What to expect from Apple heading into the report tonight…

Email from a subscriber:

“Cody, you bought the Google calls before Google’s earnings report and it made us huge money. Why aren’t we doing the same by buying Apple calls before Apple’s earnings report?”

Great question.   The set up for each stock was very different heading into the earnings report.  For one thing, just look at the chart below and you’ll see that in the last month Apple’s stock has already outperformed Google’s stock even with that big pop:

Heading into Google’s report, I was confident that the bar was set low and that even if Google just delivered something close to in line that the stock would rise.  And if they were to report the blow out kind of numbers that they really did, I had figured that the stock would really pop, as I’d explained when I’d been buying the Google calls.

I don’t see that same set up heading into Apple’s call tonight.  Rather than the stock being far off its all-time highs like Google had been, Apple’s hitting new all-time highs yet again today.   Rather than the stock having just recently turned up after a stupid “Greek debt crisis” sell-off like Google had been, Apple’s already blown right past where it was before the so-called crisis.

Heading into Apple’s report, the bar is not set low.  Even as the stock remains remarkably cheap for such a great company, the bar for the near-term is very high as expectations into the report have been amped up, especially after that awesome Google report last week.  That report got a lot of the shorts out of Apple already and that means there’s not as much short-term firepower to pop things here this time.

The upshot is that Apple’s probably going to need to deliver a stellar earnings and revenue quarter along with some huge iPad2 numbers.  The analysts are looking for almost 8 million iPads moved last quarter.  That number needs to be closer to 9 million to juice this stock tomorrow.

I first bought Apple here on these pages back in April 2003 at $7 a share and I held it til I closed my hedge fund and became a TV anchor.  I’ve bought it back since I started trading again this year and I remain very bullish on Apple.  Indeed as I’ve predicted before, I do think it’ll be a $1000 stock someday.  In a few years.  Not so sure about tomorrow, but I’ll be holding my position regardless.