NASDAQ stocks had their worst month since the Financial Crisis in 2008. The VIX, a measure of investor fear, is nearing the highest levels since the Covid Crisis began. Seemingly impervious Apple has felt the fury as well, even after a record-breaking revenue quarter.
Shares of Apple (AAPL) are now at oversold levels that have signaled major buy points in the past. I like to use a straightforward system to identify potential technical turning points. The process used was presented in a previous article for those who missed it.
The AAPL stock chart below shows times when 9-day RSI, MACD, and Bollinger Percent B reached oversold readings at the same time. AAPL was also trading at a big discount to the 20-day moving average as well. All these previous instances proved to mark significant short-term lows in AAPL stock as highlighted in aqua. Apple once again generated a technical buy based on these indicators just recently.
There is major horizontal support at the $150 level for Apple. $140 is additional downside support.
Implied volatility (IV) is signaling a buy as well. The recent red-hot rise has taken IV to extremes once again.
Important to notice how these major spikes in IV have coincided with the major buy points from the price chart earlier. Combining IV analysis along with technical analysis can make for a much more robust timing tool.3 STOCKS TO DOUBLE THIS YEAR
Implied volatility also means option prices are much more expensive. This makes selling strategies more effective when constructing trades.
Let’s walk through how selling puts now to be paid to be a buyer of Apple at lower levels has become a more profitable endeavor with lower risk.
All things being equal, the following two should hold true regarding put prices:
- Higher stock prices should equate to lower put prices
- Less time until expiration should mean lower put prices
All things are not equal in the case of implied volatility (IV) in AAPL options from last November until now. A quick side by side comparison while highlight how the recent spike in IV has made put prices dramatically more expensive.
Below is the option montage from 11/12/2021
Below is the similar option montage from last Friday – 4/29/2022
The current put prices are much more expensive even though AAPL stock was much lower back in November and there are two more days until expiration. This is because of…
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