Analysts question whether Apple (NASDAQ:AAPL) investors should leverage their long positions using options strategies. The stock has risen nearly 9% since the company's Worldwide Developers Conference, entering a period known for seasonal strength.
While AAPL is not covered by Susquehanna, analysts explore the benefits of "covered 1x2 call spreads" for existing long positions. This strategy allows investors to magnify potential gains while limiting downside risk.
Historically, July has been AAPL's strongest month, averaging a 6.5% increase and positive returns in 9 out of the last 10 years. Susquehanna highlights the recent rise in call options buying as a sign of bullish sentiment, but also notes a corresponding increase in volatility. This has made buying calls outright more expensive.
Analysts state the "setups for call spreads or 1x2 call spreads is an attractive one."
Susquehanna assesses using the July 26th expiration 215/230 covered 1x2 call spread. This would involve buying the 215 calls and selling twice the number of 230 calls. This structure limits potential gains above $230 but offers leverage between $215 and $230.
In conclusion, Susquehanna's analysis suggests that covered 1x2 call spreads could be an attractive option for AAPL longs seeking to amplify potential gains during the historically strong month of July, while still managing downside risk.