I recently laid out a bearish thesis on Apple, which has played out as anticipated, with the stock pulling back and the April 4, 2025 $245/260 Call Vertical collecting over 70% of the maximum profit. However, AAPL continues to face significant headwinds that reinforce our bearish outlook. As consumer brands sour on their 2025 outlook, AAPL’s lackluster iPhone 16 sales confirms a more selective consumer base. Additionally, competition in augmented reality from rivals like Meta Platforms and Snap continues to challenge the commercialization of Apple’s Vision Pro future. Lastly, AAPL’s progress in artificial intelligence remains underwhelming, with the Apple Intelligence trailing competitors like META, Microsoft and xAI — who are setting the pace in AI innovation. With this, AAPL’s valuation remains hard to justify given growth metrics that lack optimism. As these challenges persist, we are taking profits on our trade and rolling our credit spread to seek further bearish exposure and re-center our position. The chart of AAPL continues to support our bearish view, as AAPL has underperformed the S & P 500 since its December peak, forming a pattern of lower lows and lower highs. This indicates ongoing weakness and potential for further correction to its next major level of support around $200. AAPL’s valuation remains my primary concern, trading at an 83% premium relative to its peers, despite growth metrics that are only in line with industry standards. While its superior profitability has historically supported a premium, the recent slowdown in revenue, EPS growth and consumer spending trends introduces significant downside risk: Forward PE ratio: 33x vs. industry median of 18x Expected EPS growth: 11% vs. industry median 13% Expected revenue growth: 6% vs. industry median 6% Net Margins: 24% vs. Industry Median 8% Warning signs: Disappointing iPhone 16 Sales: AAPL continues to struggle with underwhelming iPhone 16 sales, reflecting a more selective consumer base. AR competition: Rivals like META and SNAP are intensifying competition in augmented reality, putting pressure on AAPL’s Vision Pro future. AI shortfalls: Apple’s Apple Intelligence has failed to deliver meaningful advancements, lagging behind competitors in AI. China’s economic slowdown: The economic downturn in China, a critical market, continues to dampen AAPL’s sales growth. To maintain our bearish exposure, we’re rolling our credit spread to a lower strike with a call credit spread: Sell the April 25, 2025 $230/245 Call Vertical @ $5.85 Credit. This entails: Selling the April 25, 2025 $230 call @ $9.48 Buying the April 25, 2025 $245 call @ $3.63 The maximum reward is $585 if AAPL is below $230 at expiration. The maximum risk is $915 if AAPL rises above $245 at expiration. The breakeven point for this trade is $235.85. View this Trade with Updated Prices at OptionsPlay . This adjusted call vertical strategy re-centers our bearish position, leveraging AAPL’s continued technical weakness and overvaluation to capture further downside potential. With persistent headwinds and a lack of immediate catalysts, this trade aligns with our bearish thesis, offering a way to profit from a further potential pullback with defined risk. DISCLOSURES: None. 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.
