As the market emerges from its second mini-correction of 2018, it's time to be more discerning with your trading ideas. One way to do that is to find stocks that have an established long-term uptrend and solid market potential. Once again, Apple Inc. (NASDAQ: AAPL ) fits that bill rather well.
Apple stock is no longer as "recession proof" as the talking heads on Wall Street once proclaimed. But the company remains on more solid footing that many of the more speculative trading possibilities. In short, there are many companies that would love to have the lowered iPhone shipping projections that analysts are touting for Apple's 2018 performance.
What all these negative financial media headlines mean for Apple is lowered expectations. For Apple stock investors and traders, this is a good thing. As a result, AAPL shares remain a solid value play, even amid rising market volatility.
For instance, take Apple stock's technical backdrop. The shares have maintained a solid uptrend for nearly the past two years. Apple stock price action has steadily trended higher despite lowered iPhone shipments and less-than-spectacular product launches.
That's because even a "failed" product launch at Apple (like the HomePod) still brings in loads of cash for the company.
Click to Enlarge Technically, AAPL stock is in the process of rebounding from the lower rail of this long-term uptrending channel. The shares once again found support near their 200-day moving average and have retaken the shorter term 50-day in the process. Only short-term resistance near $175 stands in the stock's way of reaching new all-time highs once again.
On the sentiment front, Apple's outlook remains broadly bullish. Thomson/First Call reports that 32 of the 38 analysts following AAPL stock rate it a "buy" or better, with no "sell" ratings. Furthermore, the consensus 12-month price target rests at $192.49, suggesting 11.5% upside for the shares.
Apple stock options traders, meanwhile, have grown weary in the increased volatility of the current market. AAPL's April put/call open interest ratio has risen to 0.80 - a reading that is elevated for Apple stock.
As for April implieds, options traders are pricing in a potential move of about 4.4% for AAPL stock through expiration. This places the upper bound at $180 and the lower bound at roughly $165.
2 Trades for Apple Stock
Call Spread: Traders looking to bet bullish on AAPL might want to consider an April $175/$180 bull call spread. At last check, this spread was offered at $1.81, or $181 per pair of contracts. Breakeven lies at $176.81, while a maximum profit of $3.19, or $319 per pair of contracts - a potential return of 76% - is possible if AAPL stock closes at or above $180 when April options expire.
Put Sell: For a more neutral trade on Apple stock, traders might consider an April $160 put sell. At last check, this put was bid at 99 cents, or $99 per contract. As always, you keep the premium received as long as Apple stock closes above $160 when April options expire.
The downside is that should AAPL trade below $160 ahead of expiration, you could be assigned 100 shares for each sold put at a cost of $160 per share.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
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