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Apple hits record highs as investors weigh covered calls ahead of earnings
The stock has posted three straight record closes this year, and covered calls aim to generate up-front premium by capping upside if shares keep rising.
Apple shares have surged to the top of the “Magnificent Seven” this year, with three straight record closes, setting up a high-stakes setup as investors look toward the next earnings period.
According to Yahoo Finance, one approach for holders expecting a quieter move from here is a covered call, which pairs owning at least 100 shares with selling one call option against that position.
The example outlined involves owning 100 shares near $340 and selling an Aug. 21 call with a $355 strike, which would pay about $4.35 per share, or $435 total, immediately as premium.
In that scenario, the trade would generally benefit if Apple finishes below $355, while the covered call's break-even level drops to about $335.65 versus $340 for the stock alone, and the maximum profit is about $1,935 if the stock reaches the strike at expiration.