Apple (AAPL) Earnings Strategy

Apple (NASDAQ:AAPL) is up slightly today ahead of its earnings report after the close. The company is expected to post sales growth of 19%, and in the trading community there is speculation that it will need margins above 37% to impress. Apple’s guidance for the next quarter is also in focus and it could play a big part in driving the stock price either way. AAPL has a reputation for very conservative guidance, but a very low-ball number could frighten investors.

I am going to play into earnings with a call spread. With an options strategy, the risk on the trade is premium paid. I bought the $525 call and sold the $550 call with a ~$5 cost basis. If the report is any good, the huge descending channel will get resolved above $530. The next resistance after that is $555ish, and then after that there is $574 and $590. If it’s a soft report, the spread will be a 000. Risking $5 to make $20, I’m willing to go with that. Then the report risk will be out of the way and I’ll trade the stock and measure it depending on where it’s trading.

The levels to watch are recent low at $483, then a weekly support at $470ish and then major support at $440.

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They often halt the stock after the report so using this option strategy is how I will stay involved. I might also trade it after hours. I put on half my call spread yesterday and haven’t done the other half yet.

Disclosure: GE, LNKD, WMT, TASR, MGM, DBC, CAT. Long AAPL 525 calls, short AAPL 550 calls. Short IYT, SPY.

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About Scott Redler 367 Articles

Scott Redler is the Chief Strategic Officer of T3 Live. He develops all trading strategies for the service and acts as the face of T3 Live. Mr. Redler focuses on thorough preparation and discipline as a trader.

Mr. Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Mr. Redler moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, continued to trade actively while working closely with all traders in the firm to dramatically increase performance.

Mr. Redler has participated in more than 30 triathlons and one IronMan, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business, Bloomberg, and he is a regular contributor to Minyanville and Forbes’ Intelligent Investing blog. He has been quoted in the Wall Street Journal and Investor's Business Daily, among other publications.

Scott received a B.B.A. in Marketing/Finance from the State University of New York at Albany, graduating Magna Cum Laude from Albany's School of Business.

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