Few big surprises are expected from Apple this quarter after its pre-announcement earlier this month.
But, the options market has other ideas. Traders are expecting a sizeable move for the mega-cap when it reports after the bell, says Todd Gordon, founder of TradingAnalysis.com.
"The options market for tonight is expecting roughly a $6.30 move higher or lower. That is the plus and minus one standard deviation," Gordon said on CNBC's "Trading Nation" on Tuesday. "Roughly 68 percent of the occurrences of Apple's stock price should, according to the options math, be between $150.24 and $162.64, so you have a $12 range."
At the time of Gordon's trade, a $6.30 move higher for Apple implied 4 percent upside and downside.
"All the stocks along with Apple heading into earnings certainly have elevated implied volatility, and what will happen right here is after the earnings come out tonight, that implied volatility will drop. You can use that to your advantage," Gordon said.
To do that, Gordon is executing a call credit spread trade where he sells a $162.50 call and buys the next strike up at $165. Then, to offer protection, he is selling a $150 put and buying the $148 put.
That trade offers $113 of profit if Apple finishes between $150.16 and $162 by Feb. 1 expiration. If Apple drops below $150, the trade will have a maximum loss of $87. If Apple rallies sharply above $162, the trade would lose $137.
