Shares of Apple (AAPL) were on the rise after the iPhone maker forecast strong sales growth for the current quarter. Apple was unloved and arguably fell out of favor in 2024 as AI darling Nvidia overtook the favorite tech stock crown. As this week’s big tech earnings have been quite bifurcated (Microsoft lower, Meta to new highs), I believe more volatility and revaluation will transpire within the ‘Magnificent 7’ stocks. This continued tech sector volatility should allow an investor to create an opportunity (using options) for the former heavyweight champion in Apple. AAPL 1Y mountain Apple, 1 year Apple is often praised for its design and user experience, yet investors have become lukewarms in recent quarter as Apple has approached AI capital expenditures much more cautiously than peers such as Microsoft, Alphabet and Meta. That prudence paid off earlier this week when China’s DeepSeek unveiled its free AI open-source technology. DeepSeek rattled chipmaker investors of imminent price wars, crushing stocks of some of Apple’s competitors and pushed the iPhone maker slightly back in favor. The limitless AI euphoria has arguably turned into mania after CNBC confirmed that OpenAI is in talks to raise up to $40 billion in a funding round that would lift the artificial intelligence company’s valuation to as high as $340 billion. For context, this report comes just three months after SoftBank backed a $6.6 billion funding round for OpenAI at a $157 billion valuation. Bubbles can last longer than anticipated, but I believe the AI spend by companies has crossed into a dangerous territory and the ROI on these investments become more challenging as the CapEx grows. Apple is on track in 2025 to spend $1 billion on generative AI. Zuckerberg has suggested that META will spend $65 billion on AI in 2025. I want to use Apple technicals to take advantage and capture tech volatility. I want to use a ratio put spread anticipating a move lower in Apple. This put spread consists of buying a higher strike put, but selling two lower strike puts to finance the more expensive (higher strike) put. In the event the price of Apple goes lower than where I sold twice as many puts, I am happy to own the tech giant. The Trade Bought one 2/21/2025 $240 put for $2.75 Sold two 2/21/2025 $230 puts for $ 1.00 This 1×2 debit spread cost an investor $0.75 or $75 per 1×2 put spread AAPL was trading around $246 upon time of execution DISCLOSURES: (Kilburg is long this spread.) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
