Apple, the one time favorite of Wall Street, just touched upon a new 52 week high on Tuesday, January 17th, breaking the $120 threshold for a short while before settling at just under $120 for the day. It was a gain of $0.93 for the day, or 0.79 percent. This in itself isn’t anything special, but it does show strength for the company. On this same day, the S&P 500 dropped by 0.30 percent, and the fact that Apple was able to outperform the economy—while financial and healthcare stocks weighed everything else down—shows that the company has the ability to still surprise us.
For traders of all sorts, Apple still holds a lot of potential for creating profits. In fact, most analysts predict growth of more than $12 per share over the coming year. While this is something that remains to be seen, it does mean that Apple is like to come under the spotlight yet again in the very near future.
It doesn’t matter if you are a long-only day trader, or a binary options trader that will pursue both long and short positions, Apple still has a solid foothold within the tech sector and is worth watching. Other darling stocks have emerged in the tech sector lately, most notably Facebook and Netflix, but Apple still has the name recognition and the capital to be a legitimate monster in the stock market.
The problem with Apple is the fact that it has increased drastically in volatility. Two years ago, when Apple was the undisputed largest company in the world and had established its products as the fastest moving items in the market, the company had a Beta mark of under 1.00. This indicated that Apple was slightly more stable than the stock market as a whole. This made trading it as a binary option very easy because odds were that it was going to be moving up as long as the major indices were, too.
Today, the Beta stands at 1.32, indicating that it is more than 30 percent more volatile than the S&P 500. In other words, when the S&P moves one way, there’s less than a 70 percent chance that Apple will move the same way. As a binary options trade, Apple has been a touch stock to trade correctly.
Moving forward, it is hard to know what to expect from Apple, especially now that it’s up at the top of its charts. We expect long term growth from the company, but unless something happens to trigger more predictable movement, Apple is not a strong short term binary options choice. It’s also not a strong choice for CFD trading, especially on a normal trading day. If you are going to day trade Apple, your best bet is to wait for financial reports of the company to be officially filed, or a new product launch goes off better than expected. Otherwise, Apple is one of those companies that you can use to take out periodic long term hedges to help offset losses in other areas, or to boost overall earnings. Looking for moments where Apple will not only be more predictable, but able to outperform the major indices as a whole is a must if you want to trade the stock and have strong, profitable results to show for it.
Right now, while Apple sits at the top of its price chart is not the time to take that risk, though. Unless you are planning to buy Apple and hold for an indefinite period of time, Apple is a little too risky to add into your trading routine at this moment.