AAPL Is The Market, The Market Is AAPL

Andrew Giovinazzi

BY ANDREW GIOVINAZZI

August 6, 2023

Yo Pit Crazies,

So stocks can go down!

I can remember days on the Cboe or P-Coast where I just wanted the bell to ring. I was short gamma, short puts, and just getting run over as the puts I sold went from little puts to very big puts. The only thing that would stop the losses was the bell.

The bell finally goes ding ding, and a night of time decay respite arrives, only to watch the next day as IV exploded and it happened again. Just ring the damn bell.

There’s a feeling for an end of day pop in IV that I wanted my readers to get. That was Apple’s (Ticker: AAPL) day on the close Friday.

AAPL 30 DAY price chart after nearly getting to $200

Mark and I had a chance to get together on Friday morning and come up with an AAPL trade, and we found some surprising things.

The big question is if AAPL is going to start one of those long cyclical drawdowns.

AAPL Has Had a Few Big Drawdowns in the iPhone Era

The end of 2018 tech got smoked and AAPL got down to a single digit multiple. The stock went from $57 to $37. In the 2012 time frame, pre-split, AAPL peaked at $400, only to drop back to $220 and languish in 2013 when it became a premium seller’s dream. Several times, AAPL will run and stay running, only to suffer a crushing drawdown from the top.

AAPL chart from 2016 to 2023

AAPL chart from 2012 to 2017

I will also note in the iPhone era as AAPL keeps selling handsets and adding services through the App Store. That’s still a great business, but the growth in revenue is slowing and has been, in fact, going backwards since 2021. AAPL holds a near record market capitalization and multiple.

AAPL IV is trading at multiyear lows. That’s a massive opportunity.

So, Mark and I bought a bunch of Dec 2024 puts and stock in the Trading Desk with a low margin alternative for our students. That’s with the idea that AAPL is ready for its next drawdown, and we’ll get paid to own the stock.

It’s a six month trade, but the selloff generally takes some time as money comes out of AAPL and into other tech. We did it delta neutral because we’re in a bull market, and the AI juices can get people paying money for things. That way we can be wrong but still be right.

I like semis for the new money. But that’s another post for this week.