Shares of Apple Inc. (NASDAQ:AAPL) have definitely been under pressure over the past few weeks. After making new all-time intraday highs of $183.50 on March 13, AAPL has fallen nearly 8% over the past eight trading days. Apple stock is now negative for 2018.

While fears of a President Donald Trump starting a trade war have weighed heavily on stocks generally, the indiscriminate selling is likely to soon crescendo. I look for AAPL stock to find its footing over the next several days.

Apple now sports a current price-earnings of roughly 17, well below the S&P 500 multiple of nearly 22. It looks even cheaper on a forward basis with a 15.33 forward P/E for 2018. Add in a solid 1.5% dividend yield and Apple stock is nearing levels that will certainly entice value investors.

While the days of heady growth are over for Apple, especially considering the mega market capitalization of $850 billion, it is becoming more attractive as a core investment as shares continue to drop. Important to also remember the increased stock buyback program by Apple will also be a long-term positive for shares.

On a technical basis, Apple is getting extremely oversold, with 9-day RSI readings below 30 for only the fourth time in the past year. The previous three times AAPL reached such extremes proved to be significant short-term lows in Apple stock. $165 is also a major support area that should provide additional downside support.

The recent sharp drop in Apple stock has also driven implied volatility (IV) in AAPL options higher with IV now in the 59th percentile.

This makes option prices more expensive and favors selling strategies when structuring trades. So to position to be a buyer of Apple stock on further weakness, a put credit spread trade makes sense.

Apple Stock Trade

Buy AAPL April $157.50 puts and sell the April $160 puts for a 45 cents net credit.

Maximum gain on the trade is $45 per spread with a  maximum risk of $205 per spread. Return on risk is 21.95%. The short $160 call strike is well below the $165 support area for AAPL and provides a 5.24% downside cushion to the $168.85 closing price of Apple stock.

Tim may hold some of the aforementioned securities in one or more of his newsletters. Anyone interested in finding out more about Tim and his option-based strategies can go to https://marketfy.com/item/options-and-volatility.