The Bottom Line:
- Scott Gillum from Shadow Trader offers a positive outlook on AAPL stock, proposing a credit selling strategy at the $165 level, identified as a pivotal market low.
- The trading strategy involves selling the 165 strike put option for $94 and buying a 162.50 strike put option, yielding a net credit of approximately $40 with a real risk exposure of $210.
- This approach anticipates a 19% return on risk over the next 10 days, assuming the stock price stays above $165, with strategies in place for both profitable outcomes and share acquisition scenarios.
- Gillum emphasizes a high probability (76%) of profit from this strategy, viewing any pullbacks as opportunities to acquire shares at a favorable price, indicating a bullish sentiment on AAPL.
- The summary concludes with an invitation to join Gillum for live trading sessions on Shadow Trader’s Squawkbox, offering real-time trading insights and strategies.
Scott Gillum from Shadow Trader recently shed light on an innovative trading strategy for Apple Inc. (AAPL), portraying a positive sentiment towards the tech giant despite its recent market downturns. His analysis began with an observation of Apple’s remarkable recovery from its market low in October last year, where it surged from $165 to a peak of $200 in December. This rally was followed by a retracement, seeing the stock potentially falling back to the $165 level, a significant 61% pullback from its recent high. Gillum sees this as a golden opportunity for traders, specifically pointing to a credit selling strategy anchored at this crucial $165 support level.
Strategic Trade Setup
The core of Gillum’s trading strategy revolves around options. He advises selling the 165 strike put option for $94 while simultaneously buying a 162.50 strike put option. This action caps the risk and results in a net credit of approximately $40 to the trader. Essentially, the trader is exposed to $210 in real risk with this setup. Assuming the stock price does not dip below $165 within the next 10 days, this strategy could yield a return on risk of about 19%. However, if AAPL shares fall beneath the $165 mark, it would trigger an automatic acquisition of 100 shares at $165 each, totaling a $6,500 investment.
Potential Outcomes and Risk Management
Gillum emphasizes the high chance of profitability, pegged at 76%, from this trade setup — a strong testament to his bullish outlook on AAPL. He articulates the dual benefit of potentially acquiring AAPL shares at an advantageous price while having a well-defined strategy for managing risks and securing profits. In the event the trade turns profitable or requires taking possession of the shares, Gillum suggests adopting strategies such as covered calls or collar trades to enhance return or protect the investment.
Engagement and Further Learning
Expressing a resolutely positive stance on Apple’s stock, Gillum invites traders to join him in live trading sessions. These sessions aim to offer real-time insights into applying such strategies in the fluctuating market, leveraging Shadow Trader’s Squawkbox as a dynamic platform for engagement and learning. This invitation not only underscores the practical application of the discussed trading strategy but also highlights the potential for traders to benefit from market movements through meticulous planning and strategic execution.
Scott Gillum from Shadow Trader has unveiled a compelling tactic for capitalizing on Apple Inc. (AAPL)’s current market position, emphasizing a positive perspective despite recent downturns. The strategy meticulously outlines how after a marked rise in Apple’s share price—from $165 in October to a peak of $200 in December—it witnessed a pullback, descending to possibly retest the $165 level. This specific juncture is pinpointed as an optimal moment for traders to implement a credit selling approach.
Capitalizing on Market Lows Through Credit Selling
The essence of the strategy revolves around the execution of option trades at the critical $165 mark, a significant low from October. By selling the 165 strike put option for $94 and simultaneously purchasing the 162.50 strike put option for risk limitation, traders can secure a net credit of roughly $40. This positioning incurs an actual risk exposure of $210, yet it promises a return on risk near 19% over a span of 10 days, assuming the stock’s price sustains above the $165 threshold. Such a move would ideally prevent the activation of the option, thereby avoiding the obligation to purchase 100 shares at the set price of $165, which totals an investment of $6,500.
Strategic Risk Management and Profit Maximization
Gillum’s analysis doesn’t just halt at the trade setup; it extends into meticulous risk management and profit-taking strategies, should the trade veer towards success or necessitate taking hold of the shares. The suggestion here includes the strategic use of covered calls or collaring the stock post-acquisition, enabling the trader to manage potential outcomes effectively. This proactive approach ensures that traders not only brace for the initial trade implications but also equip themselves with tactics to handle subsequent market movements.
Embracing Bullish Sentiments with a Structured Approach
The overarching sentiment from Gillum is undeniably bullish towards AAPL, underpinned by a robust belief in the stock’s profitability prospects—pegged at a high probability of 76%. This strategy is not merely about leveraging market lows; it’s a comprehensive outline for entering the market with a favorable cost basis while maintaining a clear framework for risk and profit management. The proposal shines a light on acquiring shares at an advantageous price and navigating through the market’s ebbs and flows with a well-conceived options strategy. Gillum’s invitation for live trading sessions further solidifies the aim to guide traders through these market fluctuations, providing real-time insights and strategies via the Shadow Trader’s Squawkbox platform.
Scott Gillum from Shadow Trader discussed a trading strategy for Apple Inc. (AAPL), expressing a positive outlook on the stock despite its recent downturns. According to the analysis, Apple’s stock experienced a significant rally from a market low in October of the previous year, climbing from $165 to a high of $200 in December before facing a pullback of at least 61% of that move, potentially dropping to the $165 level again. Gillum highlighted this as an opportunity to engage in a credit selling strategy at the $165 level, which was identified as a crucial market low in October.
Unveiling the Strategy
The trade setup proposed involves selling the 165 strike put option for $94 and buying a 162.50 strike put option to cap the risk, resulting in a net credit of approximately $40 and an exposure of $210 in real risk. This strategy offers a return on risk of about 19% over the next 10 days, assuming the price remains above $165. If the stock crosses below $165, it triggers an acquisition of 100 shares at a cost basis of $165 per share, amounting to a total investment of $6,500. The plan also includes strategies for managing the trade if it turns out to be profitable or if it requires taking possession of the shares, suggesting the use of covered calls or collar trades post-acquisition.
Risk Management and Profitability
Gillum’s sentiment towards AAPL was decidedly positive, focusing on the high probability (76%) of profit from this trade setup despite the stock’s recent pullbacks. He underscored the potential for acquiring shares at a favorable price and outlined a clear strategy for risk management and profitability. This exemplifies a bullish stance on Apple, forecasting an optimistic scenario where traders can benefit from market fluctuations through well-planned options strategy.
Engagement and Learning Opportunity
Gillum concluded by inviting viewers to join him for live trading sessions, promoting Shadow Trader’s Squawkbox as a platform for real-time trading insights.
The analysis provided by Scott Gillum of Shadow Trader offers a compelling overview of a trading strategy centered around Apple Inc. (AAPL), particularly in the wake of its recent market movements. Despite a visible downturn, there remains a bullish outlook on Apple’s stock, marked by a significant rally from a market low in October of the previous year. This rally saw the stock climb from $165 to a high of $200 in December, only to experience a pullback. Gillum identifies this pullback, potentially reaching the $165 level again, as a prime opportunity for traders to employ a credit selling strategy.
Strategies for Maximizing Returns
The proposed trade setup involves a precise strategy: selling the 165 strike put option for $94 while simultaneously buying a 162.50 strike put option to cap the risk. This approach yields a net credit of approximately $40, alongside an exposure to $210 in real risk. With an expected return on risk of about 19% over the next ten days, provided the stock price stays above $165, this strategy not only mitigates risk but also positions traders for a favorable return. Crossing below the $165 mark would trigger the acquisition of 100 shares at a cost basis of $165 each, totaling an investment of $6,500, but also opening the door to subsequent strategic moves.
Acquisition as Opportunity
Should the stock price dip below the critical $165 level, the strategy transitions to acquiring shares, viewed not as a setback but as an opportunity to engage with the market strategically. The acquisition allows for the application of covered calls or collar trades post-acquisition, offering a methodical approach to managing the trade. This shift contextually emphasizes the significance of having a clear, adaptable strategy in place, especially in scenarios where the initial trade setup evolves into stock ownership.
Risk Management and Potential Gains
Gillum’s analysis underscores the importance of a clear strategy for risk management and capitalizing on potential gains. With a high probability (76%) of profit from this trading setup, despite the recent pullbacks AAPL has faced, the strategy exemplifies how traders can leverage market fluctuations to their advantage. The dual focus on acquiring shares at a favorable price and employing a detailed plan for navigating post-acquisition scenarios reflects a well-rounded approach to trading within the technology industry, illustrating a bullish stance on Apple that anticipates profitability and strategic asset accumulation.
This detailed strategy not only highlights the potential for high returns but also stresses the importance of preparedness and flexibility in trading. Such an approach encourages traders to remain optimistic and proactive in the face of market volatility, emphasizing the potential benefits of strategic acquisition and effective risk management.
Scott Gillum from Shadow Trader delved into a promising trading strategy for Apple Inc. (AAPL), showcasing an optimistic perspective on the stock despite recent market challenges. The analysis revealed that Apple’s shares had witnessed a remarkable recovery, escalating from $165 in October to a peak of $200 by December. However, following this surge, the stock underwent a pullback, retracing at least 61% of its gains, possibly reverting to the $165 mark. This situation was interpreted by Gillum as a prime opportunity for traders to implement a credit selling strategy at the pivotal $165 threshold, which marked a significant low point in October.
Strategic Trade Setup Unveiled
The recommended approach involves a play on options; specifically, selling a put option with a strike price of $165 for $94 while simultaneously buying a put option at a $162.50 strike price to limit potential losses. This tactic offers a net credit of roughly $40, pairing it with a real risk exposure of $210. Assuming the stock price stays above the $165 mark, this strategy forecasts a return on risk of approximately 19% over the ensuing 10 days. A dip below this threshold would necessitate buying 100 shares at a cost basis of $165 each, totaling an investment of $6,500. Gillum also outlined subsequent strategies for managing the position, whether by securing profits or assuming ownership of the shares, recommending strategies such as covered calls or collar trades post-acquisition.
Optimism Backed by Statistical Confidence
Gillum’s analysis radiated a confident vibe towards AAPL, underpinned by a 76% probability of profit from this specific trade setup despite the stock’s recent setbacks. He spotlighted the allure of acquiring shares at an advantageous price and provided a comprehensive plan for managing risks and maximizing profitability. His perspective is buoyantly bullish on Apple, suggesting a favorable outlook where traders can capitalize on market vicissitudes through a meticulously devised options strategy.
Gillum took this opportunity to extend an invitation for more interactive learning and trading experiences, urging the audience to join live sessions. These sessions are featured on Shadow Trader’s Squawkbox, a platform renowned for offering invaluable real-time trading insights.
