Consumer tech giant Apple (AAPL) dropped about in-line with the overall stock market last year. Shares look ready to move higher, however, and one trader is betting on a sizeable move in the coming weeks.
That’s based on the April 14 $160 calls. With 37 days until expiration, 3,871 contracts traded compared to a prior open interest of 110, for a 35-fold rise in volume on the trade. The buyer of the calls paid $1.89 to make the bullish bet.
Apple shares recently went for about $151, so the stock would need to rise $9, or about 6 percent, for the option to move in-the-money. The strike price is still well under the stock’s 52-week high of $179.61.
While shares lost about 10 percent over the past year, revenues dropped by just 5 percent. Add in the company’s healthy profit margin of 25 percent, as well as hefty cash flow supporting a growing dividend and share buybacks, and it’s likely that shares will recover in time.
Action to take: Investors may like shares here in the low $150 range. The stock yields 0.6 percent, which isn’t huge, but Apple has been consistent about growing its dividend, while focusing its cash flow on share buybacks.
For traders, the April calls are aggressive, but can potentially deliver mid-double-digit gains in the coming weeks on a move higher in shares.
Disclosure: The author of this article has a position in the company mentioned here, but does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.