As covered yesterday, there is at least one top notch stocks that investors should avoid given its history of dismal performance in August. Today we want to focus on a title that could generate big gains by the end of the month: Apple Inc. (NASDAQ: AAPL). Equity is fresh out of a optimistic income report who garnered a slew of bull ratings. Although the stock recently retreated from its all-time high of $ 150 on July 15, AAPL has many advantages as it enters a historically bullish month.
According to the data from Schaeffer’s senior quantitative analyst Rocky White over the past 10 years, Apple stock has been one of the best stocks to own in August. The stock is one of three hardware and tech names on White’s list of the 25 best S&P 500 stocks to hold this month, and has an average return of 6.6%, with 70% of positive returns.
A move of similar magnitude from AAPL’s current boom of $ 147.22 would put equity at $ 156.94 – well above its aforementioned all-time high. On the charts, the stock has so far risen 34.4% year-on-year and has only registered a monthly loss once in the past five months. And while Apple stock has suffered its fair share of pullbacks over the past year, the 200-day moving average managed to catch two major declines in the first half of 2021 and remains a well-established supporting trendline.
Shorts are already starting to build their positions, and there is still a lot of pessimism to unravel. Short interest increased 6.8% in the most recent reporting period, and the 96.36 million shares sold short represent 29.6% of AAPL’s available free float.
Meanwhile, the option stands are extremely bullish, with calls reigning on the roost. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the 50-day share buy / sell volume ratio of 3.82 is higher than any other readings from last year. In other words, long calls are picked up faster than usual.
Now seems like a good time to bet on the next equity moves with options. This matches the Schaeffer’s volatility index (SVI) of Apple stock of 20%, which is in the lower 13th percentile of its annual range. Put simply, options players are currently pricing in relatively low volatility expectations. In addition, security is Schaeffer’s Volatility Dashboard (SVS) sits at a high of 98 out of 100, which means the AAPL has exceeded volatility expectations of options traders over the past year.