I have written several articles in the past two years with a similar title to this post. The fundamental and technical rationales always seem to prove themselves. The sales, the must-have gadget magic, the earnings growth, the margins, and the institutional must-have sponsorship of the stock all make buying the dips in AAPL a worthwhile endeavor.
There are probably some regular patterns of trading behavior here too in how institutions react to AAPL around its quarterly events. There is often a run-up to the report, and then either a pop higher or slow drift lower. Their last report in October gave us another variation as the miss on revenue and EPS caused a 5% drop the next day. I saw that as a buying opportunity with low risk.
But who always has the ready cash to deploy in a $400 stock? In October, before their last earnings report, I looked at some ways to play AAPL with January options that did several things for you:
1) Less capital outlay
2) Custom-defined risk/reward
3) Opportunities to increase leverage and return potential
4) A "set-it-and-forget-it" strategy that offers "sleep-at-night" risk while you give the play time to work out between earnings reports. In other words, instead of shelling out $400 per share (or $200 on 50% margin) and worrying about where you stop yourself out on a decline below $380, I designed three possible bull call spreads using January options that limited risk to around $30 per share even on a far worse decline.
All of the spreads ended profitable before Jan expiration because AAPL delivered the pullback and rally I expected. They were not without risk, of course, but the key point is that you could define your risk according to your confidence in a bull thesis about the stock.
Below I give the link to the original strategy piece. Until they report tonight, let's hear what you expect from the king of must-have gadget-magic and productivity tools...
Has their new company guidance plan given investors a clearer idea of where to value the stock?
How do you value it? Are you buying the dips, trading the swings, or investing for the long-term?
What opportunities and obstacles do you see for Apple growth?
How to Make 50% on AAPL in 3 Months?
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