $65-68, you're buying near gamma support with 15% discount from recent highs
- 📊 Initial position size: 25-30% of intended allocation, scale up on weakness
- ⏰ Re-evaluate after Q1 earnings in May - if execution solid, add to position

Risk level: Low (cash position) | Skill level: Beginner-friendly

Expected outcome: Avoid buying at resistance ($73-76), capture better entry on inevitable consolidation, reduce risk of sharp drawdown.

⚖️ Balanced: Replicate the Collar (Copy The Pros)

Play: For existing holders with gains, implement protective collar similar to institutional trade

Structure: Own 100+ shares, sell covered calls, buy protective puts

Example (adjust strikes based on risk tolerance):
- Own 200 shares of TEM at $73.40 = $14,680 position
- Sell 2 contracts of Jun 2026 $85 calls (18 months out) → collect ~$1,800-2,200 premium
- Buy 2 contracts of Jun 2026 $55 puts (18 months out) → pay ~$800-1,000 premium
- Net premium collected: ~$1,000-1,200 (reduces cost basis from $73.40 to ~$68.40)

Why this works:
- 🎯 Caps upside at $85 (16% gain from current levels) - reasonable target given resistance at $80
- 🛡️ Protects downside below $55 (25% cushion) - serious protection if integration fails or litigation escalates
- 💰 Collect net premium to reduce cost basis
- ⏰ 18 months gives time for Ambry integration, multiple earnings reports, FDA approvals
- 📊 Similar strategy to the institutional trade but with strikes adjusted closer to current price (tighter collar)
- 🤝 Sleep better at night knowing worst-case scenario is limited to $55 floor

Position sizing: Only implement on core long-term holdings where you're comfortable capping upside for 18 months

Risk level: Moderate (defined risk, requires stock ownership) | Skill level: Intermediate

When to close early:
- ✅ Stock rallies above $82 → close short calls to capture remaining upside (pay to close at loss, but stock gains offset)
- ⚠️ Stock drops below $60 → exercise protective puts or close collar to lock in hedge value
- 📊 Significant de-risking event (lawsuit settled, major acquisition announced) → consider removing collar

🚀 Aggressive: Bull Put Spread - Bet on Support Holding (ADVANCED ONLY!)

Play: Sell put spread targeting $70-65 support zone for income

Structure: Sell $70 puts, Buy $65 puts (December 19, 2025 expiration - 25 days)

Why this could work:
- 📊 Gamma support at $70 and $65 creates natural floor - market makers will buy dips to hedge put exposure
- 💪 Recent consolidation in $71-76 range suggests support building
- 📈 Bullish thesis: Ambry acquisition closed, xT CDx launching, profitability approaching
- 🎯 Collecting premium from elevated IV (129% volatility makes options expensive)
- ⏰ 25-day timeframe allows theta decay to work in your favor
- 💰 Defined risk spread ($5 wide = $500 max risk per spread)

Estimated P&L:
- 💰 Collect ~$1.50-2.00 net credit per spread (will vary based on current prices)
- 📈 Max profit: $150-200 if TEM stays above $70 at December 19 expiration (keeps entire premium)
- 📉 Max loss: $350-300 if TEM below $65 at expiration (difference between strikes minus premium collected)
- 🎯 Breakeven: ~$68-68.50
- 📊 Risk/Reward: ~1.5:1 to 2:1 (decent for 25-day trade)

Why this could blow up (SERIOUS RISKS):
- 😱 Earnings surprise: If company pre-announces weak Q4 results or cuts 2025 guidance, stock could gap down 15-20% overnight
- ⚖️ Litigation bomb: Adverse ruling in securities lawsuit could trigger panic selling
- 💸 Market correction: Broader selloff in high-multiple growth stocks could overwhelm technical support
- 🔨 Break below $70: If support fails, next stop is $65, then $60 - spread goes to max loss quickly
- 📉 Year-end tax selling: Unexpected selling pressure from tax loss harvesting

CRITICAL WARNING - DO NOT attempt unless you:
- ✅ Understand you're SELLING options (taking on obligation)
- ✅ Can afford max loss of $300-350 per spread
- ✅ Will close position if TEM breaks below $70 (don't ride to expiration hoping for miracle)
- ✅ Have experience with put spreads and understand margin requirements
- ⏰ Plan to close at 50-70% profit target rather than holding to expiration

Risk level: ELEVATED (can lose 2-3x collected premium) | Skill level: Advanced only

Position management:
- 📈 Close at 50% profit if reached quickly (don't be greedy)
- ⚠️ Close entire position if TEM breaks and closes below $71 (4% stop loss)
- 🎯 Maximum position size: 2-3 spreads per $100K portfolio

⚠️ Risk Factors

Don't get caught by these potential landmines:

⚖️ Securities litigation wild card: Active class action lawsuit alleging inflated revenue claims and aggressive accounting creates massive uncertainty. Potential settlement costs $50-150M, but worse is reputational damage and management distraction. Stock could gap down 20-30% on adverse ruling or settlement announcement. Litigation could drag well into 2026, creating ongoing overhang. This is probably the single biggest risk factor that justifies the $40 downside protection in the collar trade.
🏥 Ambry Genetics integration execution risk: The $600M acquisition represents 50%+ of prior Tempus revenue scale - this is MASSIVE integration complexity. Risk of culture clash (Silicon Valley AI startup meets traditional genetics lab), technology integration delays (combining genomics platforms takes 12-18 months minimum), customer attrition (hereditary testing clients may resist AI-heavy approach), and duplicative cost structure. If customer retention dips below 90% or integration extends beyond 2025, stock could test $55-60 levels. Management inexperience with M&A at this scale adds risk.
💳 Reimbursement headwinds for new tests: While TEM has FDA approvals for xT CDx and other tests, securing payer reimbursement is a separate battle that takes 12-24 months per test. Major payers (UnitedHealth, Aetna, Cigna) scrutinize novel AI-based diagnostics heavily. Risk that reimbursement denials delay revenue recognition by quarters or years, causing revenue growth to decelerate sharply and miss the aggressive 79% YoY guidance. Compliance costs already increasing ~20% - margin pressure possible even if tests get approved.
🥊 Competitive pressure from established players: Foundation Medicine (Roche) and Illumina have massive advantages in market share (Illumina 25% vs TEM 15%), established reimbursement pathways (approved for 5+ years), and balance sheet firepower to compete aggressively. If competitors launch superior AI-powered tests or slash pricing to defend market share, TEM could face sustained margin compression. Guardant Health's liquid biopsy strength represents alternative technology path that could leapfrog TEM's tissue-based approach.
💰 Profitability timeline risk at rich valuation: Trading at 17.9x forward sales despite negative cash flow and targeting only $5M adjusted EBITDA in 2025 on $1.265B revenue (0.4% EBITDA margin) shows market is pricing in aggressive profitability ramp in 2026-2027. Any indication that profitability timeline extends to 2027+ could trigger 30-40% valuation compression. With $726M debt load and negative operating cash flow, company may need to raise dilutive equity capital if cash burn accelerates. Growth-at-all-costs model works until it doesn't.
🎢 Extreme volatility creates whipsaw risk: YTD volatility of 129.4% is absolutely wild - this means TEM can move 5-10% on NO NEWS. Max drawdown of 39.4% in summer 2025 (from $72 to $24) shows how fast sentiment can shift on post-IPO stocks. Recent rally from $43 to $76 (77% in 3 weeks) is parabolic and screams "overheated." Technical pullback of 15-20% ($62-65) possible even without fundamental catalyst, simply from profit-taking and momentum exhaustion.
🔥 Post-IPO lock-up dynamics: TEM IPO'd June 2024, meaning traditional 180-day lock-up expired around December 2024. Watch for insider selling pressure as early employees and venture capital backers cash out after 40-80% gains from IPO price ($37). Form 4 filings showing heavy insider selling could signal lack of confidence and trigger selloff. The Ambry acquisition included $100M in TEM shares subject to 1-year lock-up expiring February 2026 - potential selling overhang.
📉 Macroeconomic headwinds if recession emerges: At current valuation, TEM has zero recession protection. Healthcare spending is typically defensive, but precision medicine diagnostics are somewhat discretionary - hospitals cut non-essential testing first in budget crunches. Biopharma R&D spending (source of Data Services revenue) also cyclical. If economy weakens in 2025-2026, stock could correct 40-50% back to IPO levels ($35-40) even with solid execution.
🎯 Smart money derisking at current levels: The $5.8M collar trade signals institutional holders are locking in profits and hedging downside after the massive post-IPO rally. When sophisticated players cap upside at $100 and buy $40 disaster insurance, it's a yellow flag. They're not selling outright (bullish long-term) but clearly worried enough to sacrifice upside beyond 36% for downside protection. Respect that signal.

🎯 The Bottom Line

Real talk: Someone just implemented a sophisticated $5.8M collar strategy on TEM after the stock nearly doubled from IPO levels. This isn't bearish on the AI healthcare thesis - it's smart institutional risk management by players who've already made huge money on the post-IPO rally and want to lock in gains while keeping skin in the game.

What this trade tells us:
- 🎯 Sophisticated holder expects continued volatility through 2026 (not betting on smooth ride to $100)
- 💰 They're willing to cap upside at $100 (36% gain) in exchange for $40 catastrophic protection (45% downside cushion)
- ⚖️ The timing (after November spike to $76) shows they see binary risk - Ambry integration, profitability timeline, litigation outcomes all could swing dramatically
- 📊 They collected $2.6M net premium to implement this - essentially getting paid to derisk a winning position
- ⏰ January 2027 expiration captures 2 years of catalysts: 8 earnings reports, Ambry integration completion, multiple FDA approvals, profitability inflection, litigation resolution

This is NOT a "sell everything" signal - it's a "take profits and manage risk intelligently" signal.

If you own TEM:
- ✅ Consider trimming 25-30% at $73-76 levels (lock in gains from IPO or summer lows)
- 📊 If holding through integration period, implement protective collar similar to this trade (adjust strikes to your risk tolerance)
- ⏰ Don't get greedy - you've already won! Up 45% YTD is excellent for a volatile post-IPO stock
- 🎯 If stock breaks above $80 convincingly, could re-add trimmed shares on momentum to $85-90
- 🛡️ For holders of 200+ shares, consider selling 1-2 covered calls and buying protective puts (copy this collar structure)

If you're watching from sidelines:
- ⏰ Patience wins - stock just ran 77% in 3 weeks, pullback to $65-68 likely before year-end
- 🎯 Post-conference (December 3) or year-end selloff to $65-70 would be EXCELLENT entry (12-15% off highs near gamma support)
- 📈 Looking for confirmation of: Ambry integration progress, xT CDx adoption metrics, partnership expansions, Q1 2025 earnings beat in May
- 🚀 Longer-term (12-18 months), successful execution on Ambry synergies and profitability inflection could drive $90-110 if everything goes right
- ⚠️ Current valuation (17.9x forward sales, negative cash flow) requires flawless execution - one major stumble and it's back to $55-60

If you're bearish:
- 🎯 Short-term bearish thesis has merit given parabolic rally and institutional derisking
- 📊 First support at $70 (gamma), major support at $65 (strong put gamma), deeper support at $60
- ⚠️ Bull put spreads ($70/$65) offer defined-risk way to collect premium betting on support holding
- 📉 Watch for break below $70 - that's the trigger for cascade to $65, potentially $60
- ⏰ Year-end could bring tax-loss selling pressure from holders underwater from $72 summer highs

Mark your calendar - Key dates:
- 📅 December 3, 2025 - Piper Sandler Healthcare Conference presentation (management commentary)
- 📅 December 19, 2025 - Monthly OPEX (±13.1% implied move window)
- 📅 Late May 2025 - Q1 2025 earnings (first post-Ambry full quarter)
- 📅 August 2025 - Q2 2025 earnings (mid-year profitability check-in)
- 📅 November 2025 - Q3 2025 earnings (1-year post-Ambry acquisition assessment)
- 📅 February 2026 - Ambry share lock-up expires ($100M potential selling pressure)
- 📅 January 15, 2027 - Collar expiration date

Final verdict: TEM's long-term AI healthcare story remains INCREDIBLY compelling - 79% revenue growth guidance, $600M Ambry acquisition, 95% biopharma partnership penetration, multiple FDA approvals, and path to profitability are all real and impressive for a company that just IPO'd 18 months ago. BUT, at 17.9x sales after doubling from IPO with massive integration risk ahead, the risk/reward at current prices ($73-76) is NO LONGER skewed favorably for aggressive new money. The $5.8M institutional collar is a CLEAR signal: smart money is derisking after winning big.

Be patient. Let year-end selling create opportunity. Look for entry at $65-68 near gamma support. The AI healthcare revolution will still be here in 2-3 months, and you'll sleep better paying $66 instead of $76.

Winners lock in profits. Protect your capital. 💪

Disclaimer: Options trading involves substantial risk of loss and is not suitable for all investors. This analysis is for educational purposes only and not financial advice. Past performance doesn't guarantee future results. The collar trade represents one institution's hedging strategy based on their unique position, tax situation, and risk tolerance - it does not constitute a recommendation that you should follow it. Collar strategies cap upside in exchange for downside protection and may not be appropriate for all investors. TEM is a newly public company (IPO June 2024) with limited trading history, negative cash flow, active securities litigation, and high volatility (129%) - suitable only for risk-tolerant investors. Always do your own research and consult a licensed financial advisor before trading.

About Tempus AI Inc: Tempus AI is a technology company advancing precision medicine through AI, with a market cap of $12.5 billion in the Medical Info Systems industry. The company combines genomics testing with real-world clinical data analytics to enable personalized treatment decisions across oncology and other therapeutic areas.