Call Options Or Put Options Apple (AAPL)?

| April 30, 2014 | 0 Comments

AAPL OptionsApple (AAPL) is once again proving why it’s the largest public company in the world.  The stock has gone almost straight up since last week and is nearing the $600 per share mark.

AAPL shares are trading at $598.47.  The stock’s up 57% from the 52-week low of $381.79 and is now almost a percent above the previous 52-week high of $595.98.

Is this an opportunity to buy call options on AAPL because of the company’s impressive quarter?  Or should you buy put options on AAPL because the buying frenzy is going to lose steam?

The bulls make a convincing argument…

You know the story.  AAPL handily beat earnings estimates last week, on both revenues and profits.  Since then, the stock has gone nearly straight up.

What’s more, the company boosted its dividend and share buyback program.  And, the stock is going to split in a 7-for-1 deal.  The cheaper share price could mean AAPL will be added to the Dow Jones Industrial Average – and spark another wave of fund buying.

And don’t forget, Apple is likely to announce the next version of its iPhone as well as another new product (such as the iWatch) later this year.  It seems there are plenty of reasons to be bullish on this stock.

But the bears have a compelling case as well… 

The good news might already be built into the share price at this point.  After all, the stock is already up over 11% from last week.  Perhaps the investor euphoria will be short-lived.

Also, if the company’s new products don’t resonate with the crowd, it could become a real problem.  The iPad already looks like it’s experiencing a major slowdown in sales.

Finally, AAPL is boosting its dividend and share buyback… does that mean management is worried about growth?  If Apple is transitioning from a growth stock to an income stock, the shares likely won’t keep going higher.

So is Apple’s great week a reason to be bullish, or has the stock surge run its course?

If you think the bulls are right, take a look at buying the AAPL June 21st $660 calls for around $2.50.

If you think the bears are right, take a look at buying the AAPL June 21st $540 puts for around $2.50.

Yours in Profit,

Gordon Lewis

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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.