Apple Inc.: How to Play AAPL Stock Amid New Highs

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Shares of Apple Inc. (AAPL) jumped in early morning trading Monday on news that RBC Capital Markets was raising its price target for the tech titan to $120. The analyst-induced bump momentarily vaulted AAPL stock to yet another new all-time high north of $115. By day’s end, however, the euphoria dissipated and profit taking caused the stock to close lower by 0.17%.

News and price target raising aside, the price performance of AAPL stock has been a veritable dream for shareholders. The cult stock is now up 42% on the year, with 19% of that coming in the past month alone. If Apple continues to deliver this holiday season, 2014 is going to be a banner year for the bulls.

Apple aapl stock
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Source: MachTrader

In the short run, Monday’s sharp intraday reversal left Apple shares with an ominous looking bearish candlestick, which may mark a near-term top in the stock. Of course, after the recent run in AAPL stock, some consolidation is well-deserved.

That said, the uptrend looks solid, so any and all pullbacks demand to be bought.

How to Play AAPL Stock

In response to Monday’s large intraday swings, implied volatility in AAPL stock options jumped just shy of 10%. And yet, despite the sharp uptick in demand, option premiums remain cheap.

Traders looking for a lower-cost alternative to buying shares could consider buying call options. The unlimited reward inherent with this type of option play allows unfettered participation for further upside in AAPL into year-end.

The Jan $110 call option in particular looks ripe for the picking. The call currently can be purchased for $6.40, but it should become cheaper if AAPL stock pulls back in the coming days.

The max risk will be limited to the initial debit paid, while the max reward (as mentioned) will be unlimited.

As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2014/11/aapl-stock-apple-inc/.

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