DailyPlay – Opening Trade (AAPL) Closing Trades (SHOP, AMGN) – March 26, 2025

Closing Trades

• SHOP – 79% gain: Buy to Close 3 Contracts (or 100% of your Contracts) April 25 $92/$80 Put Vertical Spreads @ $0.63 Debit. 
  DailyPlay Portfolio:  By Closing all 3 Contracts, we will be paying $189. We initially opened these 3 Contracts on March 12 @ $2.95 Credit. Our gain, therefore, is $696.
• AMGN – 48% loss: Buy to Close 3 Contracts (or 100% of your Contracts) April 25 $310/$300 Put Vertical Spreads @ $4.74 Debit. 
  DailyPlay Portfolio: By Closing all 3 Contracts, we will be paying $1,422. We initially opened these 3 Contracts on March 14 @ $3.20 Credit. Our loss, therefore, is $154 per contract.

AAPL Bearish Opening Trade Signal

Investment Rationale

As Apple Inc. (AAPL) approaches its $225 resistance level, a series of mounting challenges remains. A more selective consumer has led to disappointing iPhone 16 sales, a major component of revenue. Additionally, AAPL faces stiff competition in their singular bet on the future of augmented reality, where rivals are putting pressure on the future of Apple’s Vision Pro. Moreover, Apple’s venture into artificial intelligence has gone from bad to worse, pushing its core features that were marketed with the iPhone 16 into next year. Compounding these issues, the economic slowdown in China, a critical market for Apple, is dampening sales further. And with AAPL’s valuation trading at a 50% premium over its peers, it’s increasingly untenable given an outlook that lacks much optimism. This puts AAPL in a spot of vulnerability, suggesting that a breakout back towards recent highs is less likely.

If we look at the chart of AAPL, it has underperformed the S&P 500 since hitting a new all-time high in December and has continued to print a series of lower lows and lower highs. This suggests that as it approaches a major resistance level, the timing is optimal to add some bearish exposure where the risk/reward is attractive. Our downside target on AAPL is $200. 

And if we look at the business,AAPL’s valuation is hard to justify, trading at an 50% premium relative to its peers, despite growth metrics that are only in line with the industry. While its superior profitability has historically justified a premium valuation, recent slowdown in revenues and EPS growth puts this at significant risk.

• Forward PE Ratio: 30x vs. Industry Median 20x
• Expected EPS Growth: 11% vs. Industry Median 10%
• Expected Revenue Growth: 6% vs. Industry Median 6%
• Net Margins: 24% vs. Industry Median 13%

Without an immediate catalyst on the horizon, my preference is to take a bearish to neutral outlook by harnessing options premiums by Selling an May 2, $225/240 Call Vertical @ $5.58 Credit.

AAPL – Daily

Trade Details

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish Credit Spread

Details: Sell to Open 2 Contracts AAPL May 2 $225/$240 Call Vertical Spread @ $5.58 Credit per Contract.

Total Risk: This trade has a max risk of $1,884 (2 Contracts x $942) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $942 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 trajectory over the duration of this trade.

1M/6M Trends: Bearish/Bearish

Relative Strength: 4/10

OptionsPlay Score: 103

Stop Loss: @ $11.16 (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