Apple to report fiscal Q4 numbers October 25

What's Happening

Tech titan Apple ( AAPL ) will report its fiscal fourth-quarter numbers on October 25. The company will report after the market close, with the consensus calling for earnings of $1.65. During the same period last year the company earned $1.96 per share, and the stock is up 10.7% on the year.

Technical Analysis

AAPL was recently trading at $116.53, down $7.29 from its 12-month high and $27.06 above its 12-month low. Technical indicators for AAPL are bullish and the stock is in a strong upward trend. The stock has recent support above $113.50 and recent resistance below $118.20. Of the 33 analysts who cover the stock, 25 rate it a "strong buy", three rate it a "buy", three rate it a "hold", and two rate it a "strong sell". The stock receives S&P Capital IQ's 5 STARS "Strong Buy" ranking.

Analyst's Thoughts

Apple is currently enjoying a strong run up following a successful launch for its new iPhone 7, but Wall Street will be quick to react to any signs of weakness that may arise in the company's quarterly report. In addition to any updates on the iPhone, Wall Street will also look for clues as to how strong the company's newest product; the Apple Watch has been selling. Even with the stock's recent gains, its valuation remains favorable, with a P/E of just 13.6. The low valuation suggests upside potential on the back of an earnings beat, but Wall Street will quickly turn against the stock on any signs of weakness, so investors should have an exit plan in place just in case the quarterly report disappoints.

Stock Only Trade

If you're looking to establish a long stock position in AAPL, consider buying the stock under $116.50. Sell if it falls below $105.00 or take profits if it gets to $134.00.

Bullish Trade

If you want to set up a bullish hedged trade on AAPL, consider a January 92.50/97.50 bull-put credit spread for a 25-cent credit. That's a potential 5.3% return (21.1% annualized*) and the stock would have to fall 16.1% to cause a problem.

Bearish Trade

If you want to take a bearish stance on AAPL at this time, consider a January 130/135 bear-call credit spread for a 50-cent credit. That's a potential 11.1% return (44.6% annualized*) and the stock would have to rise 12.0% to cause a problem.

Covered Call Trade

If you like the stock, but wish to lower your cost basis on a new position, you may want to consider a January $115.00 covered call. Buy AAPL shares (typically 100 shares, scale as appropriate), while selling the January $115.00 call for a debit of $110.80 per share. The trade has a target assigned return of 3.8%, and a target annualized return of 15.3% (for comparison purposes only).

Bron: Nasdaq