Why This CIO Recommends Selling Apple Puts Until 'Catalyst' Moves the Stock

Kevin Kelly was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick. Tune in to the daily broadcast live Monday-Friday at 8 a.m. ET here.

On Benzinga's #PreMarket Prep, Recon Capital Chief Investment Officer Kevin Kelly said that Apple Inc. AAPL would need a "catalyst" to ultimately push the stock higher. Over the past three months, Apple has been stuck in a $124 to $134 range - of which it is currently trading in the middle of, at $128.60.

Related to the Worldwide Developer Conference, Kelly said that this week's Apple Music announcement was well scripted and, given that iTunes already had a radio feature, it was more of a "publicity stunt." The interesting part will come if this is a "prelude" to another content announcement related to the TV.

Kelly recommends that traders sell Apple puts given the fact that it is a "great company" with "great leadership" and "great fundamentals." Previously, Kelly said he recommended selling a January 2016 $120 put in the stock, which would currently yield a $6 per share premium. If traders also wanted to capitalize on the upside, they could enter a risk reversal, Kelly said, and use that collected premium to purchase a call.

Apple is nearly 1 percent higher in Wednesday's trading after falling earlier in the week in response to WWDC. For the year, the stock is still outperforming the broad market, up 16.6 percent compared with gains of 7 percent in the NASDAQ 100.