A bearish options trade on Apple as the tech giant struggles
Apple is showing signs of vulnerability as the tech giant faces increased downside risk as market sentiment weakens. This has been compounded by missed opportunities with Apple Intelligence, slowing iPhone sales, and limited developer support for VisionPro. With AAPL sitting above a major support level, this setup provides a compelling case for adding bearish exposure using a vertical spread with a strong risk/reward ratio to target a potential quick decline. Trade timing The timing for adding bearish exposure to AAPL is optimal, as the stock is trading just above its $195 support level. This has been coupled with poor relative strength to the S & P 500, suggesting a higher likelihood of a breakdown below $195, with a downside target near $170. Fundamentals AAPL trades at a considerable premium over its industry despite lagging growth rates, making its valuation hard to justify based solely on profitability. Forward PE ratio: 25x vs. industry average 19x Expected EPS growth: 8% vs. industry average 11% Expected revenue growth: 5% vs. industry average 6 Net margins: 24% vs. industry average 9% Bearish thesis Poor relative performance: AAPL's relative strength to the S & P 500 is notably weak at 2 out of 10, heightening the probability of a breakdown below its $195 support. Launch missteps: The botched release of Apple Intelligence, marked by delays and underwhelming features, alongside disappointing iPhone 16 sales has eroded investor confidence. Additionally, the lack of developer support for VisionPro further weakening AAPL's growth narrative. Valuation risk: The stock's forward PE of 25x suggests that there are substantial risks to its valuation. Options trade To capitalize on AAPL's potential downside, I'm buying a July 18 $195/$180 put vertical @ $3.99 debit. This entails: Buying the July 18 $195 put @ $5.70 Selling the July 18 $180 put @ $1.71 The maximum reward is $1,101 per contract if AAPL is below $180 at expiration. The maximum risk is $399 per contract if AAPL is above $195 at expiration. The breakeven point for this trade is $190.01. View this Trade with Updated Prices at OptionsPlay. This strategy positions you to benefit from AAPL's potential quick breakdown below $195, leveraging its poor relative performance, launch missteps and rich valuation to profit from a debit vertical spread with a strong risk/reward ratio. This trade offers a compelling opportunity to capture downside potential in a high-premium tech stock with limited risk. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Entrepreneur
12 minutes ago
- Entrepreneur
US Added Most New Millionaires in the World in 2024: Report
UBS revealed its latest report on global wealth on Wednesday, which looks back on wealth trends. The number of millionaires in the U.S. grew last year, setting the U.S. apart as a world leader in global wealth. UBS, an investment bank and financial services company, released its annual global wealth report on Wednesday, looking back at wealth trends in 2024. The company defined a millionaire as anyone with a net worth of at least $1 million. UBS found that the U.S. added over a thousand new millionaires per day on average in 2024, far more than the 380 new millionaires per day experienced in China, which was in second place. Altogether, there were 379,000 new millionaires in the U.S. last year, followed by China's 141,000. The two countries made up more than half of the 684,000 new millionaires overall. Wealth growth in North America was "driven by a stable U.S. dollar and upbeat financial markets," according to the report. Financial markets did well last year: The S&P 500 was up by more than 23% in 2024, and the Nasdaq was up nearly 29%. Related: This Self-Made Millionaire Who Lived in a Trailer Park Before Starting a Business at 19 Reveals Her 'Superpower' — and 1 Quality That Sets Successful People Apart UBS found that the U.S. has the greatest number of millionaires in the world, more than Western Europe and China combined. The U.S. has 23.8 million people in the seven-figure club, the highest out of any other nation, and holds almost 35% of the share of global personal wealth. China comes in second with 6.3 million millionaires and close to 20% of the share of personal wealth. Countries such as Japan, France, Germany, the U.K., and Canada have over two million millionaires as of 2024. In sum, there are almost 60 million millionaires in the world who control a total of $226.47 trillion in assets. Related: Barbara Corcoran Says If You Want to Become a Millionaire Do This 1 Thing: 'I Out-Try Anyone' UBS expects the number of millionaires to keep rising, and an additional 5.34 million people to become worth seven figures by 2029, a 9% increase from 2024. "Over the next five years, we expect North America and Greater China to be the main drivers of global wealth growth," the report reads. A separate report from Henley & Partners and New World Wealth, released last month, shows that the number of liquid millionaires in the U.S., or those with assets of more than $1 million, has increased by 78% in the past decade.
Yahoo
36 minutes ago
- Yahoo
Investors see quick stock market drop if US joins Israel-Iran conflict
By Noel Randewich (Reuters) -Financial markets may be in for a "knee-jerk" selloff if the U.S. military attacks Iran, with economists warning that a dramatic rise in oil prices could damage a global economy already strained by President Donald Trump's tariffs. Oil prices fell nearly 2% on Wednesday as investors weighed the chance of supply disruptions from the Israel-Iran conflict and potential direct U.S. involvement. The price of crude remains up almost 9% since Israel launched attacks against Iran last Friday in a bid to cripple its ability to produce nuclear weapons. With major U.S. stock indexes trading near record highs despite uncertainty about Trump's trade policy, some investors worry that equities may be particularly vulnerable to sources of additional global uncertainty. Chuck Carlson, chief executive officer at Horizon Investment Services, said U.S. stocks might initially sell off should Trump order the U.S. military to become more heavily involved in the Israel-Iran conflict, but that a faster escalation might also bring the situation to an end sooner. "I could see the initial knee-jerk would be, 'this is bad'," Carlson said. "I think it will bring things to a head quicker." Wednesday's dip in crude, along with a modest 0.3% increase in the S&P 500, came after Trump declined to answer reporters' questions about whether the U.S. was planning to strike Iran but said Iran had proposed to come for talks at the White House. Adding to uncertainty, Iranian Supreme Leader Ayatollah Ali Khamenei rejected Trump's demand for unconditional surrender. U.S. Treasury yields fell as concerns over the war in Iran boosted safe haven demand for the debt. The U.S. military is also bolstering its presence in the region, Reuters reported, further stirring speculation about U.S. intervention that investors fear could widen the conflict in an area with critical energy resources, supply chains and infrastructure. With investors viewing the dollar as a safe haven, it has gained around 1% against both the Japanese yen and Swiss franc since last Thursday. On Wednesday, the U.S. currency took a breather, edging fractionally lower against the yen and the franc. 'I don't think personally that we are going to join this war. I think Trump is going to do everything possible to avoid it. But if it can't be avoided, then initially that's going to be negative for the markets,' said Peter Cardillo, Chief Market Economist at Spartan Capital Securities in New York. "Gold would shoot up. Yields would probably come down lower and the dollar would probably rally." Barclays warned that crude prices could rise to $85 per barrel if Iranian exports are reduced by half, and that prices could rise about $100 in the "worst case" scenario of a wider conflagration. Brent crude was last at about $76. Citigroup economists warned in a note on Wednesday that materially higher oil prices "would be a negative supply shock for the global economy, lowering growth and boosting inflation—creating further challenges for central banks that are already trying to navigate the risks from tariffs." Trump taking a "heavier hand" would not be a surprise to the market, mitigating any negative asset price reaction, Carlson said, while adding that he was still not convinced that the U.S. would take a heavier role. Trades on the Polymarket betting website point to a 63% expectation of "U.S. military action against Iran before July", down from as much as an 82% likelihood on Tuesday, but still above a 35% chance before the conflict began last Friday. The S&P 500 energy sector index has rallied over 2% in the past four sessions, lifted by a 3.8% gain in Exxon Mobil and 5% rally in Valero Energy. That compares to a 0.7% drop in the S&P 500 over the same period, reflecting investor concerns about the impact of higher oil prices on the economy, and about growing global uncertainty generated by the conflict. Turmoil in the Middle East comes as investors are already fretting about the effect of Trump's tariffs on the global economy. The World Bank last week slashed its global growth forecast for 2025 by four-tenths of a percentage point to 2.3%, saying that higher tariffs and heightened uncertainty posed a "significant headwind" for nearly all economies. Defense stocks, already lifted by Russia's conflict with Ukraine, have made modest gains since Israel launched its attacks. The S&P 500 Aerospace and Defense index hit record highs early last week in the culmination of a rebound of over 30% from losses in the wake of Trump's April 2 "Liberation Day" tariff announcements. Even after the latest geopolitical uncertainty, the S&P 500 remains just 2% below its February record high close. "Investors want to be able to look past this, and until we see reasons to believe that this is going to be a much larger regional conflict with the U.S. perhaps getting involved and a high chance of escalating, you're going to see the market want to shrug this off as much as it can,' Osman Ali, global co-head of Quantitative Investment Strategies, said at an investor conference on Wednesday.
CNET
36 minutes ago
- CNET
Why I Use Apple AirTags to Track Everything From My Luggage to My Car
Not long ago, as I waited at baggage claim after a trip to Paris, I became increasingly nervous as bag after bag dropped onto the carousel -- none of them mine. I knew there was no need to panic though. Back at Charles de Gaulle airport, I had dropped a sophisticated little tracking device into my trusty rolling suitcase before handing it over and heading to my gate. So, I pulled out my iPhone and, with just a few taps, I could see that my bag had never left the City of Light. (Merde!) Over the years, I've come to depend on Apple's AirTags to keep track of many types of easy-to-lose valuables. They're not only good for luggage. I also use them to track wallets, bikes, keys and even my car. I tell everyone who will listen that you can never have too many of these handy devices. That's why I think it's worth taking advantage of the current deal at Amazon that slashes the price of a four-pack of AirTags down to $75. Here's how the Apple AirTag that was in my suitcase on that fateful trip works. It uses an ingenious method of tracking itself, detecting its location from nearby iPhones and using them to anonymously piggyback the coordinates to a secure server where I could look it up on my iPhone. Until just a few years ago, this would have seemed like a scene straight out of a spy movie. Hey, did you know? CNET Deals texts are free, easy and save you money. Instead of wondering if my belongings were stuck on an abandoned luggage cart or strewn across the tarmac, I could see in almost real time that my suitcase was still chilling at Charles de Gaulle airport in Paris. I was able to calmly tell the airline my bag didn't make the flight, and it made arrangements to have it delivered to me a few days later. Apple AirTags are all about peace of mind By itself, an AirTag isn't much. A 1.26-inch smooth round puck that looks like a glossy white breath mint, it sinks to the bottom of a bag or dangles from a key chain (with a compatible key ring, sold separately). It's meant to disappear. CNET Activating the AirTag was a simple process of pairing with my iPhone. And then, because it obviously doesn't really do anything out of the box, I forgot about it. But the next time I couldn't find my keys? Sorcery. My iPhone didn't just tell me they were somewhere nearby -- it walked me directly to them, thanks to the AirTag's built-in Ultra Wideband chip. Suddenly, all that time I'd spent retracing my steps and overturning couch cushions in the past felt like ancient history. Now I have AirTags in or attached to every significant item I'd want to keep track of: My everyday laptop bag, my camera backpack, the suitcase I use most when traveling, my key chain, my car and a smaller sling bag I take on walks. I can pull up the Find My app on any of my Apple devices (or sign in to iCloud on any web browser) and see where my items are and the last time the AirTags registered their locations. Clip an AirTag onto a bag or bury it in the depths. Sarah Tew/CNET AirTags aren't just for my everyday items. People I know in the movie business tell me that AirTags are tossed into nearly every bag and Pelican crate, not solely to ensure that the valuable equipment inside doesn't walk away but to quickly differentiate equipment amid similar looking containers. Some of my friends also attach AirTags to their pets' collars (though experts say there are better ways to track pets). AirTags are also useful for things that you want to keep close by Being able to detect my luggage a continent away provided a sense of relief, to be sure. But at the local level, my AirTags will also trigger an alert when I get too far away from them. For example, if I accidentally forget my camera bag in the car when I stop somewhere for lunch, a Find My notification appears telling me I've left it behind. It works the same for newer AirPods models as well. Sharing is now a big part of AirTag tracking My family has two cars, and I wanted to be able to track them both. But it used to be inconvenient to pair the AirTag in the car my wife drives to her iPhone (and the one in my car to my iPhone). To guard against unwanted tracking, an AirTag will notify nearby iPhones of its existence, so whenever I drove my wife's car without her in it, I got a notification that an AirTag was traveling with me. (If the owner is near the AirTag, the alert does not appear.) However, ever since the release of iOS 17, AirTags are shareable, which solves this problem. I shared my AirTag with my wife, and she with me, so regardless of which car I'm driving, I can find it more easily in a crowded parking lot without getting constant, unnecessary alerts. Share an AirTag's location with someone you trust. Screenshots by CNET A more recent feature to AirTags that arrived with iOS 18.2 is the ability to temporarily share an AirTag's location with someone I trust. In my luggage example above, if the suitcase was in the airport with me, but the airport's staff hadn't yet been able to locate it (not uncommon during peak travel times), I could share its location with an attendant who could quickly retrieve it from areas inaccessible to the public. Apple Apple AirTag specs Diameter: 1.26 inches (31.9 mm) 1.26 inches (31.9 mm) Height: 0.31 inches (8 mm) 0.31 inches (8 mm) Weight: 0.39 ounces (11 g) 0.39 ounces (11 g) Splash, water and dust resistance: Rated IP67 (maximum depth of 1 meter up to 30 minutes) Rated IP67 (maximum depth of 1 meter up to 30 minutes) Connectivity: Bluetooth 5.0 Bluetooth 5.0 Battery: Replaceable CR2032 coin cell battery The only minor annoyance about AirTags An AirTag includes Bluetooth, the U1 Ultra Wideband chip and an NFC chip to share basic details when it's in Lost Mode. That's all powered by a CR2032 coin cell battery, which in my experience lasts roughly a year before I need to replace it. I get notified when a battery is starting to get low, although there's no gauge to see how much is left until it goes into the red. And it's easy to change batteries. But my small fleet of AirTags means I need to swap multiple ones each year. I buy them in packs of 20 that I slowly work through. The CR2032 battery in an AirTag can easily be replaced. Patrick Holland/CNET AirTags also make great gifts Apple AirTags consistently appear in our gift guides throughout the year because you can always find another use for one. They're often reduced in price when sold in packs of four. And there's an ever-growing ecosystem of ways to mount them, from sturdy vaults that adhere to a car to discrete fabric holders that will keep your favorite classic bomber jacket from flying away. Whenever I show someone how I use AirTags on a bag or keychain, I kind of wish I had a pocket full of AirTags to hand out because once someone sees how it works, they're sold. When will this deal expire? We don't know how long this deal will last. We see four-packs available at this discounted price pretty frequently throughout the year, but it could expire at any time without notice. I recommend placing your order while you can be sure to get this price because I'm confident you'll find new uses for them once you have a few.
