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Apple event - expected moves and ways to trade.
2 min read

Apple event - expected moves and ways to trade.

Apple event - expected moves and ways to trade.

Overview

Apple's new products event is underway. A look at expected moves over the next few weeks and trades for those that are either bullish or bearish coming out of the event.

The Set-up

First, a look at the 1 month expected move chart, via Options AI technology:

Options are pricing about a $10.50 move in either direction over the next month.

Ways to trade

Apple options prices are still fairly elevated following the recent moves in the stock into and out of its split. What happens next largely depends on the broader market. On the other hand, typically options would be pricing in the event and decrease in value after. That means credit spreads should be considered with an assumption of a normal market, but the risk of broader market volatility coming back an important secondary consideration.

Bullish - Here's a bullish target to the expected move targeting October expiration:

And a closer look at the two spread trades, first the Oct +117.50/-127.50 debit call spread:

And next the Oct -117.50/+106.25 credit put spread:

The debit call spread has a breakeven near $121 in the stock and is not very expensive on a move higher. The credit put spread has a high probability and would benefit from volatility coming in on a move higher (or even sideways).

Bearish - Next, a bearish price target to the expected move in October expiration and the resulting credit and debit spreads:

In this case the credit call spread -117.50/+127.50 and its breakeven near $121 is pretty close for the resulting risk/reward. The debit put spread +117.50/-106.25 has just a 38% probability of profit but would hold value fairly well on a move lower as volatility would stay elevated.

Actionable Insights from the Options Market

Earnings event expected moves
Unusual activity alerts
Spread trade education

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