Tech ETF Traders Bullish Before Apple Earnings

ETF Trends

In ETF options trading, Technology Select Sector SPDR (XLK) has attracted some interest in the May 30 calls, which is significant given Apple’s (AAPL) expected earnings tonight after the bell.

AAPL remains the largest holding in this index, at 13.00%, with IBM (IBM), Microsoft (MSFT), and Google (GOOG) “gaining market share” if you will, in terms of index representation thanks to AAPL’s punch-drunk stock performance for the past 7 months.

Notably, MSFT stock has bounced nicely post earnings, and within shouting distance of a fresh 52 week high, and the stock now has a 8.06% weighting in the index, and is the number two holding.

Being a market capitalization weighted index (weightings are calculated by multiplying share price times shares outstanding), AAPL had a much more significant weighting (north of 19%) when the stock was in the $600s range, than where the stock is today.

MSFT stock spent much of the latter part of 2012 in free-fall, toiling in the $26 range. But the month of April has been kind to shareholders as the stock is closing in on $31 at the moment in a post earnings environment.

Most will recall such a time in the marketplace which feels like twenty years ago, where people would mention “Mister Softee” and just smile.

The stock is at least causing investors to grin based on the recent surge to new multi-month highs.

In the past, we have examined ways to get diversified tech exposure as well as specific exposure to GOOG, so today we briefly fill in MSFT stock for this same search.

IYW (iShares DJ Technology, Expense Ratio 0.48%) carries an 8.64% weighting in MSFT, followed by IGV (iShares S&P North American Technology- Software, Expense Ratio 0.48%), with an 8.14% weighting.

The gigantic QQQ (PowerShares QQQ Trust, Expense Ratio 0.20%) of course has a healthy weighting to MSFT, at 8.04%.

Two other lesser known ETFs, TDIV (First Trust NASDAQ Technology Dividend, Expense Ratio 0.50%) with a 7.74% and IGM (iShares Goldman Sachs Technology, Expense Ratio 0.48%) which carries a 7.59% weighting in “Soft.” With new leadership emerging in Tech recently, and with more volatility to come in the near term thanks to upcoming earnings reports, expect Tech based ETFs to continue to see heavy trading interest.

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