Taking a Bite out of the Apple

Sean McLaughlin
September 5, 2019

The headlines certainly haven't been kind to any stock whose company does business in China. You wouldn't be faulted for being cautious in this space. That said, there is one very familiar name that in spite of it all has continued to hang in there, setting up for what could quite possibly become a headlines grabbing upside move of its own.

Of course, I'm talking about none other than Apple $AAPL.

As you can see in this chart, $AAPL has impressively (and quietly?) built a nice, consolidating base while the Tariffs storm swirls around them. Who knows how that will end up? But if price action is any guide (hint: it is), $AAPL is telling me things are going to resolve and Apple will be just fine.

Of course, we're a long way from any all-clear signs, so we too will tread cautiously into a bullish trade. During our August Conference Call, All Star Charts discussed a potential price target north of 270 if $AAPL were to get moving. We're going to try to catch some of the pulp in the middle.

Here's the Play:

We're going to purchase a January 215/235 Bull Call Spread for $6.50 or cheaper. This means we'll be long the Jan 215 call and short the Jan 235 call for a net debit.

My goal in this trade is simple. I'm looking to double my money. The most this spread could be worth if it goes my way is $20.00. But I'm not particularly interested in holding this position all the way to expiration. So when I can close this spread for around $13, which would be double what I paid, then I will do so.

On the flip side, $193 is my line in the sand. If $AAPL closes below 193 at any time while this trade is on, I'll close it and re-evaluate from the sidelines. That will be a strong indication that I'm early and/or wrong.

All Star Options subscribers who have any questions during the life of this trade can email me here.

~ @chicagosean

We do trades like this all week long. Try out All Star Options Risk Free.

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