AAPL: Time for Puts
Updated
Firstly I'm a huge 
AAPL fan when it comes to their products, however, I believe the time has come to buy some Put Options.
Trend Analysis
Utilizing the 1D chart, I found a double-top "M" pattern and at the time of this idea we are currently sitting a little under the second peak. The descent can be steep according to a macro-Fibonacci tool where the $125 share price rests around a 50% retracement level. Support at this level has been strong since May 2021.
I used two micro-Fibonacci tools to identify areas of minor support during the descent. I believe the use of both is necessary as some traders will be using the uptrend retracement (green) and others will use the downtrend retracement (red). I believe that there is a good possibility for reversal at the 61.8% downtrend Fib retracement as this level has been a key area of support and resistance since August 2021; see image below. It goes without saying that by the time the share price reaches this level, the double top pattern will already be considered valid so it's my opinion that a catalyst in the form of bad news will be required to see further declines.
Fundamental Analysis
According to the Q3 Earnings Call (Annual Report), Apple has only utilized 17.67% of its $90 billion dollar share repurchase program authorized in May '23. According to a later footnote, Apple repurchased $76.6 billion of its shares during 2023 which leads me to believe there is either a mistake in the report or that most of the $76.6 billion satisfies an earlier repurchase program. On the 10K form, see bottom of page 18 - note 1 and bottom of page 20.
Sentiments
I didn't find anything that changed my opinion on the current market trend for Apple. While the company does appear to be improving it is still in a rough spot. The aggressive repurchasing of its own stock and placing itself into a deficit doesn't make sense to me as a long-term plan. I understand that companies will do this to raise their EPS and benefit their shareholders but it also says that the company doesn't plan on expanding in the foreseeable future.
AAPL fan when it comes to their products, however, I believe the time has come to buy some Put Options. Trend Analysis
Utilizing the 1D chart, I found a double-top "M" pattern and at the time of this idea we are currently sitting a little under the second peak. The descent can be steep according to a macro-Fibonacci tool where the $125 share price rests around a 50% retracement level. Support at this level has been strong since May 2021.
I used two micro-Fibonacci tools to identify areas of minor support during the descent. I believe the use of both is necessary as some traders will be using the uptrend retracement (green) and others will use the downtrend retracement (red). I believe that there is a good possibility for reversal at the 61.8% downtrend Fib retracement as this level has been a key area of support and resistance since August 2021; see image below. It goes without saying that by the time the share price reaches this level, the double top pattern will already be considered valid so it's my opinion that a catalyst in the form of bad news will be required to see further declines.
Fundamental Analysis
According to the Q3 Earnings Call (Annual Report), Apple has only utilized 17.67% of its $90 billion dollar share repurchase program authorized in May '23. According to a later footnote, Apple repurchased $76.6 billion of its shares during 2023 which leads me to believe there is either a mistake in the report or that most of the $76.6 billion satisfies an earlier repurchase program. On the 10K form, see bottom of page 18 - note 1 and bottom of page 20.
- Cash on-hand has increased by 27% since September 2022.
- Current ratio (current assets/current liabilities) is 0.99 which is concerning from a financial standpoint. However, this is an improvement from September 2022 when its current ratio was 0.88.
- Retained earnings, while still in a deficit, has improved by 93% since September 2022. These deficits were self-inflicted as Apple spent most of its net income on stock repurchases the last three years.
Sentiments
I didn't find anything that changed my opinion on the current market trend for Apple. While the company does appear to be improving it is still in a rough spot. The aggressive repurchasing of its own stock and placing itself into a deficit doesn't make sense to me as a long-term plan. I understand that companies will do this to raise their EPS and benefit their shareholders but it also says that the company doesn't plan on expanding in the foreseeable future.
Trade active
A possible double bottom could form around the range of $178.50-$180.20. I will be watching for significant support at these levels. If confirmed, a price target near $193 is possible. Due to the size of the macro-double top "M" pattern in my original idea I believe it will still remain valid as long as a short-term recovery doesn't take AAPL higher than the $193 ceiling.Trade active
APPL is forming a medium-size double bottom whose second dip is projected to coincide with the February 1st Earnings Call. I will be watching for significant resistance around the $192-193 range followed by a descent back to $180-181. I believe the outcome of the Earnings Call will be the main factor in whether or not AAPL's developing double bottom will be valid or not.I believe that entering a position close to or within the $180-183 range should be performed with extreme caution. This range will carry the most inherent risk especially for derivatives. Whether or not the double bottom becomes invalid, the move that follows will most likely be steep and therefore traders should be weary that their positions have the potential to be extremely profitable or incur significant losses.
Note
Potential long opportunity approaching. Technical indicators and double bottom formation suggest a recovery to the $180-185 share price.
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