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Apple - AAPL earnings and trading to a target.
2 min read

Apple - AAPL earnings and trading to a target.

Apple - AAPL earnings and trading to a target.

Overview

Apple reports its 2Q results after the bell. The consensus eps is $2.26 (-8.1% y/y) on revenues of $54.64B (-5.8% y/y).

The Set-up

AAPL saw all time highs near $325 in February then YTD lows around $225 in March. It is ~$290 now and $300 is in sight. Here's the 2 week expected move from OptionsAI technology:

Ways to Play

Many of AAPL's FANG peers have already reported and some have seen big moves (GOOGL, FB, NFLX). Other big tech peers like MSFT and INTC have seen muted post earnings moves. It's impossible to know where AAPL fits in this environment. Options are pricing a larger than recent expected move but volatility has come in enough that it's not ridiculously high historically. For those looking to "sell the move", thinking this is more of a MSFT situation, there are several ways to do it. The simplest is to pick a direction and sell the corresponding call or put spread. Another way to do it is sell the move entirely, with a neutral price target.

From OptionsAI technology:

Both the short iron condor and the short iron butterfly are centered around $290. The width of the trade is determined by the expected move. This is essentially saying both the bulls and bears have overpriced this move. The butterfly shows a higher potential profit amount, but that is exactly at 290, with profits trailing off in either direction if the stock were to move higher or lower. The condor makes its entire profit between its breakevens. Both trades can lose the total risk if the stock goes outside the outer strikes.

In both cases, the trade can be adjusted higher or lower to express a slight bullish or bearish view.

This is just one example. Short call spreads and put spreads can express directional but short premium views as well. And for those looking to target a specific move, perhaps that big large number at $300? Here's how a $300 target looks on OptionsAI technology, with May 15th expiration:

Clearly the call is expensive for that target, the long call spread increases probability of profit and has 4/5 risk and the short put spread the highest probability but 11/6 risk/reward.

When using options, this side by side comparison is crucial in constructing the right trade for your view. Whether you're bullish, bearish, or neutral.

Give OptionsAI technology a try with your own price target in AAPL HERE

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