Dan Nathan Shows A Way To Trade Apple

CNBC Options Action's Dan Nathan spoke on the show recently about the unusually large trading range he's seen in Apple Inc. AAPL stock.

Shares, he explained, lost approximately $40 billion in the morning session last Monday. The decline lasted around two minutes. It managed to recover about half of the losses, but traded flat for the rest of the week.

The decline in Apple has left a mark on the option price.

Nathan presented a chart showing an increase in implied volatility, and suggested a way to exploit the situation using options.

He believes the stock is going to trade in a range between $115 and $120 and wants to sell the January weekly 119 call for $1.15 against a long stock position.

To a trader with a long position in Apple, this move offers a protection at $113.85. If the stock rallies above $119, the trader would have to sell the stock at that price.