Apple shares are sinking after reporting earnings — here's why you shouldn't be surprised

Apple shares fell as much as 5 percent in after-hours trading on Thursday after reporting quarterly earnings. While the company's reported earnings per share and revenue beat analysts' expectations, its iPhone sales fell short of estimates.

Prior to its report, the options market expressed Apple stock's implied move was around 5 percent in either direction, with a somewhat cautious sentiment. The lack of volatility priced into the stock ahead of time was somewhat unusual.

Technology stocks have been through the ringer recently, with the tech-heavy Nasdaq Composite and Nasdaq 100 coming off their worst months since the depths of the financial crisis. Once high-flying names such as Facebook, Netflix and Alphabet are trading well off their highs.

Apple, however, has held up remarkably well relative to its other large-cap technology peers, and the options are not pricing in much volatility at all on the back of its earnings report.

Stacey Gilbert, head of derivative strategy at Susquehanna, told CNBC's "Trading Nation" on Thursday afternoon that Apple's expected move on the earnings is more or less in line with that of recent quarters.

"You would assume the market is pricing in a higher level of volatility as it approaches the Apple earnings cycle, and that's actually not what we're seeing. In fact, volatility has kind of come out of the market following the Apple event earlier this week. The market's pricing in less than a 5 percent move on earnings. If we look over the last both four quarters and eight quarters, we've seen on average around a 4 percent move, so there really isn't an excessive amount of volatility being priced in here," Gilbert said.

From a sentiment perspective, Gilbert said she's seeing an increasingly cautious tone within the market that may signal investors aren't as enthusiastically bullish as they've been in the past.

"Apple was typically a stock that we saw nothing but upside call buyers, investors continuing to position for the upside, wanting to use the options as a way to spend less money but get that upside exposure. We've seen a shift more recently where investors are starting to sell some of that upside, thinking that Apple may start to be peaking here; at least not have the same upside that it has [had]," she said.

Fundamentally, some investment advisors are growing cautious on the company's growth.

"It's a sustainable company … Apple is just one of those companies that I believe belongs in everybody's portfolio. They're going to have a good quarter, but I don't think they're going to knock anyone's socks off," Mark Tepper, president and CEO of Strategic Wealth Partners, said Thursday on "Trading Nation."

Tepper said that while he's not dumping the stock, he is growing concerned about what he describes as a potential slowdown in iPhone sales and a lack of innovation in other areas of Apple's business.

Apple shares were trading lower in the after-hours session on Thursday after closing at session highs, at $222.22 per share.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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