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Let Apple’s Options Volatility Work For You

Despite the bout of weakness recently seizing shares of Apple (NASDAQ:AAPL), the stock is revealing a hat trick of bullish signals.  First, it has formed a clean pullback on the weekly chart, which could be setting up another in a long line of dip-buying opportunities.  Second, the stock bounced perfectly off the rising 200-day moving average and a key support level around $355.  Third, any type of selloff on Thursday in sympathy to the sad news of Steve Jobs’ passing (the stock was recently off 1.4%) will likely be short-lived and eventually give way to resuming the uptrend.

In addition to the bullish disposition of the stock, implied volatility is also sky-high right now in AAPL options, which makes short volatility strategies an alluring play.  Traders looking to acquire bullish exposure should consider selling the October 350-345 bull put spread for around $1.30 credit.   Provided AAPL remains above $350 by October expiration, the put spread will expire worthless, allowing traders to capture the $130 profit potential.  The maximum risk of $370 will be incurred if AAPL resides below $345 at October expiration.

Source:  MachTrader

At the time of this writing, Tyler Craig had no position on AAPL.


Article printed from InvestorPlace Media, https://investorplace.com/2011/10/let-apples-options-volatility-work-for-you/.

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