Apple iPhone X Woes Rattle Dow, Tech Stocks – Schaeffers Research

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Dow component Apple Inc. (NASDAQ:AAPL) is in focus this morning, after reports surfaced of lower-than-expected iPhone X shipments in the company’s fiscal first quarter. This report has pushed Apple suppliers such as Finisar (FNSR) and Skyworks Solutions (SWKS) lower, and has AAPL trading down 3% at $169.80 in early action.

Apple stock has been ramping higher lately, punctuated by a record high of $177.20 on Dec. 18. The shares have gained nearly 47% in 2017, despite today’s losses — but the recent burst of momentum has left AAPL hovering well north of reliable support at its 120-day moving average, situated around $161.

As usual, AAPL remains surrounded by optimism on Wall Street — including a Dec. 25 Barron’s cover headlined “Apple’s Golden Moment.” Echoing this, 22 of the 30 analysts following the security carry “buy” or “strong buy” recommendations. Any further negative news on the iPhone X could potentially elicit downgrades and bearish notes from this group.

For those betting on some significant short-term price swings in AAPL, now is an opportune time to buy options premium on the stock. Apple’s Schaeffer’s Volatility Index (SVI) of 16% ranks in just the 11th annual percentile, indicating muted volatility expectations are being priced into front-month contracts. Plus, AAPL stock has consistently rewarded premium buyers over the last 52 weeks, per its Schaeffer’s Volatility Scorecard (SVS) of 98 — which indicates the shares have consistently outpaced the volatility premiums priced into their option contracts.

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