Apple’s launch of the iPhone 17, outselling the iPhone 16 by over 10%, has driven its stock to a record high, with a 4% increase early this week. After lagging earlier in the year, Apple is now leading the Magnificent 7 stocks, marking a reversal in performance over the past four weeks.

The tech sector’s earnings season begins with expectations for strong Q3 performance, aiming to maintain the Magnificent 7’s outperformance. Analysts predict a year-on-year earnings increase of 12% and a revenue rise of 14.6%, slightly lower than Q2’s growth figures of 26.4% in earnings and more than a 15.5% increase in revenues.

Netflix, not part of the Magnificent 7 but influential in setting the tone for tech earnings, anticipates $11.5bn in revenue and $3.02bn in net income for the last quarter. There’s expected strong subscriber growth driven by content like K-Pop Demon Hunters and Squid Game. Despite possible lower margins in Q4 due to content investments, its share price remains up by over 30% this year.

Tesla, releasing earnings on Wednesday, is also under scrutiny. Analysts expect revenues of $26.2bn and net income of $1.9bn, higher than Q2 figures, due to record car deliveries. The stock is up over 100% since April, with a recent rally of 5.85% in the past month. However, risks remain as future revenues and deliveries may dip after President Trump cut the EV subsidy.

Given Apple’s surge to a record high yesterday, driven by strong iPhone 17 sales, we see elevated risk heading into its earnings. The stock was a laggard for most of 2025 before this recent 4-week rally, meaning expectations have risen very quickly. We should consider that implied volatility in Apple options is climbing, making strategies like selling out-of-the-money call spreads attractive to capitalize on a potential post-earnings stall.

The broader tech sector faces a high bar, with analysts forecasting 12% earnings growth for the Magnificent 7 this quarter. We’ve seen the CBOE Nasdaq 100 Volatility Index (VXN) climb to over 28, its highest level since the Q2 earnings season, which signals significant price swings are expected. This suggests that hedging long tech portfolios with puts on an index like the QQQ could be a prudent move in the coming weeks.

Netflix, reporting this week, will set the tone for market reactions. The options market is currently pricing in an 8.5% move in its stock price following the announcement, reflecting uncertainty over its future guidance. A straddle, which involves buying both a call and a put option, could be an effective way to trade this expected volatility without picking a direction.

A specific catalyst for Netflix is the potential denial of an acquisition of Warner Brothers. We expect management to dismiss this speculation on the earnings call, which could provide a boost to Netflix shares while pressuring Warner Brothers. This creates a potential pair trade opportunity for those willing to go long Netflix and short Warner Brothers ahead of the report.

Tesla also reports this week after a run of more than 100% since April, fueled by record Q3 deliveries ahead of the EV tax credit expiration. We saw US auto sales data for September 2025 confirm a 40% month-over-month surge in EV purchases, a pull-forward in demand that is unlikely to be repeated in Q4. This sets up a classic “sell the news” scenario, where even a strong earnings beat could be overshadowed by weak forward guidance.

The key risk for Tesla is a sharp fall in its Q4 delivery forecast now that the Trump administration’s subsidy cut is in effect. We remember the enthusiasm for its FSD announcements in 2023 and 2024, but that may not be enough to support the stock if near-term guidance disappoints. Buying puts on Tesla could be a direct way to position for investors losing patience with promises of future Robotaxi revenue.