Apple and Amazon are set to report earnings after the bell, with the outcome expected to play a significant role in determining whether the stock market can recover from what has been a challenging week so far [1]. This earnings season has seen mixed results among big-tech companies, with recent examples including Alphabet and Tesla both falling, and Microsoft rallying while Meta declined [1]. Apple shares have performed strongly, rising 25% year to date and achieving record highs, including a 7% rally since the S&P 500 peaked on June 2 [1]. Options traders are anticipating a larger-than-usual move for Apple following its earnings report, with implied volatility pricing in a 3.4% move—more than double the stock's median 1.5% move after its past four reports [1].
Earlier in the week, options flows for Apple were bullish, but sentiment turned slightly bearish as early gains reversed and the broader market sold off on Wednesday [1]. Of the $634 million in options premium on Apple that day, over $470 million was tied to calls, but much of this activity involved selling calls, indicating a bearish tilt according to SpotGamma and Barchart data [1]. The most popular contract by volume was the 330-strike puts expiring Friday, which would only be profitable if Apple shares dropped by more than 3% [1].
In contrast, Amazon shares have been flat for the year, but options traders appear more optimistic about the company's earnings [1]. On Wednesday, most of the $615 million in options premium was tied to puts, but the prevailing strategy seemed to be selling volatility rather than buying it, resulting in a net positive trade sentiment of nearly $3 million and 100,000 deltas, according to Barchart analysis [1]. Traders are expecting a 6.6% move in Amazon shares after earnings, slightly below the median 7% move seen over the past four quarters, based on Cboe LiveVol data [1].
Overall, options traders are positioning for significant post-earnings moves in both Apple and Amazon, reflecting heightened expectations and uncertainty around these mega-cap tech stocks. Apple has just reached a record high, and market participants are actively strategizing around potential volatility in the wake of the upcoming reports [1].
CONCLUSION
The options market is signaling expectations for substantial volatility in Apple and Amazon shares following their earnings reports, with traders taking slightly bearish positions on Apple and more optimistic stances on Amazon. The results from these tech giants are poised to have a high impact on broader market sentiment as investors seek direction after a turbulent week.