Binary Options Apple (AAPL) Trading Strategy

The Apple Story

With a vision to develop and sell personal computers, Apple was founded on April Fool’s Day in 1976 by three people who originally worked at Atari: Steven Wozniak, Steve Jobs and Ronald Wayne. However, just 12 days later and after feeling out of depth amongst ‘intellectual giants’ Jobs and Wozniak, Wayne sold his 10 percent of shares back for $800 (Note: Had he kept his stake it would be worth approx $35 billion today).

Needing to raise capital for their Apple I personal computer dream, Jobs sold his Volkswagen van and Wozniak sold his Hewlett-Packard scientific calculator for $500 to finance their earliest operations. In June 1977, the Apple II (personal computer for mass market) was released as the first product in the journey of Apple as we know it today, one of the most valuable brands in the world.

Apple Today

Entering the Fortune 500 at number 411 in 1983 after just 5 years in existence, Apple is the fastest growing company in history. Generating billion dollar revenue figures for more than the last decade, Apple Inc. has grown from its earliest beginnings and now designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players worldwide as well as selling related software, services, accessories, networking solutions, and third-party digital content and applications.

More profitable than Microsoft (NASDAQ:MSFT), Oracle (NASDAQ:ORCL), Google (NASDAQ:GOOG), Facebook and eBay (NASDAQ:EBAY) combined, most of Apple’s global annual revenue (approximately $182 billion in FY ending October 2014) is generated from the products Apple has invented during the last 10 years, such as iPods, iPhones, iPads, and iTunes. Almost half of its global annual revenue, or $91 billion, comes from products invented in the past 4 years such as the iPhone which Apple Inc. sold its’ 500 millionth unit in March 2014.

Stock Exchange Listing

Apple, Inc.’s initial public offering (IPO) was on December 12, 1980 at $22.00 per share (NASDAQ: AAPL). Since that time Apple’s stock has split two for 1 on three separate occasions:  1987, 2000, and 2005. As recently as 2014, Apple issued a 7 for 1 stock split.
Since its IPO in December 1980, the market value of the company has risen over 50,000% and from its first day close, the share price has risen 23,100%.

Identified (and classified) as Consumer Electronics, Apple Inc. is the trading largest stock in the S&P with an average daily trading volume of approx 46 million shares and a current trading price of $106.26.

Trading AAPL for Profit

Because binary options traders are not concerned with how much an asset moves in price, only the direction, it is important to trade stocks where there is a strong positive (or negative) correlation between to seek guidance in the short term market direction.

AAPL provides traders with an ideal opportunity to profit with the strong correlation between the announcement of impending releases of specific Apple products and the share price. That is, in the short term lead up to iPad and iPhone releases announcements (in particular), the AAPL share price follows a repeated basic pattern and breakout trade opportunity.

AAPL Patterns

Due to factors including increased media exposure, product release anticipation and increased sales revenue, binary traders can identify (and successfully trade) a basic price breakout pattern on product announcements and release of 2 of the key AAPL products: iPhones and iPads.

Generally, in the short-term lead up to a product release/launch, along with increased trading volume, the AAPL share price rises. For binary traders, this is an ideal opportunity for a ‘call’ trade in anticipation of a short term rise in price.

Historically, AAPL trades up approximately 1 percent on the day of a new release announcement. In the 1-to-2 month prior to the product release, the AAPL share price typically rises up to 5 percent and in the week post-product launch, AAPL often trades up (up to 8 percent). After price peaks, a short-term price correction follows by which time AAPL price continues to trade in line with the trend.

Trading the medium-to-long term AAPL trend also has a correlation that binary traders should note for trading profit. Correlating AAPL price to revenue, historically if iPhone and iPad revenue (but more so iPad) is increasing (which both account for approx. 77% of sales revenue for Apple Inc. in 2014), the AAPL stock price trends upwards. Conversely, if traders consider unit sales (rather than revenue) for the iPhone and iPad (but more so iPhone), the positive correlation is also present. That is, increased sales transpire to an uptrending AAPL share price action.

Trader Note

Responsible money management ensures that the losses don’t mitigate the profits.