The former tech darling Apple is set to report next week, and investors seem to be underappreciating this $3 trillion essential company. I want to use options on the second-worst performing “Mag 7” name in 2025, AAPL, to define a bullish strategy as I believe earnings will help the former tech King find its footing again. Apple shares have lost nearly 15% year-to-date as persistent concerns related to iPhone sales, an AI void in the Apple ecosystem, and the uncertainty swirling around potential impact of trade tariffs between the US and China on its supply chain. With a 5.84% weighting in the S & P 500 , Apple has been the S & P 500’s “Top Detractor” in 2025. Apple is scheduled to release its fiscal Q3 2025 earnings on Thursday, after the market close. Expectations are for tariffs to potentially add about $1 billion to costs for the quarter (which may or may not materialize), either in a negative or possibly positive way…gross margins will be impacted, projected at roughly 46%. The Trade As this is a trade predicated on a significant earnings move, my timeline will be shorter than usual, but I will go a week out after earnings. I want to attempt to put this position on for nearly no cost. Thus, this trade has three legs as I chose to sell an otm (out-of-the-money) put to help finance the upside call purchase. Sold the $205 8/08/25 AAPL put for $1.95 Bought the $220 8/08/25 AAPL call for $3.25 Sold the $230 8/08/25 AAPL call for $1.00 This trade was execute when APPL was trading above $214 This spread will cost an investor $0.30 or $30 per one lot The spread will have the ability to profit $9.70 or $970 per one lot if Apple closes above $230 on 8/08/25 An investor must be prepared to own AAPL at $205 as that is a cash-covered put. Meaning that an investor will be “put” to the stock if Apple was to fall under $205 on 8/08/2025. DISCLOSURES: Kilburg is long this spread and long AAPL. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
