Apple proves once again it is the ultimate cash machine. How to trade the stock from here
Apple (AAPL) didn’t just report strong fiscal second quarter earnings yesterday ; it delivered what CEO Tim Cook called the “best March quarter ever.” While the rest of the ‘Mag 7’ is caught up in the artificial intelligence arms race (spending hundreds of billions in capital investment), Apple remains the ultimate shareholder cash machine. By sticking to its decade’s old playbook of buybacks and dividend hikes, it’s reduced share count significantly and supercharged earnings per share (EPS) growth to 22%. Truly a masterclass in operational efficiency by Tim Cook. I want to use options to possibly own more Apple exposure as Tim Cook hands off the AAPL baton to new CEO John Ternus in the coming months. The S & P 500 recently hit its twelfth new all-time high of 2026 Friday morning, which makes me mindful of where we are on risk appetite and the recent snapback rally after the volatility surrounding the Iranian war. That being said, I want to use an options spread to assist in defining my risk to additional Apple exposure. Apple Q2 2026 Earnings Highlights: Triple Beat: Revenue came in at $111.2 billion (up 17% year-over-year), crushing the high end of Apple’s own guidance. EPS hit a March quarter record of $2.01, handily beating the Street estimate of $1.94. $100 Billion Club: The board authorized an additional $100 billion share repurchase program, matching last year’s historic authorization. This is massive and certainly keeps Apple in a league of its own for capital return while its peers pivot to wild AI capex. Dividend Hike: Tim Cook raised the quarterly dividend by 4% to 27 cents per share, payable on May 14 to shareholders of record as of May 11. The iPhone 17 “Super-Cycle”: iPhone revenue reached $56.99 billion, a new March quarter record. Cook also noted “extraordinary demand” for the iPhone 17 lineup and the new iPhone 17e. Services at All-Time Highs: Services revenue hit $30.98 billion. This high-margin business is now almost 28% of total revenue, providing further stability for the stock. Margin Expansion: Gross margin reached 49.3%, significantly surpassing previous guidance and reflecting the shift toward high-margin software and services. The Trade (Selling a Risk Reversal) Sold the AAPL $270 6/18/2026 put for $5.00 Bought the AAPL $290 6/18/2026 call for $6.00 This spread will cost an investor $1, or $100 per one lot Apple was trading around $281 when this trade was executed AAPL 1Y mountain Apple over the past year Apple needs to trade above $291 for this trade to be profitable and an investor must be prepared (and have the cash) to buy AAPL at $270 in the event this stalwart reverses lower before expiration. DISCLOSURES: I own AAPL in both ETFs that I manage; Essential 40 ETF (ESN) and Mango Growth ETF (GARY) . All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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