A Lot Of Bullishness On Apple Heading Into Earnings

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We are concerned that expectations may be too high with the stock rebounding over 45% in recent weeks.


Recall that in only the past year, Apple stock has been below $100, more than doubled to above $200 and fell more than 40% in less than two months to $115, only to move more than $50 to $168 in about seven weeks.

We find this trading action amazing and indicative of the trading environment…..

“Not A Great Time To Pick Apple” (subscription required), Shaw Wu, Analyst, American Technology Research, Tuesday April 22

Apple (AAPL) shares had been on an amazing tear, rising 40% from early March when they were trading around $120 to yesterday’s close at $168 (AAPL 1 Year Chart).  They’ve sputtered a little today on downgrade from buy to hold from American Technology Research (see above).

But bullishness on the stock heading into earnings still prevails as can be seen from the action in the options market.  More than twice as many May calls as puts have traded today, according to Scottrade, with the big action at strike prices from $160-$180.  That compares to more puts than calls outstanding coming into todays trading.

If you own Apple stock, now is a good time to take profits, in my opinion.  A good report will probably be met with a gap up and then a fade on profit taking.  A bad report could result in a big selloff.

Disclosure: Top Gun has no position in Apple (AAPL) shares.

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