Apple ( AAPL ) has been under pressure for months, but the stock took a huge hit when its CEO, Tim Cook, lowered future guidance and blamed weakness in China for the reduced forecast. AAPL has fallen 21% over the last six months.
AAPL was recently trading at $147.07 down $86.4 from its 12-month high and $5.06 above its 12-month low. InvestorsObserver's Stock Score Report gives AAPL a 9 long-term technical score and a 14 short-term technical score. The stock has recent support above $142 and recent resistance below $157. Of the 28 analysts who cover the stock 13 rate it Strong Buy, 1 rate it Buy, 14 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell, AAPL gets a score of 35 from InvestorsObserver's Stock Score Report.
Apple stock has been under pressure over the last six months, but the stock fell nearly 10% on January 2 after the company lowered its fiscal Q1 revenue guidance to $84 billion from a previous midpoint guidance of $91 billion. The company blamed weakness in China for the lower guidance. With the recent selloff, AAPL now trades at a forward P/E of just 10, which should start to attract value hunters. The ongoing trade war between the U.S. and China is definitely a concern, but big hits to both nation's stock markets will create pressure on both countries to find a resolution to the current situation, and if/when a deal is eventually reached the entire market should move higher and stocks like Apple that have been hit particularly hard should enjoy nice rallies. Apple shares are up nearly 4% after the big selloff on news that the U.S. and China have resumed trade talks, but AAPL remains vulnerable to any negative news regarding the ongoing negotiations. The company will report it fiscal Q1 numbers January 29, and with muted expectations there is a good opportunity for the stock to rally if results come in as expected. Analysts have an average price target of $205.58 on the stock.
Stock Only Trade
If you're looking to establish a long stock position in AAPL consider buying the stock under $147. Sell if it falls below $136 or take profits if it gets to $169.
If you want a bullish hedged trade on the stock, consider a 2/15/19 115/120 bull-put credit spread for a $0.30 credit. That's a potential 6.4% return (55% annualized*) and the stock would have to fall 18.6% to cause a problem.
If you want to take a bearish stance on the stock at this time, consider an 2/15/19 170/175 bear-call credit spread for a $0.3 credit. That's a potential 6.4% return (55.5% annualized*) and the stock would have to rise 15.8% to cause a problem.
Covered Call Trade
If you like the stock but wish to lower your cost basis on a new position, you may want to consider a 2/15/19 $150 covered call. Buy AAPL shares (typically 100 shares, scale as appropriate), while selling the 2/15/19 $150 call for a debit of $141.37, per share. The trade has a target assigned return of 6.1%, and a target annualized return of 53% (for comparison purposes only).