Call Options Or Put Options On Apple (AAPL)?

| September 10, 2014 | 0 Comments

Options on Apple (AAPL)The world finally got to see Apple’s (AAPL) new line of products at its huge launch event this week. The largest company in the world certainly made a splash with three, shiny new products.

AAPL shares are currently trading at $101.00. The stock is trading just 3% below the 52-week high of $103.74 and is 61% above the 52-week low of $62.79.

Is this an opportunity to buy call options on AAPL because of the company’s three brand new products? Or should you buy put options on AAPL because investors are likely to sell on the news? 

The bulls make a convincing argument…

AAPL introduced two new versions of the iPhone 6 and the Apple Watch at their conference this week. The iPhone is always a huge seller, so you can be sure it will do fine.

But, the company could do even better by selling the more expensive iPhone 6 Plus, which is AAPL’s biggest phone yet. Large phones are becoming very popular and the company can charge a premium for them.

And let’s not forget the Apple Watch. The huge new product area for Apple could be a real game changer. Plus, both the iPhones and the Apple Watch will have the ability to make mobile payments, a possible major source of additional revenues.

But the bears have a compelling case as well… 

One of the most often heard clichés of investing/trading is “buy the rumor, sell the news”. Basically, actual news often doesn’t live up to the hype of the rumor mill.

With something as big as an Apple new product launch, the rumor mill was working overtime. So, regardless of what products the company launched, many investors are likely to be disappointed.

More importantly, no one has any idea how the new Apple Watch will sell. Apple is certainly counting on it to do well. But, it’s a concept that needs to be accepted by the public, and $349 is a pretty steep starting point.

So is it time to be bullish on AAPL due to the new gadgets, or should you take a bearish position because who knows how enthused consumers will really be?

If you think the bulls are right, take a look at buying the AAPL November 105 calls for around $2.75. 

If you think the bears are right, take a look at buying the AAPL November 95 puts for around $2.50.  

Yours in Profit,

Gordon Lewis

Tags: , , , ,

Category: Call Or Put Options?

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also editor of our dynamic theme-based options trading service, Advanced Options Adviser, and one of the key analysts behind the highly successful Options Trading Wire.