Apple (AAPL) stock sees biggest surge in 5 weeks after new CEO takes over...hedge cost '$5'

▲ Apple (AAPL)/AI generated image

Apple (AAPL) recorded its strongest one-day surge in five weeks with the launch of its new CEO, John Ternus.

According to Yahoo Finance on September 2 (local time), CEO John Ternus has taken over from Tim Cook to lead Apple. Ternus is Apple's third CEO this century. The stock price rebounded from support around $310 and approached the high of around $340 recorded at the end of July.

Yahoo Finance proposed a low-cost downside protection strategy for investors holding 100 shares of Apple stock. This involves buying one $310 put option contract expiring on September 18 and selling one $340 call option contract with the same expiration. The cost of the $310 put option is $2.17 per share, totaling $217. By selling the $340 call option, one can receive $2.12 per share, totaling $212. The final protection cost is only about $5 per 100 shares.

However, there is a limit to the upside profit. If the stock price falls below $310 by the September 18 expiration, the put option will protect against the decline. Conversely, if it exceeds $340, any additional upside must be forfeited, and the held shares may need to be sold at $340. The breakeven point is approximately $324.82. Based on 100 shares, the maximum loss is calculated to be approximately $1,482, and the maximum profit is approximately $1,518.

A short-term variable is Apple's major product event scheduled for September 9. This is the first major product event attended by Ternus as CEO and takes place nine days before the option expiration. Yahoo Finance explained that shareholders who want to observe the new CEO and new product releases can limit the downside risk below $310 for about $5, instead of forfeiting additional profits above $340.

[Article Key Summary]

-Apple recorded its strongest one-day surge in five weeks with the inauguration of CEO John Ternus, approaching the high of around $340 again.

-Based on 100 shares of Apple, combining the purchase of a $310 put option and the sale of a $340 call option can protect against downside risk below $310 for approximately $5.

-Apple's first major product event under Ternus's leadership is scheduled for September 9, making the new CEO and product releases key variables for the stock price next week.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*