With Apple Inc.’s all-time highs, a growing set of challenges emerged. If the iPhone maker’s stock remains stuck or lower, I’ll review the option trading which is beneficial. The latest iPhone 16 has not met sales expectations yet, indicating a more selective consumer. Additionally, AAPL faces fierce competition on its bizarre bet on the future of augmented reality, where competitors put pressure on Apple’s Vision Pro’s future. Furthermore, Apple’s adventures on artificial intelligence are bland and cannot match the innovations of competitors who set AI standards. (Note that Apple has just announced the release of a new value-priced iPhone that runs Apple Intelligence but stocks are not responding.) Complex these issues, China’s economic slowdown is a key market for Apple and is further weakening sales.) Complexing these issues, China’s slowdown is a key market for Apple and is further weakening sales. . And, because AAPL trades at 65% higher than its peers’ high prices, it becomes increasingly untenable because the perception lacks motivation to justify this premium. This puts AAPL in a vulnerable position, which suggests that a breakthrough at a new all-time high here is unlikely. If we look at the AAPL chart, it’s not doing well as it hits new all-time highs in December and continues to print a series of lows and lower highs. This suggests that the stock may need to be corrected, especially given the position at the top of its trading range. And, if we look at the business, although the growth indicators are only consistent with the industry, it is difficult to justify the valuation of AAPL, with a premium of 65% relative to peers compared to peers. Although its excellent profitability historically justifies advanced valuations, the recent slowdown in revenue and EPS growth makes this risk significant. Forward PE ratio: 33x with industry median 20x expected EPS growth: 11% with industry median 10% expected revenue growth: 6% with industry median 6% net profit margin: 24% with industry median Count 13% of the trades without immediate trading catalysts on the horizon, my preference is to take advantage of the option premium by selling April 4 ($245/260) vertical talical @ $5.74. This involves: Sale April 4, $245 Call @ $8.00 Buy April 4, $260 Call @ $2.26 View this deal at the updated price of the option, with the highest reward of $574 if the AAPL is below $245 . If AAPL rises above $260 at expiration, the maximum risk is $926. The transaction has a breakeven point of $249.74. This call vertical strategy takes advantage of the expected pullback of AAPL stock price with limited risks. With the current technical setup and advanced valuation of AAPL, this option trading fits with bearish papers, providing a way to profit from neutral or bearish risks. Disclosure: (None) All opinions expressed by CNBC Pro Contributors are their opinions only and do not reflect opinions from CNBC, NBC Universal, their parent company or affiliate and may have previously been on TV, radio, internet or internet or on the internet or another medium. The above is subject to our terms, conditions and privacy policies. This content is for informational purposes only and does not constitute financial, investment, taxation or legal advice or advice on purchasing any guarantee or other financial assets. The content is general in nature and does not reflect any individual’s unique personal situation. The above may not be suitable for your specific situation. You should strongly consider seeking advice from your own financial or investment advisor before making any financial decisions. Click here for the full disclaimer.
Apple is facing some challenges. If stocks struggle from here | Real Time Headlines
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