Apple (AAPL) will report fiscal Q14 results today after the close. The options market is implying about a 7% move in either direction tomorrow, or about $10. With the stock very near $143 the Jan29th straddle (the at the money call and put premium are equal to $10) if you bought that, and thus the implied move you would need a rally above $153 or a decline below $133 to make money on Friday’s close.

Shares of AAPL are trading within 1% of the all-time high made this week, already up nearly 8% on the year. The one year chart below shows the very well defined uptrend from its March lows and the recent breakout near $139 after a four-month consolidation. There is nothing not to like here from purely a technical perspective, and a pullback to the uptrend near $130 would be fairly constructive for long-term bulls on the stock in my opinion. A break below the uptrend and are threatening the two lows in November and of course, its 200-day moving average all the way down at $106.50:

 

The consensus is looking for about 20% eps growth and 14% sales growth in FY2021, the stock trades at about 35x this year’s expected earnings, a more than 15-year high, while P/E to Growth (PEG) is just under 4, also at a 20-year high:

 

ICYMI, last night Microsoft (MSFT) which was also trading at a new all-time high, after a long consideration like AAPL, reported a huge beat and very solid guidance, and despite an implied move just under 5%, and the stock gapping up 5% during the conference call last night, today the stock has been met with some profit-taking, only up 1% as I write. AAPL’s chart looks identical to MSFT.

 

My Take into the print: AAPL is up 30%, or $650 billion since their Q4 report. Any and all good news is IN the stock and reflected in the stock’s decades high earnings multiples. I suspect the quarter was good, and the limited visibility they give will be sound. The company could hint at some supply constraints of components like semiconductors that are slowing supply, but in this market maybe investors are willing to look past that and anticipate that they make it up in the current quarter.

As I said on CNBC’s Fast Money last night, while the quarter was fantastic, I am not sure who the incremental buyer is, in the current market…I feel the same for AAPL.

 

So what’s the trade? If I am long stock, I look to sell weekly calls against my shares targeting the implied move of 7% to add some short term yield, for instance…

vs 100 AAPL shares long at $144, Sell to open 1 Jan 29th 152.50 call at $2.15

Break-even on Jan 29th close:

Profits of the stock up to $152,50, with an effective call-away level at $154.65 (short call strike + call premium) up about 7.4% If the stock is 152.50 or below take in the $2.15 in premium or about 1.5% in two days. If the stock is above 152.50 prior to expiration the long holder can cover the short call to keep the long stock position intact so it is not called-away.

Losses of the stock below $141.85, the current stock price less the call premium received which serves as a small buffer to the downside.