4 Trade Ideas for Apple: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Apple, $AAPL, capped off a 5½ month run higher with a blow off top in early September. It quickly dropped more than 12% in 2 days and then continued to move lower over the next 2 weeks, It found support upon retracing 38.2% of the run higher mid-month and then reversed. It has slowly been recovering since, sticking to the 50 day SMA as it moves higher.

The Bollinger Bands® are now squeezed in, often a precursor to a move in price. The RSI is consolidating over the mid line with the last few days moving higher. The MACD is now positive and slowly moving up. There4 is resistance at 117.75 and 120.50 then 124.25 and 129 before 137.75. Support lower comes at 112.25 and 109.50 then 105.25. Short interest is low under 1%. The stock pays a dividend with a 0.70% annual yield and has traded ex-dividend since August 7th. The company is expected to report earnings next on October 29 and has a new iPhone product release on October 13th.

The October monthly options chain shows the biggest open interest on the put side at the 115 strike and then at 110. It is biggest at 115 on the call side as well, but very large at 120 and 125 above as well as 110 below. The October 30 Expiry options, covering the earnings report, have the biggest open interest at the 112 and 115 put strikes and then the 115, 130 and 120 call strikes. The at-the-money straddle suggest a price move of $10 or a range of 107 to 127 at expiry following the report. The November options chain has the biggest open interest at the 110 and 120 put strikes and at the 125, 120 and 115 call strikes, where it is much bigger,

Apple, Ticker: $AAPL

Trade Idea 1: Buy the stock on a move over 118 with a stop at 112.

Trade Idea 2: Buy the stock on a move over 118 and add an October 30 Expiry 115/110 Put Spread ($1.95) while selling an October 30 Expiry 125 Call ($2.05).

Trade Idea 3: Buy the October 23 Expiry/November 120 Call Calendar ($3.30) while selling the October 23 Expiry 110 Put ($1.15).

Trade Idea 4: Buy the November 100/120/125 Call Spread Risk Reversal for 40 cents.

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After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into the October options expiration, saw equity markets looking strong again.

Elsewhere look for Gold to continue its short term move higher while Crude Oil consolidates in a broad range. The US Dollar Index continues to move lower while US Treasuries pullback as well. The Shanghai Composite looks to continue in consolidation over support while Emerging Markets march to the upside. The Volatility Index looks to drift lower making the path easier for equity markets to the upside.

Their charts look strong on both timeframes. On the shorter timeframe both the QQQ and SPY are breaking above the consolidation ranges following the September swoon, while the IWM is leading the pack and ready to finally attack the February high. On the longer timeframe the SPY and QQQ are closing in on their all-time highs while the IWM may join them soon. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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