The bullish signals ahead of this week’s Mag-7 earnings ...Middle East

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    As the S&P 500 continues its record streak, one important group of stocks has lagged the broader market: the Magnificent 7. Options traders are betting that could change this week.

    How Apple, Alphabet, Amazon, Meta, and Microsoft shares perform on earnings will likely decide how much higher the broader market can go. The S&P 500 is up 2.4% on the year, while the Mag-7 is basically flat.

    Calls are trading more expensive than puts in the five names that report this week, and call volume outpaces put volume in all but Alphabet.

    In the case of Alphabet, traders are betting on an unusually big move. Options prices around earnings imply a 5.25% move, even though the stock has only swung an average 1% in the last four quarters. That means those options look a bit rich compared to recent history.

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    Alphabet, YTD

    On the other hand, there may be easier juice to squeeze in Meta options. Even though the implied move in the social media behemoth is 7%, the actual stock move around earnings has averaged 9% over the past four quarters.

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    Meta, YTD

    With options prices rising alongside steep moves in tech companies and the Cboe Volatility index holding firm in the mid-18s, traders will want to be mindful of how much they’re spending to place directional bets, especially considering volatility almost always subsides the day after earnings.

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