Apple shares bounce off lows as earnings optimism picks up: 3 other FAANG stocks dominate earnings calendar
Apple (AAPL) are among the large-cap tech stocks to report next week, along with Amazon (AMZN), parent company of Google Alphabet (GOOGLE), Meta . Platform (META), Advanced micro-devices (AMD) and Qualcomm (QCOM).
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Apple shares rose more than 7% at the end of October after earnings and revenue beat expectations.
With the stock market in a confirm the uptrend Against a backdrop of improved sentiment, Apple could have another positive response to earnings. However, Apple stock is still far from highs and below the 200-day moving average.
Apple stock drops to lows
Apple still has to face overhead supply problems when it works its way higher. But Apple stock is holding up well after jumping above the 50-day moving average on January 23.
For the current quarter, the Zacks consensus estimate is that adjusted earnings will fall 8% to $1.94 per share. Revenue is expected to drop 2% to $121.2 billion. Results will be available on Thursday after closing.
The quarter ending in December is typically Apple’s strongest quarter in terms of revenue. But Apple has faced production difficulties in China that have caused shipments of iPhone 14 Pro models to drop during the holiday season.
When Apple reported earnings on October 28, total revenue of $90.15 billion exceeded expectations. iPhone revenue grew steadily, growing nearly 10% to $42.6 billion, but just below consensus of $43.2 billion.
Mac revenue was a bright spot, growing 25% to $11.5 billion. This figure far exceeds the consensus of $9.36 billion. Other product sales, including the Apple Watch and AirPods, also topped expectations, up 5% year-over-year.
Top stocks to watch
A host of other top stocks are on the earnings calendar, including drilling technology provider championX (CHX), set in a cup base with handle with a buy point of 32.85. The cup holder with handle has been the launch pad for many major stock market leaders in the past.
ChampionX shows several consecutive quarters of triple-digit earnings growth. Year-to-date estimates are strong too: Full-year profits are expected to soar 98% for 2022 and another 58% this year. Results will be available on Wednesday after closing.
In the semiconductor industry, Allegro microsystem (AGM) third report before opening. The chipmaker fell sharply after breaking through the 34.24 entry but finally found support at 21-day exponential moving average. It surpassed the alternative entry on Thursday on high volume. peer group Microchip technology (MCHP) is approaching the 80.60 entry ahead of earnings Thursday after the close.
giant chip Qualcomm (QCOM), meanwhile, has risen above its 200-day moving average. Some recent above-average volume price gains have lifted QCOM Cumulative/Distribution Rating to B. Results are also due on Thursday after closing.
Separate, two charts stocks — caterpillars (CAT) and insurance company chubb (CB) — also in the earnings table.
Caterpillar has been on a steady run after entering the Leaderboards in early January. Results will be available early Tuesday. Look for adjusted earnings in Q4 to grow 47% to $4.95 a share, with revenue up 15% to $15.89 billion.
Chubb reported on Tuesday after closing. The Swiss-based property and casualty insurer has been performing well since being added to the Top list in late November, when it completed entry 216.10.
Options trading strategy
A basic options trading strategy around earnings — using call options — allows you to buy stocks at a predetermined price without much risk. Here’s how the options trading strategy works and what recent call trading looks like for Apple stock.
First, identify the top-rated stocks with bullish charts. Some may be established in solid foundations at an early stage. Others may have already logged out and are receiving support at 10-week moving average first. And a few may be trading near the highs and not giving up on many price levels. Avoid stocks that extend too far from the appropriate entry point.
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In options trading, a call option is a bullish bet on a stock. A put option is a bearish bet. A call option contract gives the holder the right to buy 100 shares of a stock at a specified price, known as the strike price.
Puts are for weak performers with a bearish chart. The only difference is that the money strike price is just below the underlying stock price. A put option gives the holder the right to sell 100 shares of a stock at a specified price.
You make a profit when the stock falls below the strike price with the put option.
Check strike price
Once you’ve determined your call’s earnings setup, check the strike price on your online trading platform or at cboe.com. Make sure the option is liquid, with a relatively tight spread between the bid and ask prices.
Find the strike price right above the underlying stock price (out of money) and check the premium. Ideally, the premium should not exceed 4% of the underlying stock price at that time. In some cases, the monetary strike price is also waived as long as the premium is not too expensive.
Choose an expiration date that suits your risk goals but remember that time is money in the options market. A close expiration date will have a cheaper premium than an expiration date. Buying time in the options market costs more.
See which stocks in the portfolio chart
This options trading strategy allows you to take advantage of the bullish earnings report without taking too much risk. The risk is equal to the cost of the option. If the stock deviates from earnings, the most you can lose is the amount payable on the contract.
Apple stock options trading
This is a recent call from Apple.
As Apple stock trades around 143.60, a slightly losing weekly call with a strike price of 144 (expires on Feb. 24) comes with a premium of about $4.55 per contract. , or 3.2% of the underlying stock price at the time of transaction. time.
A contract that gives the holder the right to buy 100 shares of Apple at 144 per share. The most that can be lost is $455 – the amount paid for a 100-share contract.
Taking into account the premium paid, Apple would have to break through 148.55 for the trade to start making money (144 strike price plus $4.55 premium per contract).
A call option for Qualcomm is also reasonably priced. As QCOM stock trades around 133.94, a weekly call with a strike price of 134 (which expires on February 24) offers a premium of around $5.50, or 4.1 % stock price.
Follow Ken Shreve on Twitter @IBD_KShreve for more analysis and understanding of the stock market
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