Apple (NASDAQ:AAPL) stock doesn’t pull back substantially every month. So, when this does happen, smart-money investors take action. You can join in-the-know traders with simple but effective Apple options strategies, and you can even get started today (as long as the options market is open).
As a business, Apple is doing just fine. The company’s third-quarter fiscal 2024 revenue and EPS results beat Wall Street’s consensus estimates.
However, the market used Apple’s soft Greater China sales, along with general jitters about Big Tech stocks, as excuses to sell Apple stock. However, this is really just an chance for options traders to turn volatility into opportunity.
The Apple Stock Uptrend Is Still Intact
Share-price dips can feel scary in the moment. Yet, pulling back your charts and taking a big-picture view can help to alleviate the fear.
It’s true that AAPL stock fell below its 20-day moving average (shown in blue). But then, that’s just a short-term trend indicator.
Apple stock also broke below its 50-day moving average (shown in purple), which is a medium-term indicator. However, the stock is also above its 200-day moving average (shown in purple), and that’s a long-term indicator.
In addition, the 20-day moving average hasn’t crossed below the 50-day moving average, and the 50-day moving average hasn’t crossed below the 200-day moving average. The takeaway here is that the AAPL stock long-term uptrend is still intact even after a bout of volatility.
Use Options to Cash in on the Fear
When a stock falls and its volatility rises, the prices of put options usually increase. If you sell a put option, you’re agreeing to buy 100 stock shares at a certain price, known as the strike price.
You’ll immediately receive a cash “premium” payment in your account for selling an Apple put option. You’ll also agree to buy 100 Apple shares if the stock goes below the strike price. However, that’s not a terrible outcome if you expect the stock to recover sooner or later.
A simple but effective strategy is to sell an Apple option with a strike price that’s “out of the money,” or below the current share price. For example, as of this writing, you can sell an Apple put option with a $190 strike price, expiring Oct. 18 for $5.25.
With that, you would receive $5.25 per share or a $525 total immediate cash payment in your account. You’d keep that “premium” payment no matter what happens to the AAPL stock price. Alternatively, you could sell an Apple put option with a $185 strike price, expiring Nov. 15, and collect $5.65 per share or a $565 total cash payout.
Make Smart-Money Moves With Apple Options
How can a brilliant options strategy be so simple? It’s possible when you use technical analysis and capitalize on Apple share-price volatility.
Apple will certainly weather the storm and continue to generate strong revenue and income. Besides, Apple stock is still in a confirmed long-term uptrend. Thus, assuming they can afford to buy 100 shares at a discounted price, smart-money investors should try selling Apple options today.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
