Apple’s recent launch of the iPhone 17 has been a big success, selling over 10% more than the iPhone 16. This has pushed Apple’s stock to a record high, rising 4% earlier this week. After struggling earlier in the year, Apple now tops the Magnificent 7 stocks, marking a turnaround in performance over the last four weeks. The tech sector is gearing up for earnings season, with strong expectations for Q3. Analysts predict earnings will rise by 12% year-over-year, and revenues will increase by 14.6%. This is lower than Q2’s growth, which saw earnings up 26.4% and revenues over 15.5% higher. Netflix, although not part of the Magnificent 7, plays a key role in influencing tech earnings. It forecasts $11.5 billion in revenue and $3.02 billion in net income for the last quarter. A strong subscriber growth is expected, driven by popular content like K-Pop Demon Hunters and Squid Game. Even with the potential for lower margins in Q4 due to content expenses, Netflix’s stock is up more than 30% this year. Tesla is set to announce its earnings on Wednesday and is also under the spotlight. Analysts expect revenues of $26.2 billion and net income of $1.9 billion, thanks to record car deliveries. The stock has more than doubled since April, with a recent increase of 5.85% in the past month. However, there are concerns that future revenues and deliveries could drop after President Trump cut the EV subsidy. With Apple’s stock reaching a record high on the back of strong iPhone 17 sales, there is increased risk heading into its earnings report. The stock struggled for most of 2025 before this recent four-week surge, causing expectations to rise rapidly. It’s also worth noting that implied volatility in Apple options is increasing, making strategies like selling out-of-the-money call spreads appealing for a possible post-earnings slowdown. The overall tech sector has a high bar to meet, with analysts forecasting 12% earnings growth for the Magnificent 7 this quarter. The CBOE Nasdaq 100 Volatility Index (VXN) has risen above 28, the highest since the Q2 earnings season. This indicates that significant price fluctuations may be ahead, suggesting that hedging long tech portfolios with puts on an index such as the QQQ could be wise. Netflix’s upcoming report will set the market’s mood. The options market anticipates an 8.5% move in its stock price after the announcement, indicating uncertainty about its future guidance. A straddle, which involves buying both a call and a put option, could be an efficient way to trade this expected volatility without betting on a specific direction. A key issue for Netflix is the potential rejection of its acquisition of Warner Brothers. We expect management to dismiss these rumors during the earnings call, which could lift Netflix’s share price while putting pressure on Warner Brothers. This could create a pair trade opportunity for those looking to go long on Netflix while shorting Warner Brothers ahead of the report. Tesla is also scheduled to report this week after a surge of over 100% since April, driven by record Q3 deliveries just ahead of the EV tax credit expiration. September 2025 data showed an increase of 40% in EV sales from the previous month, suggesting a spike in demand that might not be repeated in Q4. This creates a classic “sell the news” scenario, where even strong earnings could be overshadowed by weak future guidance. A significant risk for Tesla is a drop in its Q4 delivery forecast following the cut in subsidies by the Trump administration. While there was enthusiasm for Tesla’s Full Self-Driving (FSD) announcements in 2023 and 2024, that may not be enough if guidance for the near term disappoints. Buying puts on Tesla could be a straightforward way for investors to position themselves if they lose patience with promises for future Robotaxi revenue.

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