How to play Apple’s earnings today (video)

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The options market is implying a move of 4% in either direction.

 

On CNBC’s Options Action Monday, Dan Nathan suggested that investors with a long position in Apple who fear their shares could make an extreme move to the downside today should consider setting up a collar:

He would sell the May 212.50 call for $2.15, against a long stock position of 100 shares and use the proceeds to buy the May 192.5 put. The trade offers protection below $192.50 and it limits upside to $212.50. Investors can maximally lose $11.80 with the trade, which is a difference between the current stock price and the strike of the put. [via Benzinga]

Friend-of-the-blog Vic Castroll, who’s been predicting an extreme move to the downside for some time, tweeted this advice:

https://platform.twitter.com/widgets.js

Disclaimer: Since I’ve never owned Apple and have never been much of a trader, I have nothing to add. Don’t blame me if you drain your IRA doing something you read about here.

Cue CNBC’s video:

Here’s how to trade Apple ahead of earnings from CNBC.