AAPL is hovering near record highs
As discussed yesterday, there is at least one Blue chip stock investors should avoid given the dismal August performance. Today we’d like to focus on one stock that could make big gains by the end of the month: Apple Inc. (NASDAQ: AAPL). The equity is fresh and optimistic earnings report that got a lot of bull marks. Although the security recently pulled back from its July 15th all-time high of $ 150, there is plenty of upside for AAPL as it enters a historically bullish month.
According to data According to Schaeffer’s senior quantitative analyst Rocky White, Apple stock was one of the top stocks in August for the past 10 years. The stock is one of only three technology hardware and equipment names on White’s list of the 25 best S&P 500 stocks to own this month, and has an average return of 6.6%, with 70% the returns are positive.
A move of similar magnitude from AAPL’s current price of $ 147.22 would bring equity to $ 156.94 – well above its record high mentioned above. In the charts, the share has so far gained 34.4% year-on-year and has only suffered a monthly loss in the last five months. And while Apple stock has suffered a fair amount of pullbacks over the past year, the 200-day moving average managed to hit two big drops in the first half of 2021 and remains a well-established trendline of support.
Short positions are already starting to build their positions and there is still a lot of pessimism that needs to be reduced. Short rates rose 6.8% over the most recent period and the 96.36 million stocks sold short account for 29.6% of AAPL’s available free float.
Meanwhile, the option pits are extremely bullish with calls running the game. On the International Securities Exchange (ISE), the Cboe Options Exchange (CBOE) and the NASDAQ OMX PHLX (PHLX), the share’s 50-day call / put volume ratio of 3.82 is higher than all other values from last year . In other words, long calls are answered faster than usual.
Now seems like a good time to bet with options on the stock’s next move. This corresponds to the Schaeffer’s Volatility Index (SVI) of Apple stock of 20%, which is in the lower 13th percentile of its annual range. In simpler terms, option players are currently pricing in relatively low volatility expectations. In addition, security is Schaeffer’s volatility scorecard (SVS) is 98 out of 100, which means that AAPL has exceeded options traders’ volatility expectations over the past year.