Apple (AAPL, $164.37, up $3.36) has added 15 points over the past week and is set to report earnings Wednesday. Expect continued improvement with Mac sales while a continuing decline in iPods is expected. The option chains are full of action as people place their bets on where Apple will end up after it reports. Given the current market environment Apple could move 10%-15% after they report. The May 175 calls (APVEO, $5.85, up $1.85) are up nearly 50% as over 12,000 contracts have traded so far. The calls opened at $3.85.

Microsoft (MSFT, $30.39, up $0.39) reports earnings Thursday. Yahoo (YHOO, $28.40, down $0.03) on Tuesday. This is going to get exciting. If Yahoo misses while Microsoft shines, then we could see Yahoo drop will Microsoft rallies. The deadline for Yahoo to accept the deal is fast approaching and we should know something by the end of the week. If Yahoo surpasses earnings estimates then it could also force Microsoft to raise its bid although the company has repeatedly said it wouldn’t. The Microsoft July 30 calls (MSQGF, $2.05, up $0.25) are now up roughly 15% since they were profiled.

Netflix (NFLX, $40.00, up $1.44) is having a good day so far. The stock is up ahead of earnings and the May 40 calls (QNQEH, $3.00, up $0.65) are active. They opened the session at $2.20. If you took a position before earnings be careful of the classic “buy the rumor, sell the news” reaction. Netflix’s earnings history has been erratic at times so protect your profits.

Potash (POT, $209.00, up $4.33) continues its surge. The May 200 calls (PYPEX, $21.00, up $3.00) were mentioned at $6.50 a contract and are up over 200%. If you haven’t set stops already, set them in the $15-$16 range. You can adjust along the way if the stock continues higher throughout the week.

Rick Rouse
Rick@OptionsMentoring.com