Apple (AAPL) began selling its new flagship iPhones in stores today. Evercore ISI raised its price target to 380, up from 365, and kept an outperform rating. The firm expects a stronger than usual iPhone refresh cycle and sees room for pricing to rise more than 20%, helped by higher average selling prices, more premium models, and buyers picking larger memory options. Its note drew on a survey of 4,000 people, some of whom said their upgrade plans are better than in past cycles.
Today's launch does not include the new foldable phone. Some analysts call the foldable a bigger event, possibly in October. Apple starts taking pre-orders for the Duo phone on October 16th, seen as a large future benefit. Apple watches ordered earlier are also being delivered today.
Stock view
The stock is not trading well today despite the high-profile release. AAPL often falls on the actual event after a long buildup, so the weak price action is not surprising. Sales will be the real measure. The verdict on the phones comes when they reach buyers and reviews start.
Valuation looks rich. The price-to-earnings ratio sits north of 38, and once a stock nears a PE with a four handle it starts to look expensive. AAPL had a strong run, dropped hard after its last earnings, then rallied back to current levels. It grew into its rich valuation over the last few quarters, including a super cycle with the iPhone 17. The stock trades about 3% below the all-time highs hit just over a month ago.
Long lines outside stores no longer make sense; ordering online and picking up later works fine. One photo of the lines looked less crowded than in past years. The people cheering outside were likely more Apple employees than actual customers.
Bullish trade: call calendar spread
A slightly bullish, range-bound calendar spread on AAPL. Buy the October 9th weekly 340 strike call and sell the September 25th 340 strike call. The 340 strike sits a couple dollars above the current price, just below record highs. The debit is roughly 315, which is the total risk of 315 dollars. The near-term short option expires in 7 days.
This trade profits if the stock stays near current levels and loses if it drops or makes a big move up of about 20 dollars. The profit range runs roughly from 333 on the downside to 348 on the upside. Because the spread is weeks wide, you can extend duration and roll the short 340 call to later weekly cycles (out toward October 2nd), collecting credits over the next seven days. Each roll chips away at the net debit and break-even, cutting risk and raising possible profit. Watch for assignment risk on the short option over the next seven days.
Bearish trade: put vertical
A more aggressive, directly bearish position that needs only a small move. Using the October 16th monthly options, which fall before earnings and so avoid earnings risk, buy the slightly in-the-money 335 strike put and sell the 320 strike put. This is a 15 dollar wide put vertical costing about a 5 dollar debit, so the risk is 500 dollars per spread.
The spread can widen to 15 dollars if AAPL falls back below 320 over the next 28 days into expiration. The break-even is only about 1.3% below the current share price. With 28 days of time, a move lower that starts to expand the spread gives flexibility to manage the trade.
