Shares of consumer tech giant Apple (AAPL) are now about flat over the past year. One trader sees a bump higher in the coming weeks.
That’s based on the October 28 $139 calls. With 16 days until expiration, 9,076 contracts traded compared to a prior open interest of 268, for a 34-fold rise in volume on the trade. The buyer of the calls paid $6.65 to make the bet.
Shares of Apple are going for about $140, so the option is an at-the-money play. Shares are just off their 52-week low of $129.
The tech firm has managed to increase revenue by 2 percent in the past year, but earnings are off by nearly 11 percent. Nevertheless, shares have gone from trading at 31 times earnings last year to 22 times today, their lowest level in two years.
Action to take: The stock will rebound in time. Patient investors can start buying near today’s levels, with an eye towards buying more on a retest of the 52-week low. Shares yield about 0.6 percent right now, and Apple has a history of raising its dividend over time.
For traders, the calls make sense as markets are very oversold in the short-term. The option can likely deliver mid-double-digit gains as it’s an in-the-money trade. Traders should look to sell on a big rally day for shares before expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.