Option Trade of The Day: Apple (AAPL)

One of the most interesting “smart money” trades we came across yesterday was with Apple Inc. (NASDAQ: AAPL).

If you’re new here, a “smart money” trade is a relatively large volume option trade most likely made by a pro trader. The idea is to analyze unusual options activity, identify an interesting “smart money” trade, and then make our best guess as to:

  1. Which direction the trader thinks the stock is headed
  2. How much they think it will rise (or fall), and
  3. In what time frame this will all happen.

If we like what we see after putting all these pieces together, we can mimic the “smart money” trade (on a smaller scale), and potentially ride alongside our pro trader to profits. With all this in mind…

A Pro Trader Just Bet $5,726,280 that AAPL Will Continue to Climb in the Next 5 Weeks

On Friday, November 19, 2021, a pro trader seems to have bought 2,807 of the December 23, 2021, $140 call options on AAPL for $20.40 per contract. His outlay was $5,726,280. 

AAPL – Option Trade

The trade’s breakeven point is at $160.40, meaning that AAPL needed to rise to $160.40 for the call option trade to break even. This is near the stock’s previous close of $160.55. For every $1 the stock rises above $160.40, our “smart money” trader will make $280,700!

On analyzing the daily chart of AAPL, the stock seems to have broken out of a symmetrical triangle pattern (marked as blue color lines). This breakout level would now act as a strong support area. The stock is also trading above the previous high price, which is marked as a purple color dotted line. All this makes it likely that our pro trader is bullish on AAPL.

AAPL – Daily Chart

This lends credence to our conclusion that the pro bought these call options, as opposed to selling them.

If you agree and would like to mimic this trade, here’s how:

Buy to open the December 23, 2021, $140 call options on AAPL for $20.40 or better.

As always, depending on your risk appetite, do remember to set a stop-loss for the options trade to avoid significant losses.

Happy Trading!

— Trades of The Day Research Team

Buy and Hold These 3 Dividend Stocks Forever [sponsor]
What's the one thing you need to stay retired? That's right... cash. Money to pay the bills. Money to weather any financial crisis like the one we're in now and whatever comes next. I've located three stocks that if you buy and hold them forever, they could serve as the backbone to your retirement. Click here for details.