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Will Apple Stock Reach New Heights?


Nov. 25 2019, Updated 1:32 p.m. ET

In Friday’s trading session, Apple stock (AAPL) was trading at $261.78, down 0.09% from the previous session. This performance lagged behind the S&P 500’s (SPY) 0.22% increase on the day. The Dow Jones Industrial Average (DJIA) gained 0.39% at the same time, while the Nasdaq rose 0.16%.

Since my last story on APPL, Why Apple Stock Could Continue to Rise Post Q4, the stock has risen from $248.4 to $261.78—as of Friday, November 22. This increase represents an upside of about 5.3%. Moreover, options traders continue to make bullish bets on Apple stock rise in the coming weeks. So let’s take a closer look at the company’s technicals and recent options trades to see if there’s upside on the horizon.

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Technical outlook for AAPL stock

If you’ve taken a gander at Apple’s daily chart lately, you’ll have an idea about what’s been going on with AAPL. Recently, the stock has held firm near its technical support, around the $260.00 price. 

In the near term, I expect Apple stock to test its resistance area of $260.00. Investors should also note that the company’s RSI index value is falling. It’s still near the 70 threshold level, meaning oversold conditions. This fact may put additional pressure toward the downside on AAPL. But to confirm that theory, let’s take a look at Apple stock’s intraday volume levels over the past two trading sessions. Since its volume has steadily decreased, I don’t expect the stock to drop below $260.00. 

By contrast, I wouldn’t be surprised if the stock continues to climb after retesting its support level. To the upside, the $268.00 price level remains the key resistance area for you to watch. Should the stock rise above that resistance, it would experience pretty significant acceleration to the upside. 

Finally, let’s take a look at the directorial movement index or DMI, which measures momentum by comparing successive day highs and lows. In AAPL’s case, the DMI started sending a bullish signal back on November 19.

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Bullish options betting for Apple stock

Some options traders are betting that the stock is set to continue rising in the coming weeks and months. Over the past several days, there was a purchase of 85,241 $260 January 17 call options for $10.45 per contract.

Moreover, this purchase brings the total number of open contracts at about 102,238. And that number means that the bet has a total dollar value of $160 million. So I have no problem describing this transaction as a hugely bullish bet. At closing, the stock was priced at $261.78. That price means that—if AAPL can reach the strike price—the common stock has an upside potential of about 4% from its current levels. If the options buyer planned to hold the options up to expiration, the price they’d need to earn a profit would be $270.45. Note that that price excludes the cost and commissions involved. 

Also, the open interest levels for the December 6 $260 calls have seen a significant increase over the past week. The open contracts rose by 12,804 contracts to about 18,711, as per Barchart.com. Again, then: Apple stock is a big, bullish bet—given the transaction’s total dollar value of about $10 million. A buyer of the calls would need the stock to rise to $265.25 by the expiration date, a gain of about 2% from APPL stock’s current price.

Finally, the open interest for the $265.00 calls that expire on January 17 rose by 3,275 contracts during the last trading session. This rise brought the total to 35,100 open contracts. These contracts traded roughly at $7.75 per contract, which means that a buyer of the calls would need AAPL rise to $272.75 by the expiration date so they could break even.

Want to reach more technical analysis stories? Check out my recent posts, Disney Stock Options: Still a Great Buy after Disney+?, Aurora Cannabis Technical Analysis: Rally Ahead? and Energy Transfer Stock Is Oversold and Undervalued.


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