Apple stock is at a record — how to cushion gains ahead of earnings: AlphaSpace Options Playbook

Apple stock is at a record — how to cushion gains ahead of earnings: AlphaSpace Options Playbook Jared Blikre Thu, July 30, 2026 at 5:06 PM GMT+2 3 min read AAPL Apple ( AAPL ) has raced to the top of the "Magnificent Seven" leaderboard this year, notching three straight record closes. That leaves shareholders weighing how much upside remains against the risk that earnings knock the stock off its highs. Investors who own Apple and expect a quieter move from here can consider a covered call , which generates income up front in exchange for giving up some gains if the rally keeps running.

A covered call combines 100 shares with the sale of one call option . Because a standard option contract covers 100 shares, the investor needs at least that many shares for the call to be covered. The investor collects a premium but may have to sell the shares at the option's strike price.

Here's an example: An investor owns 100 Apple shares near $340 and then sells one Aug. 21 call with a $355 strike price . That options contract would have recently paid about $4.

35 per share, or $435 total. That $435 immediately belongs to the investor. The catch arrives if Apple keeps climbing.

Price: $4. 35. Strike: $355.

Expiration: Aug. 21. · Yahoo Finance AlphaSpace The AlphaSpace chart above shows the call option by itself.

The solid line estimates how the option may perform before expiration, while the dashed line shows the final payoff on Aug. 21. If Apple finishes below $355, the call would generally expire worthless and the seller keeps the $435 premium.

Above $355, losses on the short call begin to grow. Viewed alone, that option leg can look dangerous, as losses keep growing once Apple rises above $355. But the investor also owns 100 Apple shares, which gain value as the stock rises.

The combined-position chart below puts both pieces together. Long 100 AAPL shares at $340 and short one Aug. 21 $355 call for $4.

35. · Yahoo Finance analysis of AlphaSpace data The horizontal axis shows Apple's stock price at expiration. The vertical axis shows the profit or loss on the 100-share position.

The purple line tracks the shares alone. Every $1 move in Apple changes the position's value by about $100. The green line adds the short call and the $435 premium.

That cash gives the covered call a head start and lowers the breakeven price to $335. 65, compared with $340 for the shares alone. Below that break-even level, the position loses money.

The premium softens the decline, but only by $435. This is not crash protection. Between $335.

65 and $355, the trade is profitable and continues rising with Apple. At $355, the covered call reaches its maximum profit of about $1,935. Above that level, the green line goes flat, because further gains in the shares are offset by losses on the short call.

If Apple finishes above $355, the shares would likely be called away, meaning they are sold for $355 each. The investor keeps the premium, and the stock gains up to the strike but gives up anything beyond it. Story Continues That caps the potential profit, which is the biggest risk to the trade.

If Apple knocks earnings out of the park and surges, $435 could look small beside the upside surrendered. The covered call works best when Apple rises modestly, trades sideways, or slips a little. It works poorly when the stock takes off.

The strategy pays shareholders today for placing a ceiling on tomorrow. Earnings will decide whether that income was worth the trade. Jared Blikre is the global markets and data editor for Yahoo Finance.

Follow him on X at @SPYJared or email him at jaredblikre@yahooinc. com.