Trading Strategies For Apple Stock Heading Into Q3 Earnings

Apple is set to release its third-quarter financial results after the market closes. Analysts estimate an EPS of $1.09 on revenues of $74.24 billion.

Apple Inc (NASDAQ:AAPL) is scheduled to release its third-quarter financial results after the market closes on Thursday. Leading up to the event, the stock was trading lower.

In the previous quarter, Apple reported earnings per share (EPS) of $1.52 on revenue of $94.8 billion, surpassing estimates for EPS of $1.43 on revenues of $92.96 billion. This strong performance led to a surge in the stock price, reaching a new all-time high of $198.23 on July 19.

Analysts are estimating that Apple will report EPS of $1.09 on revenues of $74.24 billion for the third quarter. Ahead of the event, JP Morgan analyst Samik Chatterjee maintained an Overweight rating on the stock and raised the price target from $190 to $235.

From a technical analysis perspective, Apple's stock appears neutral leading up to the event. It has broken bearishly from a rising channel pattern, negating its previous uptrend. However, this drop was accompanied by low volume, suggesting that it could be a bear trap.

It's important to note that holding stocks or options over an earnings release can be risky, as the market reaction may not align with expectations. Stocks can react positively to an earnings miss and negatively to an earnings beat.

Options traders, especially those holding close-dated calls or puts, face additional risk due to increased premiums caused by implied volatility.

Looking at the Apple chart, the stock has fallen below the bottom ascending trend line of a rising channel pattern. If it receives a positive reaction to its earnings release and moves back into the pattern, it may encounter resistance at the upper ascending trend line.

In conclusion, investors and traders are eagerly awaiting Apple's third-quarter financial results. The stock's performance leading up to the event suggests a neutral outlook, but market reactions to earnings releases can be unpredictable. Options traders should be cautious due to increased risk associated with implied volatility.