Apple Inc. (AAPL) is a California based designer and manufacturer of consumer portable electronics, primarily known for its namesake iPhone, iPad, and Mac Book product lines. As of the time of this post (10:30AM CST), AAPL is currently trading at 110.35, down 2.42% on the day, and following a significant gap down in the broader market that continues to put downward pressure on most Nasdaq stocks. AAPL is currently well within the upper portion of its 52 week trading range of 70.50-119.75 (split adjusted), and the company is scheduled to release earnings today, 1/27/2015 after the market close.

Over the last eight quarters of earnings data available, AAPL has traded with mixed results, moving higher and lower evenly (four out of eight sessions) immediately following the EPS release. The average historical move in AAPL over this same time period was 5.2%. Currently the options market is pricing in a slightly larger than average implied move of approximately 7.55% based on the current price of the at-the-money straddle. This would represent about an $8.35 change in the price of the underlying stock by this Friday’s weekly options expiration. Despite today’s pullback, AAPL continues to remain in bullish territory on a daily chart, currently trading inside the upward sloping Ichomoku Cloud and holding above most relevant moving averages and the key 110 support level. Despite Apple’s mixed track record following earnings, the recent bullish price action and technical setup in AAPL have me leaning bullish this name going into this afternoon’s earnings report, and I will be looking to establish a long position before the close.
Potential Trade: Buying the AAPL Jan 30th Weekly 115-117 Call Spreads for $0.60
Risk: $60 per 1 lot
Reward: $140 per 1 lot
Breakeven: $115.60

 

 

Andrew Keene
KeeneOnTheMarket.com

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