Earnings season is upon us and stocks have been under pressure for past couple of weeks. Many stocks including $AAPL and $AMZN recently broke their 50 days support point which is usually quite bearish for the short term. $GOOG seems to be heading towards that way as well.
This week is quite special in terms of earnings season and tech giants. All the three tech big boys reported in this blog are reporting their earnings over next couple of weeks. So we should start preparing for the trades and decide if we want to play the run up. In the past I have been successful played the earnings run up for $AAPL, $AMZN and $GOOG and this time around trying to figure out if to touch these stocks or not.
$QQQ has recently been extremely weak and has been leading the charge down. Market has completely changed its character from buying the dip to short the rips. However looking at the RSI levels of these stocks, I am tempted to say that these tech stocks might turn around in next day or two.
$GOOG is scheduled to take the lead and report the earnings on 18th. If they report good earnings, bodes really well for $AAPL and $AMZN as a whole since they are in the same sector.
Based on my analysis, I am thinking about a long call spread for
LONG 750 weekly calls + SHORT 780 WEEKLY calls
Right now that spread is selling for around 10 bucks. Risk reward is pretty much 2x which I like going into the trade. If I do take the position, would definitely sell around 75% of the holding before earnings to minimize the risk and hold the rest as lottery.