AAPL reports next week. Here’s an options trade to capitalize on a possible earnings bounce

Big tech earnings reports have put investors on quite the roller coaster. Alphabet , Microsoft and Tesla have all moved higher post earnings, while Meta and IBM had opposite reactions by dropping precipitously. Inside of this recent technology, I think it is time to add to a nearly forgotten Magnificent Seven laggard: Apple . Apple is down 11% year to date, and I want to add exposure in a zero-cost manner ahead of its earnings release next Thursday. Investors are anticipating a year-over-year decline in both earnings and revenue for this former tech favorite, but I believe this is already priced into the stock. Although expectations for quarterly revenue is for a 5% drop, the iPhone maker should still drag in a remarkable $90 billion in revenue. Big tech Q1 results have had surprisingly odd reactions thus far. Meta beat on its top and bottom lines, but investors got spooked on Zuckerberg’s unexpected additional AI spend. The high-flying stock was down nearly 15% in traders’ initial reaction. So even if Apple’s earnings disappoint, there is a probability that investors buy up the former heavyweight tech champion of the world as it seemingly is offered at a discount. I want to use technicals in my approach on this bullish view. With a nearly oversold relative strength index reading in Apple of 42, I think there is significant support at $160 — which sits just above the 200 day moving average that has been well respected in the past three years. The trade Bullish risk reversal in Apple: Sold the May 17 expiry APPL $165 put for $2.75 Bought the May 17 expiry AAPL $175 call for $2.75 This risk reversal was established at no-cost There is risk in this spread (which I am comfortable with owning more Apple 3% lower) in the event the stock moves lower as I sold a naked (cash-covered) put. However, if Apple reclaims its mojo as tech repricing persists, my upside is unlimited being long at $175. DISCLOSURES: Kilburg is long AAPL. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.