Apple Stock Is Looking Ripe For A Rally


Sell ​​juicy sluts to cash in now to be a later and lower AAPL stock buyer.



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NASDAQ stocks had their worst month since the 2008 financial crisis. The VIX, a measure of investor fear, is approaching its highest levels since the Covid crisis began. Apple, seemingly waterproof, has also felt the fury, even after a record revenue quarter.

Apple (AAPL) shares are now at oversold levels that have indicated major buybacks in the past. I like to use a simple system to identify possible technical turning points. The process used was presented in a previous article for those who missed it.

The AAPL chart below shows the times when the 9-day RSI, MACD and Bollinger Percent B achieved overselling readings at the same time. AAPL also traded with a big discount on the 20-day moving average. All of these previous cases showed that they set significant short-term lows in the AAPL stock, as highlighted in the water. Apple again generated a technical buy based on these indicators recently.

There is significant horizontal support at the $ 150 level for Apple. $ 140 is an additional downside support.

Implicit volatility (IV) also indicates a buy. The recent rise in red has taken IV to the extremes once again.

It is important to note how these important peaks in IV have coincided with the main buying points of the previous price chart. Combining IV analysis with technical analysis can be a much more robust timing tool.

Implicit volatility also means that the prices of options are much more expensive. This makes sales strategies more effective when it comes to building operations.

Let’s see how selling now has to pay to be an Apple buyer at lower levels has become a more profitable and less risky endeavor.

Equally, the following two should be true when it comes to selling prices:

  • Higher stock prices should be equivalent to lower selling prices
  • Less time to maturity should mean lower selling prices

Not everything is the same in the case of the implied volatility (IV) of AAPL options from last November until now. A quick comparison in parallel, while highlighting how the recent rise in IV has made prices dramatically more expensive.

Below is the mounting option for 11/12/2021

Below is the assembly of similar options from last Friday – 29/04/2022

Current selling prices are much more expensive although AAPL shares were much lower in November with two more days to go. This is due to the huge jump in IV.

Let’s see how far you use the table above. On November 12, AAPL shares were more than 7 points below what they closed on Friday ($ 149.99 versus $ 157.65). At that time, December $ 150 sales had 49 days to maturity (DTE) compared to Friday’s June $ 150 sales of $ 150.

So while stocks were much lower and there was more time to maturity, December sales of $ 150 in November traded 55 cents cheaper than similar whores of $ 150 in June.

Because? Implicit volatility (IV). IV has increased by almost 80% since November 12 to date. This 17.6 point increase means that the price of options has skyrocketed to the highest levels we have seen in the last 12 months. And that even after income.

The sale of the sale obliges the seller to buy the shares at the selling price. In our example, selling the June $ 150 puts would force the seller to be a buyer of AAPL shares for $ 150. For this obligation, the seller receives the option premium, or the option price. Selling a June $ 150 AAPL for $ 5.40 would force the seller to buy 100 shares of AAPL shares for $ 150 while receiving $ 540 in advance for that obligation. This makes the net purchase price (or break-even point) $ 144.60 ($ 150 strike less than $ 5.40 premium received).

Compare that to the same scenario on November 12th. The salesperson is still required to pay $ 150, but only receives $ 485 in advance. This puts the purchase price of the break-even point at $ 145.15.

The cushion, or difference between the current stock price and the break-even point is dramatically bigger now than in November due to the huge pop in IV. The pillow is now just over 13 points compared to just under 5 in November. 8.28% pillow now compared to only 3.23% pillow then, to put it in percentage terms. So selling puts now means a larger down payment along with much more downside protection compared to just a few months ago. All because IV has increased due to increased fear in the market.

Warren Buffett is a major shareholder in Apple. They make up almost 50% of Berkshire Hathaway’s portfolio. Warren Buffett also has a saying that goes “Be greedy when others are afraid.” So be like Warren and take advantage of the fear with a short bullish position on a defeated APPL value.

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What to do next?

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All the best!

Biggam team

Publisher, POWR Options Bulletin


shares closed at $ 412.00 on Friday, down $ -15.81 (-3.70%). For the year, it has decreased by -12.99%, compared to a% increase in the S&P 500 benchmark index over the same period.


About the author: Tim Biggam

Tim spent 13 years as chief options strategist at Man Securities in Chicago, 4 years as chief options strategist at ThinkorSwim and 3 years as First Options market maker at Chicago. He makes regular appearances on Bloomberg TV and contributes weekly to TD Ameritrade’s “Morning Trade Live” network. His primary passion is to make the complex world of options more understandable and therefore more useful to the everyday trader. Tim is the editor of the POWR Options newsletter. Learn more about Tim’s background, along with links to his most recent articles.

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