Mega cap tech names were under pressure in morning trade - Nvidia (NVDA), Apple (AAPL), Alphabet (GOOGL), and Microsoft (MSFT) all lower even as the NASDAQ 100 pushed toward the unchanged line. Without those names in the red, the day would likely have been green.
The "Surprise and Shine" Event
Apple (AAPL) holds its event at 1:00 p.m. Eastern. Based on market leaks, the expected reveals: the iPhone 18 Pro, the Pro Max, a foldable phone called the Ultra, and new wearables tech for the watch and AirPods. The timing matters - Apple (AAPL) is only about eight or nine days into its new CEO's tenure, John Ternus.
A Product Guy Back at the Helm
Ternus has been at Apple (AAPL) for almost 25 years, working under Steve Jobs and through the handover to Tim Cook. Cook is one of his main mentors and stays very active in the business, so he has not fully let go.
The shift here is worth watching. Cook came in as a supply chain and operations person and built huge value for shareholders as CEO. Now leadership moves back to a product guy and hardware engineer. I read this as a signal of less AI focus - the thing so many people in Apple's (AAPL) world worry about - and more of digging in on hardware as the foundation.
Look for moves like bio integration, including blood glucose monitoring. Apple (AAPL) is also working on an M&A deal for a company called Sona Magnetics, which has microchip-based brain technology that can read health, feelings, and cognition. That is the direction Apple (AAPL) is going. There will be some AI needs in the background, but AI has never really been Apple's (AAPL) primary play, and it does not need to be.
Delivering Tech to the Consumer
While big companies race to outspend each other on R&D, they skipped the question of how to actually get the technology to the consumer. Apple (AAPL) can fill that role as the hardware. Whether it integrates AI into services by outsourcing to firms like Anthropic or builds in-house is still unknown.
The Bigger Question: Margins, Not AI Spend
The main issue for the next couple of years is less about how much Apple (AAPL) spends on AI and more about how it protects margins in an uncertain cost environment for manufacturing. Memory costs have gone through the roof. Tariffs and possible onshoring of manufacturing are open topics.
Managing this is Tim Cook's specialty, so I expect his continued focus. Geopolitical risks are real. China has been a major supplier for Apple (AAPL), but the company already began diversifying, with a lot now coming out of India and production spread further worldwide so no single point can block Apple's (AAPL) ability to supply. This has been in the works for a long time, handled by field experts. Cook was also instrumental - through some lobbying - in getting temporary tariff-based breaks from the Trump administration, and those still survive, another sign the company knows what it is doing here.
The Options Trade
Volatility is juiced - more so now than going into earnings - so this could be a mover. Historically these product releases bring a "buy the rumor, sell the news" event risk, with a typical pullback after new products launch.
The stock sits about 7% off its all-time highs, at elevated levels. Forward valuation is about 33 times earnings, against a 10-year average of about 24 times. Valuation is extended, but earnings the last few quarters have been really good. Open questions: the cost of the new phones given the memory chip and component price increases, and what that does to sales.
The strategy is passive and lets you take a directional bias without being aggressive - neutral to bearish. It works if shares pull back, and gives a cushion to the upside if the stock rises before you get hurt.
Structure, using the September 18th monthly option (nine days to expiration):
- Sell the out-of-the-money 322.50 strike call.
- Buy the 332.50 strike call against it to cap risk.
This is a short $10-wide neutral-to-bearish call vertical. You collect roughly a $2.30 credit (it was trading there earlier, maybe a bit lower now). The credit is your max gain: make $230 with $770 in risk - more risk than reward, but a better probability of success. There is a 72% probability the short 322.50 call finishes out of the money at expiration. You want it to expire worthless and keep the credit.
Run it as a speculative trade, or as a hedge if you are a long AAPL shareholder. Either way you take advantage of the higher implied volatilities. The cushion to the upside break-even is about 3.5% to 4%, near 324.80.
