GLOBAL MARKETS-Asia shares follow Wall St higher on U.S. gridlock bets

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Apple (NASDAQ: AAPL) has fallen 5 percent from its recent high, and one trader expects more volatility from the stock when it reports earnings Tuesday afternoon. The options market is currently implying a 3 percent move for the stock in either direction by Fridays close. But given last weeks sell-off in tech and the sectors failure to regain those losses on Monday, Todd Gordon of TradingAnalysis.com said Apple, which has recently settled in around a $150 range, will likely stay within that consolidation even after reporting earnings. I see the market, as well as Apple, falling into a little bit of a range here, said Gordon Monday on CNBCs Trading Nation. Technology has lost its uptrend and is falling into a sort of sideways range, and I think we can use this to our advantage heading into earnings. To play this range to his advantage, Gordon suggested using a put butterfly trade structure. This involves selling two option contracts at a middle strike price while buying one contract at a higher strike price, and the other at a lower strike. The goal is for the stock to hit that middle strike. Specifically, Gordon bought the August 4 weekly 145/150/155 put fly for $1.34. Since each option accounts for 100 shares of stock, the most Gordon can lose on this trade is that $134. If Apple closes at $150, the middle strike price, on August 4 expiration, then Gordon would make about $370 on the trade, for a return of three times his money. Apple is up 28 percent year to date but has failed to make meaningful gains since early May. More From CNBC The dollar is doing something it hasnt done in 6 years Considering options trading? Here are 7 pitfalls to avoid What are semiconductor stocks trying to tell technology stocks? View comments
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