Apple is Playing it Safe but Options Traders Play Boldly

A week will rarely pass by without Apple Inc. (NASDAQ:AAPL) making the headlines. Apple is making headlines again this week, as its Worldwide Developers Conference (WWDC 2015) gets underway. The company is on track to make some announcements about its products, services, and updates; hence, the WWDC conference is a market-moving event for Apple stock.

The media is already awash with speculations, rumors, and analysis on the announcements that Apple is set to make at the conference. This information in turn provides valuable insight for options traders on whether to pitch their tents with APPL calls or APPL puts.

What to Expect from WWDC

  • Music Streaming Service

Everybody seems to agree that Apple will announce its music streaming service to take on established players such as Spotify. You’ll remember that Apple revolutionized the music industry with its iPod series and Apple iTunes. However, Apple is gradually becoming a backbencher in the music industry as music streaming continues to take precedence over music downloads. The music streaming service is not expected to add much to Apple’s revenue but it will keep users comfortable within Apple’s ecosystem and further eliminate the appeals of the Android OS.

  • New Operating Systems

The grapevine is rooting for Apple to unveil a new operating system at the WWDC 15. The market expects Apple to unveil the iOS9, which will bring new updates for the Apple cult. The market expects Apple to make a statement about the new features that we can expect to see on our iPads and iPhones after the release of the iOS 9. However, it doesn’t appear that the iOS9 will have many bells and whistles because Apple seems to be focusing more on stability and security.

In addition, a new version of the OS X is also set to be announced at the WWDC 15. The new OS X will probably have new Control Center for Macs and it is expected that it will sport improved iCloud security features.

  • New Updates and Compatibility

It is expected that the new updates on the iOS will run smoothly on older generation of iPhones and iPads. The new Siri will also be a close relative to the Siri on the Apple Watch, and Siri should now be able to relate with other Apple apps such as Passbook and Calendar. Some people are also rooting for Apple Maps to get an update that will include public-transit directions.

How to Trade APPL Options

Improving the stability and security along the iOS and OS X lines does not appear to have any immediate accruable return for Apple; nonetheless, the updates will make for satisfied customers – satisfied customers lead to satisfied shareholders and APPL should be knocking at a $150 trading price before the end of the year.

On April 16, I wrote about trading the options AAPL options and I recommended the AAPL Jul 2015 130.000 call (AAPL150717C00130000). The contract made a killing when the shares of Apple made a new 52-week high of $134.54 on April 28, but the contract has now given back those gains in line with the pullback in shares of Apple.

If Apple rises after the WWDC, I’ll recommend staying in the contract until the end of this month. If Apple falls after its WWDC, you should sell-to-close the contract, run with your losses and initiate new bullish positions with the AAPL Oct 2015 150.000 call (AAPL151016C00150000) at an asking price of $1.24.

Photo: Janitors via photopin cc

— Daily Option Alerts

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