There’s a thousand different ways to make money in the markets and one way is just to buy and hold for the long term and just hold on through all the ups and downs. A lot of Apple fans do just that but what if you could increase your returns by making money on all the Apple haters out there. Right now the stock seems to be meandering a bit and some investors are about ready to move on to something else.
If you are an Apple bull or a buy and hold forever type, consider selling OTM naked puts on Apple stock to increase overall yield – and make money from Apple bears in the process. Apple’s soft quarter and declining product sales, should be an Apple put seller’s dream come true. With the WWDC behind us, Apple stock has remained sideways. Some commentary suggest that many analysts and observers simply weren’t wowed enough to warrant a spike in Apple’s valuation.
There’s a difference between being bearish on a stock and going out and shorting the stock. One either chooses to not add to his position or puts money in other vehicles to generate alpha, while the latter believes the stock will go down so much that he can generate the most alpha by betting against it. Apple Bears are not terribly skeptical or cynical of Apple’s current business model and potential growth, but they do see it slowing down and have calculated that the recent spike in Apple’s stock will subside and fall from its current 52-week highs.It’s important to note that when Pacific Crest downgraded the stock this week, Andy Hargreaves only estimated that it would drop $10, or less than 10% from Apple’s current price. Similarly, while not an outright Apple Bear, I do see the price stagnating or declining from its current levels if no major acquisitions or shifts away from the dependency on the iPhone occur.
Key points are:
- Decline in iPhone sales and no longer #1 in smartphone market share.
- Decline in iPad sales and global decline in tablet demand.
- Apple Watch has yet to definitively prove to be the next flagship product.
- While Services growth is impressive, will it grow enough to offset declining sales in Apple’s main business – selling iPhones.
Learn more about cashing in with Apple
Filed under: Stocks
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