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How to play Apple and two other tech names on progress in US-China trade talks

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How to play Apple on any progress in U.S.-China trade talks

Progress in U.S.-China trade talks is moving in fits and starts.

After months of negotiation, the U.S. is reportedly close to entering a trade agreement with China, a deal that could be sealed at a summit between President Donald Trump and Chinese President Xi Jinping at the end of the month.

Tech stocks caught in the trade crosshairs, such as Apple, could ride a wave of optimism heading into that summit, said Sarah Potter, author of "How You Can Trade Like a Pro."

"Apple has just been sitting here and waiting for an opportunity to get even higher than where it has been lately," Potter said on CNBC's "Trading Nation " on Tuesday. "As an options trader, I think this is a really great opportunity to start looking for trades in a stock like this, as we are seeing it move sideways."

"I look at buying something like a $170 call, probably taking that out to the end of March, so a fairly quick move," said Potter. "I'm taking that risk off the table in terms of how much I'm paying, so I might be buying a call, looking to purchase at around $4, as opposed to just picking up the stock and looking for that quick pop to the upside."

Potter is betting Apple will stay above the $170 strike price by the cost of the options contract by March 29 expiration. Apple would have to fall 3 percent to move below $170.

"Intel as well is poised again to move higher, " added Potter. "It's a much cheaper stock. It has had some larger moves up and down and because of that volatility, that looks pretty exciting to me, too. Again, I would just be looking to keep it straight and keep it quick so buying a call, holding the trade for about three weeks, looking for that to pop up and move higher."

Potter is targeting a move back up to previous highs at $58 and would exit the position if it dropped below $53.

Finally, Broadcom could also get a big boost if trade issues get resolved, says Potter, though it carries higher risk than the others.

"This one may be a little bit riskier because it already has had some large moves," said Potter. "Be just a little more cautious in making sure that you're not buying the top. But certainly I would be remiss not to talk about a stock like this, especially when we're linking it to tariffs, because it is so directly related."

Intel has outperformed the market so far this year with a 13 percent gain, while Broadcom and Apple have lagged.

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How to trade Apple and Intel on U.S.-China progress