An options trade that wins if Apple continues to trade sideways or down on iPhone, AI disappointment

Apple Inc. (AAPL) is facing headwinds despite the launch of the new iPhone 16, which offered only incremental improvements over the prior generation. Investors eagerly awaited the company’s Apple Intelligence software update, but its absence as a significant growth driver is tempering investor enthusiasm. As a result, AAPL’s struggles with revenue growth persist, and without a clear date for its AI software release, the company remains vulnerable in an increasingly challenging macro environment for consumers. I’ll show an options strategy to capitalize on these struggles. If we look at the chart for AAPL, it has been trading within a tight range between $215 and $232.50 for the past few months. Despite attempts to break higher, the stock has consistently faced resistance near $232.50 and now appears poised to revisit the lower bound of this trading range, especially with weakening momentum and broader market pressures. If momentum turns negative, AAPL could potentially break below its $215 support level in the coming weeks, making it a candidate for a further bearish play. AAPL currently trades at over 29 times forward earnings, a substantial premium over the industry average of 19 times. While Apple boasts industry-leading net margins of 26%, its projected EPS growth of 11% and revenue growth of 6% are only marginally better than its peers. This leaves little justification for its premium valuation, especially considering the lack of a groundbreaking new product. To capitalize on the potential downside, I suggest selling the Nov 15 $230/$245 Call Vertical. This entails: Sell the Nov 15, 2024 $230 Calls @ $7.73 Buy the Nov 15, 2024 $245 Calls @ $2.41 View this trade in OptionsPlay for updated pricing. This call credit spread allows you to profit if AAPL stays below $230 by expiration. The maximum potential reward is $532 per contract, with a maximum risk of $968, yielding a 54.9% return on risk. The breakeven point on this trade is $235.32, meaning you would only incur losses if AAPL closes above that level at expiration. This trade provides a high probability of profit trade for investors who believe AAPL will remain range-bound or face further downside, particularly given the slowing growth. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.