DailyPlay – Opening Trade (AAPL) – December 13, 2024

AAPL Bearish Opening Trade Signal

Investment Rationale

Apple Inc. (AAPL) has recently entered overbought territory on both daily and weekly timeframes, exhibiting signs of exhaustion that suggest an increased likelihood of a significant selloff.

Currently, AAPL trades at a forward price-to-earnings (P/E) ratio of 33.34x, a substantial premium compared to the industry average of 17.89x. However, this valuation is not supported by its growth metrics. AAPL’s expected earnings-per-share (EPS) growth of 11.49% falls below the industry average of 13.93%, and its anticipated revenue growth of 6.89% is only marginally higher than the industry average of 6.50%. Although AAPL’s net margins of 23.97% far exceed the industry average of 8.40%, the recent decline in these margins heightens downside risks.

AAPL – Daily

Trade Details

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish Credit Spread

Details: Sell to Open 2 AAPL Jan 17, 2025 $260/$270 Call Vertical Spreads @ $1.19 Credit per Contract.

Total Risk: This trade has a max risk of $1,762 (2 Contracts x $881) based on a hypothetical $100,000 portfolio normally risking 2%. We suggest using 2% of your portfolio value and divide it by $881 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bearish trade on a stock that is expected to pull back from recent highs to lower support.

1M/6M Trends: Bullish/Bullish

Relative Strength: 8/10

OptionsPlay Score: 218

Stop Loss: @ $2.38 (100% loss to value of premium received)

View AAPL Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

PLEASE NOTE that these prices are based on Thursday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View AAPL Trade