Recession Looms on Thursday, Make This Trade in Advance of It

Shah Gilani|July 26, 2022

I love Apple. But their earnings report this time around might not wow anybody.

GDP numbers come out this week, and they’ll have to address the recession if it’s officially announced

On top of that, Apple said it might have to freeze hiring and is having supply chain issues.

With this in mind, there’s a chance that investors won’t be thrilled with Apple’s numbers or guidance.

And if that happens, you can set yourself up to capitalize on these potential results with today’s play.

I’ll show you exactly how to do it in today’s Take It to the Bank Tuesday.

Click the video below for the new trade.

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Hey everybody. Shah Gilani coming to you with your Take It to the bank Tuesday, where I recommend what you should do with $100 today. It’s going to be a crazy, rock and roll all week.

Especially on Thursday, because Thursday we get the advanced GDP numbers. It’s the first read on the second quarter growth domestic product growth or not growth. If it’s negative, then that means we will have had two quarters in a row of negative GDP growth.

That means we’re in a recession.

So that’s what we have Thursday morning to look forward to Thursday afternoon. After the bell, we’ve got Apple (AAPL) earnings. Now, love Apple, love all the products. Love the company. Love management. But I don’t know that this time around they’re going to wow anybody. Especially on the earnings call going to have to address a recession.

If indeed by the time the earnings call starts, we will have posted a negative quarter in terms of Q2 GDP, they’re gonna have to address it. So they’re gonna have to address forward guidance in some way. And I don’t think they’re going to be overwhelmingly positive because this is a good time, especially after they just said they’re going to freeze hiring for some teams. Now they haven’t said they’re gonna be any layoffs. Haven’t said anything about job cuts. Haven’t said anything too damaging.

But they have said that they’re going to freeze hiring. They’ve also said that they’re having continuing supply chain issues. Guess what? At the same time they report, they’re going to be compared to the fiscal third quarter of a year ago. So this is Apple’s not calendar second quarter results coming out. It’s their fiscal third quarter results.

Now compared to a year ago, their fiscal third quarter results a year ago, revenue growth was up to 36%. Now there was a lot of sales going on there. A lot of stay at home, work from home. And so we say, who knows where whatever from home and iPad sales were up, Mac sales were up. I don’t think this quarter compromise. We’re gonna see positive sales in terms of either iPads or max. And I think they’re gonna come back down to maybe flat, maybe some growth revenue’s expected to grow 2% this quarter versus fiscal quarter third for 2021, 2% revenue growth versus 36% a year ago. That’s not gonna bode well.

So I’m not expecting earnings to wow. At the same time, apple has bounced off of its recent lows, a heck of a lot more, but more than twice what the S&P has bounced. So it’s gotten ahead of itself. If the earnings aren’t robust, aren’t positive. If guidance isn’t great.

If they warn in any way, shape or fashion about, well, this recession that we now maybe seem to be in is going to probably have some effect. I don’t think the stock gonna do well. In fact, I think it’s gonna come in maybe 5%, 10%, maybe not the first day. Maybe not in the futures after the market’s closed. Maybe not in the morning, maybe not the next day.

But possibly if not, I think over the next couple of weeks they’ll come down, but it certainly could happen in a day or two. It could be really devastating for Apple in terms of a 5%, 10% down, move on the stock, which is a big move for apple stock, easy to happen. And I think it could.

So what I recommend for you guys is today buy a put spread on Apple. And if the earnings aren’t good, come Thursday. After the close Friday morning, you could start to be collecting some profits. So I recommend for you a hundred dollars that you buy the August 19th, 2022 Apple $145-$146 put spread. That means you buy the 146 strike price puts and you sell the 145 strike price puts. Now that’s a spread. That’s a put spread. You’re buying.

Now I think you can maybe get that for 25 cents. It’s a $1 spread. If you pay 25 cents to buy that put spread and before expiration or add expiration, if Apple is below 1 45, the put that you sold you’ll collect the full dollar value of that spread. And you paid 25 cents for it. If you get it that cheap, that’s a 300% gain people. Is it worth a hundred dollars to try and make a 300% game? I think so you always put a stop in there. If it doesn’t work, if earnings are better than expected, the stock rises, then maybe sell your position for half and maybe take a $50 loss. Okay. I think that’s palatable because you’re trying to make so maybe risking $50 to make a 300% return.

Yeah, that’s the kind of play I like. So that’s what I recommend for you this Tuesday. I think you should buy the August 19th, 2022 Apple $145 – $146 put spread. If you have to pay 50 cents and you get the full value of the spread, you still make a hundred percent. That’s what I recommend you do today on this $100 Tuesday. And what do I do with that? I would take it to the bank. Hopefully Friday morning. Cheers everybody catch you next week.

Cheers,

Shah