DailyPlay – Opening Trade (AAPL) – January 9, 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 higher likelihood of a strong selloff ahead. Fundamentally, AAPL appears significantly overvalued, trading at an 86% premium relative to its peers. While its net margins of 23.97% exceed the industry average of 8.40%, justifying a premium valuation, the recent decline in these margins introduces significant downside risks. AAPL’s forward PE ratio of 33.86x is considerably higher than the industry average of 17.89x. Additionally, its expected EPS growth of 11.41% and revenue growth of 6.91% are only marginally different from the industry averages of 13.93% and 6.50%, respectively. The company is expected to announce earnings after the close on Thursday, January 30, 2025, which will be factored into the option strategy chosen for today’s play.

AAPL – Daily

Trade Details

Strategy Details

Strategy: Long Put Diagonal Spread

Direction: Bearish Put Diagonal Spread

Details: Buy to Open 8 Contracts AAPL Jan 17/Jan 31 $232.50/$235 Put Diagonal Spreads @ $2.38 Debit per Contract.

Total Risk: This trade has a max risk of $1,904 (8 Contracts x $238) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $238 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is expected to continue to pull back from recent highs.

1M/6M Trends: Mildly Bearish/Bullish

Relative Strength: 7/10

OptionsPlay Score: 99

Stop Loss: @ $1.19 (50% loss 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 Wednesday’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