On CNBC's "Options Action," Tony Zhang suggested investors should consider a bullish options trade in Apple Inc AAPL. The stock is trading near a multi-month support level and the risk-reward on absolute and relative basis favors the long side, said Zhang.
See also: How To Buy Apple Stock
He wants to use options to acquire the stock at a discount. He wants to buy the April $120 put for $5.05, taking advantage of relatively elevated implied volatility in Apple. When you sell a put option like this, you are obligating yourself to buy the stock if the stock is below $120 at the April expiration, explained Zhang. The net cost basis for the stock would be $114.95 or around 5% below the closing price on Friday.
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