Option Trade
Apple Inc. (NASDAQ:AAPL) Calls 
Wednesday, 12th October, 2016

** OPTION TRADE: Buy the AAPL JAN 20 2017 120.000 call at approximately $3.75. Place a pre-determined sell at $7.00.  

Note: No protective stop losses added -- but if you wish to do so make it $1.50.            

by Ian Harvey

October 12, 2016

Apple Inc. (NASDAQ: AAPL), a company that designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications, is still running hot despite the market taking a downturn yesterday.

Apple is seeing plenty of bullish forecasts. Apple is in the midst of opportunities for market share expansion placing the company at a welcome, competitive advantage.

Things are looking good for Apple amid a strong iPhone 7 U.S. launch -- “healthy” data points presently indicated in China, and it’s arch-rival Samsung literally exploding in Apple’s dust with the disaster that has become of the Note 7.

On back of a “stronger than seasonal” third quarter it is believed that “the doom and gloom” around Apple is starting to thaw.

The tech titan is likely to remain as a top pick for the second half of 2016 and plenty of analysts are bullish – one such, for example, is top analyst Brian White, from Drexel Hamilton, who reiterates a Buy rating on shares of AAPL with a $185 price target, which represents a 57% increase from where the stock is currently trading.

White notes, “In early September, a flurry of media outlets reported the Galaxy Note 7 was catching fire and exploding, forcing Samsung to halt shipments of the new device. Today, the NY Times reported that Samsung will stop producing the Galaxy Note 7 and we believe this provides a tailwind behind what we believe is already a healthy iPhone 7/7 Plus launch.”

“With original market expectations for approximately 10-14 million Galaxy Note 7 units in H2:2016 (availability began on August 19), we believe Apple has an opportunity to pick up at least 8 million incremental units in CY:16. Moreover, this fiasco could permanently damage the Samsung brand in the smartphone market, a big opportunity for Apple to gain market share,” White concludes.

Apple has a market capitalization of $614.61 billion, a PE ratio of 13.30 and a beta of 1.22. Apple has a 12 month low of $89.47 and a 12 month high of $123.82. The company has a 50-day moving average price of $110.36 and a 200 day moving average price of $103.24.

Analyst Input

Apple Inc.‘s stock had its “outperform” rating reissued by analysts at William Blair in a research report issued to clients and investors on Monday.

Also, several other equities research analysts have recently commented on the company.

  • Cowen and Company reaffirmed an “outperform” rating and set a $125.00 price target on shares of Apple in a research report on Tuesday, June 14th.
  • Needham & Company LLC reaffirmed a “strong-buy” rating and set a $150.00 price target on shares of Apple in a research report on Tuesday, June 14th.
  • Sanford C. Bernstein reaffirmed a “buy” rating and set a $135.00 price target on shares of Apple in a research report on Tuesday, June 14th.
  • Goldman Sachs Group Inc. reaffirmed a “buy” rating and set a $124.00 price target on shares of Apple in a research report on Tuesday, June 14th.
  • Finally, Bank of America Corp. reaffirmed a “buy” rating and set a $120.00 price target on shares of Apple in a research report on Tuesday, June 14th.

Four investment analysts have rated the stock with a sell rating, nine have issued a hold rating, forty-one have assigned a buy rating and two have given a strong buy rating to the stock. The company presently has a consensus rating of “Buy” and an average price target of $126.13.

Harvey’s Options Volatility Indicator

Conclusion

Therefore, based on the facts above,  and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the AAPL JAN 20 2017 120.000 call at approximately $3.75. Place a pre-determined sell at $7.00.  

Note: No protective stop losses added -- but if you wish to do so make it $1.50.

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