Apple has pushed to new all-time highs heading into its quarterly earnings report Thursday after the bell, even as other tech names falter. The options market implies a post-earnings move of just 3.8%, and CNBC trader Mike Khouw lays out two defined-risk ways to position around the print — one to hedge, one to play for upside.
Apple has hit new all-time highs even as broader tech names and momentum plays have faltered, and the options market is pricing the coming earnings report as a calm event. Options pricing implies a post-earnings move of just 3.8% heading into Thursday's report after the bell. That leaves volatility premiums reasonable across the board.
Investors treat the Cupertino titan as largely insulated from the AI capital expenditure cycles of the mega-cap hyperscalers while avoiding the supply chain exposure of pure-play chipmakers. According to CNBC, they view the company as "above the fray", and it has so far avoided some of the pain that some in the AI trade have suffered recently.
Institutional flow tilts defensive into the print
Institutional positioning already signals a defensive lean. One of the more notable blocks to trade was a purchase of 3,500 August $310 puts at $2.22 per contract.
That protection costs roughly 65 basis points, or 0.65%, of the current share price, and in this setup long holders would be protected below $307.78. The $310 strike sits higher than where the stock traded during Apple's previous quarterly report, so buying downside protection there locks in a substantial portion of the recent run-up while risking less than 1% of total position value.
Record multiples argue for defined risk on the long side
Valuation is the sticking point for anyone not already long. Apple trades at 35x+ forward earnings, its highest multiple since 2007, and Khouw argues that chasing full-sized equity positions at peak multiples while the broader tape softens creates an uncomfortable risk/reward entry.
Instead, he points prospective buyers toward long calls or bull call spreads. Buying call options leverages upside potential if Apple beats expectations while strictly capping maximum risk, and it avoids full equity exposure should the elevated multiple re-rate lower.
Source: CNBC
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