DailyPlay – Opening Trade (AAPL) – January 22, 2025

AAPL Bearish Opening Trade Signal

Investment Rationale

Apple Inc. (AAPL) has recently reached overbought conditions on both daily and weekly timeframes, exhibiting signs of exhaustion that suggest a strong selloff may be ahead. Fundamentally, AAPL appears significantly overvalued, trading at a forward PE ratio of 32.91x, an 86% premium compared to the industry average of 17.89x. While its net margins of 23.97% are significantly higher than the industry average of 8.40%, justifying some level of premium valuation, the recent decline in its net margins highlights notable downside risks. Additionally, AAPL’s expected EPS growth of 11.42% falls below the industry average of 13.93%, and its expected revenue growth of 6.91% is only slightly above the industry average of 6.50%, further emphasizing its overvaluation concerns. Be aware that there is an earnings call on Jan 30, which is prior to the expiration date of this trade.

AAPL – Daily

Trade Details

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish Credit Spread

Details: Sell to Open 3 AAPL Feb 28, 2025 $225/$235 Call Vertical Spreads @ $3.68 Credit per Contract.

Total Risk: This trade has a max risk of $1,896 (3 Contracts x $632) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $632 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is expected to continue its bearish trend.

1M/6M Trends: Bearish/Mildly Bearish

Relative Strength: 3/10

OptionsPlay Score: 100

Stop Loss: @ $7.36 (100% loss to value of premium)

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 Tuesday ‘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