Market indicator turns bullish for Apple just before earnings

Apple reports fiscal second-quarter earnings Thursday after the bell, and something unusual is happening in its options market. One measure of downside risk has fallen precipitously in the past five weeks as traders turn bullish and it has done so heading directly into the earnings print. Traders are ready for fireworks. Apple's average one-day move following earnings has been 2.2% over the past 12 quarters but options imply that this cycle's move will be nearly 3.6%. Bracing for a larger-than-normal move makes sense if you're worried about how higher oil prices might impact consumer spending on Apple's devices or have questions about the transition from Tim Cook to John Ternus. Tariff uncertainty around components sourced out of China and the broader question of where iPhone demand goes in the back half of the calendar year give traders plenty of reason to pay up for protection going into the print. But while the option market is predicting the move will be larger than normal, one metric gives insight into what that market is saying about direction and the message is good news. RiskDex is the measure of how expensive AAPL put options are relative to call options and it has fallen precipitously in the past five weeks (you can see the three-year chart of AAPL RiskDex below). On March 25, the reading was 2.92, the highest in the last three years, and at midday on Wednesday it had declined to 1.36 — a drop of more than 50%. …