Apple (NASDAQ:), together with subsidiaries, designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players; and sells related software, services, peripherals, networking solutions and third-party digital content and applications worldwide.
The drubbing in AAPL shares continues seemingly unabated, with the shares trading under $540 for the first time since March 6. Since earnings on April 24, the stock has been down 11 out of 15 days, falling 12% from $610 to $537. AAPL now has a projected dividend yield of nearly 2%, eclipsing the yield on the 10-year government bond by 25 basis points. Much of the recent selloff has come on cash-raising by hedge funds, with AAPL being seemingly every fund’s largest holding.
Given that AAPL shares now fetch only a 13 P/E on a trailing basis and under 10 on a forward basis, combined with a nearly 2% yield, I think AAPL is reaching a valuation level that will get some institutional support. I look for AAPL to head to $560 by July expiration.
Based on AAPL’s closing market price of $530.12 for May 17, and using a target price of $560, and a target date of July 20, 2012, option strategies to consider include buying a July call spread, selling a July put spread, buying a July call or using another options strategy that best fits your trading style and risk-return objectives.
For the full details on this trade, visit TradingBlock.com, create a free Instant Login and try the TradeBuilder feature, where you’ll see several ways to trade this name. Best of all, you can see a potential profit-and-loss outline for each strategy.
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As of this writing, Tim Biggam held neutral spread positions in AAPL.
