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How to Buy Apple Stocks at a Discount When AAPL Is Overvalued

Do you lament missing out on investing in Apple when the stock was cheaper?

Do you wish you can go back in time to buy AAPL when it was undervalued?

SlashTraders will show you a technique to buy Apple stocks at a discount, even when AAPL is overvalued.

Why Do You Want to Invest in Apple Stocks?

Let's face it, so many people own iPhones now that there's no question which is the top-selling flagship smartphone brand.

The market share of iPhones and Apple products and the association of Apple products with celebrities and influencers are huge competitive advantages, or the moat, of Apple that other competitors struggle to compete with.

Apple has as wide and as deep a castle moat as other FAANG stocks, such as Facebook, Google, Netflix and Amazon.

apple competitive advantage
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The popularity of iPhones and the Apple brand make Apple extremely competitive.

In short, Apple is a healthy and profitable company that has very low risk of bankrupcy, and Apple's market capitalisation shall continue to increase in value in the near future. Similar to TSMC and S&P 500 index ETF, SPY, AAPL is a great stock to invest in long term.

Recent Price Trend of AAPL

Since we want to hold on to Apple stocks for the long term, we want to analyse recent trends of AAPL to look for patterns in price changes.

We can tell from the AAPL chart in the last year, that 50-day, 100-day, 150-day and 200-day moving averages are all trending upwards. Even when Apple stock price fell a great deal around March 2020, the price recovered very quickly to the normal upward trajectory.

aapl moving averages
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All the moving averages of the recent AAPL price chart are trending upwards.

Even when the stock price fluctuated, AAPL would rebound after touching the 100-day moving average, so we can deduce the investors in general like to set stop losses around the 100-day moving average.

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Apple stock price usually rebounded after touching the 100-day moving average.

So we can be confident in the operation and financial strengths of Apple to invest in it for a long time.

How Much Is AAPL Worth?

Based on the Trefis estimates within TD Ameritrade's Analyze tab, we can see Apple's stock price's fair value is $99.92, much less than the $130 market price.

The analysis of AAPL is as follows:

  • 42.5% is based on the sales volume of iPhones
  • 23.6% is based on software service, including App store, Apple TV, Apple Music and iCloud
  • 14.9% is based on the sales volume of Apple Watches, Apple TVs and other accessories
  • 7.8% is based on the sales volume of Macs and peripherals
  • 6.3% is based on iPad sales volume
  • Apple also has $84 billion in cash
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Breakdown of AAPL's value by Trefis.

If AAPL is only worth $100, while the current market price is $130, you might think it's too late to invest in Apple stocks.

Well, it depends how you trade.

Buy AAPL at a Discount With This Strategy

You can buy Apple stocks on the cheap if you trade in options.

We can sell a Put option at $100 to make sure we only purchase AAPL when it falls below $100.

A Put option is a contract to give the buyer the right to sell 100 units of a stock at the strike price before expiration.

By selling a Put option at $100 that expires in a month and a half, we can pocket 80 cents for the trade.

There is a 94% chance of AAPL remaining above $100 within a month and a half, so we know there is a high probability of this option expiring worthless, and we take the 80 cent profit.

aapl short put options income
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Choose a desired purchase price for our short Put options to earn an income while waiting for the AAPL price to drop.

If AAPL falls below $100 before the option expiration, the buyer of Put option can sell 100 units of stocks to us at $100, while our cost per unit of stock will be $99.20.

You'll quickly realise that you can continue to sell 45-day expiration Put options indefinitely as long as AAPL stays high.

TimeCost per Stock
45 days$99.20
90 days$98.40
135 days$97.60
180 days$96.80

If we are patient, we can keep earning income from selling Put options until the Apple stock price falls to our desired level.

Now is your turn to try the strategy we discussed today. Please leave a message below if you want me to analyse other popular stocks.

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