27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
- Apple Inc. (NASDAQ: AAPL) will report its first-quarter fiscal 2016 financial results next Tuesday, January 26, at 5:00 p.m. ET.
- The Street is expecting consensus earnings of $3.24 per share, up 5.8 percent year-over-year, on revenue of $76.412 billion, up 2.4 percent. If the company managed to meet estimates, this would be the best quarter in years.
Last Tuesday, analysts at Goldman Sachs issued a Buy rating and $155.00 price target on shares of Apple. They are projecting first quarter EPS of $3.28 on revenues of $76.8 billion (up 3 percent year-over-year, versus guidance of $75.5-$77.5 billion). While the experts’ forecasts for the first quarter stand above consensus estimates, they expect guidance for the second quarter of fiscal 2016 to be weak; however, this conservatism seems to be priced into the stock, they commented.
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Implications
Shares of Apple lost about 12 percent over the past month, underperforming the S&P 500 and Nasdaq indexes. The tech behemoth’s decline was mainly driven by several “negative supply chain datapoints,” which have suggested iPhone sales would be weaker.
Indeed, Goldman conducted a survey of 1,000 U.S. consumers, which showed iPhone holiday purchases were lower than originally expected. In addition, the analysts explicated, FX depreciation in key international markets has led to higher prices, thus dampening demand in some important regions – like Japan.
Analysts at Goldman conceive the current weakness as a buying opportunity because:
- 1. They think the guide-down is already priced into the stock.
- 2. “Apple is a defensive stock relative to the current market sell-off.”
- 3. The second quarter “represents the trough in yoy revenue growth, which is typically a good time to buy hardware stocks, with easing comps and the next product cycles (iPhone 5e, 7) driving acceleration for the remainder of the year.”
- 4. They expect the multiple to increasingly account for the evolution to “Apple-as-a-Service” – understood as recurring hardware and services “as users shift to iPhone installment plans and adopt new products/services in the Apple ecosystem, such as Apple TV, Music, Pay, Watch, etc., making the 500 million iPhone installed base stickier.”
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
Image Credit: Public Domain27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.