BY ANDREW GIOVINAZZI
February 13, 2024
Yo Pit Crazies,
Monday was The Ticker Show and we ran through, of all stocks, Apple Inc. (Ticker: AAPL). Nvidia Inc (Ticker: NVDA) might get the prize for moving to top 3 in market value over Amazon.com (Ticker: AMZN) on 1/10 the revenue but that would be a case of what is the future versus what is right now. What is going on right now is growth and multiple expansion in anything related to AI. That is not AAPL’s bag right now. Besides the geeky goggles AAPL really takes existing tech and improves it. The iPad and iWatch are just versions of the iPhone. That phone improved the Blackberry. What AAPL does have is 3 Trillion Dollars in market cap.
1 year AAPL chart with 30 day IV in red and 60 day realized vol in blue
The iPhone is a massive franchise right now but that is not growth. AMZN is a massive franchise but they already sell to the world. If 2023 was the Mag 7 and the return of Big Tech riding the AI train, 2024 will be a stock pickers year. The inflation and rate picture will play out so the Big Macro forces should be in check.
Is there any clue to the prospects of AAPL this year?
I have one or two.
The Big Tech movers have crazy option volatility right now
Yes I said option volatility. Don’t get me wrong, the ARM Holding Corps (Ticker: ARM) are flying around too. The 30 day realized volatility of AAPL is as high since mid October when we were looking at 4000 SPX. Stocks are 20% higher and AAPL is trading at higher volatility but is going nowhere fast.
AAPL 30 day realized volatility
I don’t think this bodes well for AAPL in the short term. The Vision Pro goggles will not move the needle and money is pouring into 100 billion dollar companies, not stocks 30x that. Implied volatility is 18% in AAPL and near year low’s. Hotter stocks have more expensive options because the upside is so hard to price. I see AAPL pulling back to test the earnings lows of $180 or so. We put on a put “stupid” in the Ticker Highlight Show with a call hedge. A put stupid is buying two strikes in the same term so we think there is some downside momentum.
The CPI should prove a catalyst for stocks. If AAPL does not get a boost, it should test the earnings lows.
To Your Trading Success,
-AG
Andrew Giovinazzi
30-Year Trading Pro
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