Todd Gordon, the founder of TradingAnalysis.com, spoke on CNBC's "Trading Nation" about a bullish options trade in Apple Inc. (NASDAQ: AAPL) ahead of earnings. The company is scheduled to report earnings on July 30.
Gordon explained that Apple is trading close to its downtrend line, which is now resistance. He expects the stock to break out above the resistance after earnings.
To make a bullish bet, Gordon wants to buy the August 212.50 call, sell two contracts of the August 217.50 call and buy the August 222.50 call for a total cost of 77 cents. If the market jumps to $217.50, the trade is going to reach its maximal profit of $4.23. Above $217.50, the profit starts to trail off and the maximal loss for the trade is 77 cents.
Apple's stock closed Tuesday at $208.84 per share.
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