Apple is a "Boomer" Stock, but Still Makes Piles of Cash
Apple is a "Boomer" Stock, but Still Makes Piles of Cash
By:Tom Preston
AAPL's weakness could be a good contrarian trade opportunity for bulls
Is there a more “boomer” stock than Apple (AAPL)? 15 years ago, it was the hottest company around, but lately, the market’s treating AAPL like an old man yelling at clouds.
After hitting an all-time high last December, it’s down almost 12% in 2024 and at its lowest price in six months. But AAPL does have piles of cash on hand and is by far the strongest brand of any of the mega-cap stocks. And it could show just how successful it is on its next earnings call.
AAPL’s OTM calls are trading over equidistant OTM puts, indicating that the market sees risk to the upside. That might be enough for a contrarian trader to consider a bullish strategy in it. AAPL’s implied volatility (IV) has been climbing with the approach of its earnings release in early May, and its 27% overall IV and 66% IV rank are high enough to make its options good candidates for short premium strategies.
Trading idea
If you think AAPL might keep rallying in the next few weeks and are willing to take risk through earnings, the short 160 put in the May expiration with 43 DTE is a bullish strategy that has an 89% prob of making 50% of its max potential profit before expiry, and that generates $5.06 of positive daily theta.
Tom Preston, tastylive chief market strategist, is responsible for the brokerage’s trading strategy, client-facing trading software and futures trading products. He contributes to Luckbox magazine and writes tastylive's Cherry Bomb newsletter. He's been trading options since 1992.
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