Apple has been ripping higher lately. It is amazing how sentiment on a stock can change so fast. Apple share fell from a peak of about $130 in the middle of 2015 to a low of just under $90 in Q2 2016. As the price of Apple shares struggled we saw many articles with bearish undertones. A typical article published on 2016 had titles like these.
APPL: 3 Reasons Why Apple’s Stock Is Falling (4/27/2016)
Apple’s fall should really scare every investor. Here’s why. (4/28/2016)
Apple stock destroys $218B: How low can it go? (1/15/2016)
Apple Shares Drop As iPhone Sales Decline And Results Fall Short of Expectation (4/26/2016).
Apple Stock Hits Near Two Year Low Amid Falling Sales (5/6/2016)
Apple Shares Could Fall After Losing Weight in Russell Index (6/20/2016)
Apple’s stock can’t move higher until Street cuts estimates (7/1/2016)
Apple Shares Likely to Fall With iPhone 7’s Unveiling (8/29/16)
A review of the chart above shows that these articles coincided with a falling share price. (Were the articles driven by lower prices, or were lower prices the result of bearish news? There is a question for you to ponder.) Now that the share price of Apple is on the rise, we are seeing more bullish articles. Titles like these are showing up.
5 Factors That Could Drive Apple Stock Higher In 2017 (12/13/2016)
Apple, Jobs Data Bump Stocks Higher At The Open (2/1/2017)
Apple Inc. (AAPL) Stock Is Moving Markets – Literally (3/3/2017)
To get a read on sentiment, it is also helpful to look at what people are doing. On March 1st, 2017 we saw 20,206 June 15, 2018 $200 Strike Calls trade for just over a buck on the asked side of the market, when AAPL stock was trading around $139. This tells us that there is an institutional investor out there looking for Apple to rip higher over the year ahead. With the stock already up about 50% from the July 2016 lows, this investor is looking for an additional 45% move just to break even.
As a point of reference, if the share price of apple went to $200 a share, the company would have a market cap of $1.06 trillion and an enterprise value of almost $1.1 trillion. We like Apple products and we think it is a terrific company, we we think this investor is asking a bit much. If pressed and asked to decide which side of the trade we would be on, we would be a seller of the leaps and not a buyer.
