What options are telling us about Apple and earnings

Options traders are pricing in a bigger move than normal from Apple Inc. (AAPL) when it reports after the bell Today.

Options pricing implies a move of 6.6% in either direction through Friday, based on a strategy called a straddle, according to options-data provider Trade Alert. The strategy involves buying a put option and call option at the same strike price near the stock’s current price, in order to hedge out the direction of the move. The more expensive the cost of the put and the call, the bigger the expected move.

A put option grants the right to sell shares of the underlying stock at a specific price by a certain time. Call options confer the right to buy shares.

Most of that 6.6% move is likely to come the day after Apple reports earnings, which tends to be a big catalyst for stock swings. A move of that magnitude would be the biggest since Apple reported earnings in April 2014, when shares rose 8.2%. The average post-earnings move from Apple is 5.2%, according to Trade Alert.

Apple options are heavily traded among retail and institutional investors.