This Apple (AAPL) Trade Could Double Your Money in Two Months

Stocks started off in negative territory on Wednesday, but rallied back and posted some decent gains. All four main indices finished higher, but the Nasdaq really stood out with a gain of 1.13%. The S&P was up 0.58% and the Dow moved higher by 0.45%. The Russell lagged the others, but it still gained 0.34%.

Of the 10 main sectors, seven moved higher on Wednesday. The communication services sector was far and away the best performer with a gain of 2.24%.

The tech sector was the only other sector with a gain over one percent as it moved up 1.09%.

The financial sector was the worst performer with a loss of 0.37%.

The materials sector was down 0.26% and the utilities sector dropped 0.17%.

My scans remained on the positive side last night and they shifted to more bullish posture.

There were 53 names on the bullish side and 15 on the bearish side.

The barometer edged up slightly, from 34.4 to 34.9.

Today’s trade idea is from the bullish list once again and it is on Apple (Nasdaq: AAPL). The stock appeared on the bullish list and it has solid fundamental ratings. The EPS rating is at 62 and the SMR rating is an A.

The daily chart shows that a trend channel has formed over the last few months and Apple has just bounced off of the lower rail of the channel. The 50-day moving average is also providing support. The overbought/oversold indicators reached their lowest levels since December, but have turned higher in the last few days.

Buy to open the July $190-strike calls on AAPL at $9.00 or better. These options expire on July 19. In order for these options to double the stock will need to reach $208, at least from an intrinsic value standpoint. That is lower than the recent high and below the upper rail of the channel. I suggest a target of 100% with a stop at $185.00.

— Rick Pendergraft

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Rick Pendergraft, Trades Of The Day

Rick Pendergraft has been studying, trading, analyzing and writing about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. Rick's analysis process includes fundamental, sentiment and technical analysis.