This week’s Apple trading strategies (1/13-1/17)

7 Comments

  1. Gregg Thurman said:

    I did very well with my weekly in-the-money Call Spreads strategy (buy at Monday’s intraday low). I even added to my position on Thursday (Friday expiry). ROI for the week ~37% (goal is 15%-20% gain weekly).

    To that end I have developed tools to aid those trades. They have worked quite well sans macro events of the past 18 months (trade war tweets).

    I will continue along this path, perhaps taking on a bit more risk. What I buy will be determined by tomorrow’s intraday low (indicator says $308-$308.50). If AAPL performs as indicated I’ll be a buyer of the JAN 17 $302.50/$305 Call Spread. The extra risk I spoke of would be the $305/$307.50 Call Spreads.

    My desired entry price is $1.95-$2.05.

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    January 12, 2020
  2. Jerry Doyle said:

    I assume it depends on whom you give more credence to in assessing whether Apple currently is expensive. Tim Seymour says “Apple ain’t cheap here,” although he holds it long as an investor. Gene Munster, one of the premier former top tech analysts who knows Apple intimately and who is held in esteem by many Apple followers because of Gene’s astute thinking track record on Apple, puts forth a very strong argument for Apple trading 50% higher than Friday’s close. Gene says a logical base case (as Joseph Bland frequently denotes) is that Apple should have a P/E ratio similar with the P/Es of Microsoft, Alphabet and Facebook, which are 31, 30 and 35 respectively. Gene prognosticates Apple will earn about $15 per share in FY 2020. So Gene is saying, if you place a 31 multiple on Apple then you are staring at a $465 share price. Gene says there is a bigger trend underway in quality of multiples.

    My take: The above is just another in a series of revelations with high merit that Apple is a strong buy for long term investors and that we can expect reasonably good stock price growth in the coming 2-3 years along with continued share repurchases and dividend increases.

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    January 12, 2020
    • Turley Muller said:

      I don’t necessarily think Apple should have same P/E’s as FB, MSFT, and Google. Those guys have higher sales growth and margins. But, P/E’s aren’t always a great metric as they are quite simplistic. That said, I think the valuations on those stocks are quite stretched- and there is regulatory risks not reflected in share prices. They are all one-trick ponies too.

      Apple deserves a premium for its large user base and its tops in loyalty. Apple also sits in the driver’s seat for payments, AR, and health monitoring which I believe we will see some big developments in the next couple years. IL

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      January 12, 2020
  3. Gregg Thurman said:

    Apple also sits in the driver’s seat for payments, AR, and health monitoring which I believe we will see some big developments in the next couple years.

    Yes it does.

    Look at the AirPods. The original was Pooh pawed as way over priced and not as good as competing products. AIRPODS #1 seller since launch.

    Then there are the Apple Watches. See above.

    And Apple Pay. See above.

    Apple Music. Growing faster than Spotify – larger in the US.

    Health monitoring capabilities – there is no second place

    We all know these things. My point is we didn’t know about them until just before Apple announces them, and we don’t know what Apple is working on now. As we have learned, not knowing is not the same thing as nothing is going on.

    At this time in Apple’s history it has developed several platforms from which can spring several different, but connected, new products

    I don’t know what they might be other than a very vague “something in AR” or “something in autonomous autos”, or whatever, but I’m confident than when Apple launches, whatever it is will be panned as over-priced and not as good as… But then it will become aspirational, the industry leader in mind share and profit share, and will make Apple’s ecosystem that much stickier.

    As each new glue factory is added to Apple’s product list, be it hardware or Services, Apple’s revenue and net income is going to grow, and now that we’ve broken through this psychological PE barrier AAPL will be priced for what Apple IS, a well oiled machine turning out decades of winning product after winning product each enjoying industry leading profits.

    So I don’t care about future PE ratios, just like getting past units reported AAPL is moving past PE as a measure of reasonable value.

    2
    January 12, 2020
    • Gregg Thurman said:

      Please forgive the punctuation errors in the above. Stream of consciousness writing is prone to ungainly grammar and punctuation.

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      January 12, 2020
      • Turley Muller said:

        Ha- grammar looks fine. AirPods have been nuts and Apple is working on adding health sensors to them, perhaps glucose and O2. A number of non-health possibilities too. It’s its own platform. That $199 price point on the Apple Watch S3 had to big seller. Considering 75%+ of Watch sales are 1st-timers, the installed base is becoming sizable. Sales should remain strong since we haven’t really gotten into the replacement cycle with so many sales to new users and the longevity of a great product. My mother’s turns 5 in April. Wears it everyday.

        Regarding AR- not sure what’s going on there, but there are a TON of patents being filed. All over my head in technical speak, something about point clouds. Tons of wireless (5G) patents too. Whenever Apple introduces iPhones with its own integrated base bands there should be considerable improvements in battery life.

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        January 12, 2020
  4. Fred Stein said:

    Apple and AAPL:

    The bull case for Apple is strong, as others above have noted. It is still under-appreciated by most analysts. Beyond the current success of AirPod and Watch, Apple’s has a moat in wearable and the potential of all kinds of services, some already in use and some in the works. Apple in India may be surprise us, despite such a slow start.

    The bull case for AAPl is also strong, Four forces feed this:
    1) AAPL is finally understood as a safety stock with buybacks backed by cash and cashflow to sustain the buybacks if the market flinches.
    2) Apple’s PE remains competitive with 10 year T-bills.
    3) Apple can grow regardless of iPhone unit and ASP vagaries. Apple is now a divi-growth co. whose dividend can double every 5 years or so.
    4) Net inflows of cash from passive and active investors globally into large Cap US companies.

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    January 13, 2020

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