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Selloff marks great opportunity to buy Apple: Trader

Selloff is a great opportunity to buy Apple: Trader

Apple shares sold off 1.5 percent on Monday along with the broader market.

The stock is now down 4 percent in the past 30 trading sessions, but according to one trader, the selloff is creating "a great opportunity to get into Apple on the long side."

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Looking at a daily chart of Apple, Keene noted that the stock has declined to its 100-day moving average for the first time since January. "As we see each time the stock has hit its 100-day moving average in the past, we've found buyers," Keene said Monday on CNBC's "Trading Nation." Apple shares hit a year-to-date low on Jan. 6, and then subsequently rallied rallied more than 28 percent to its high on April 28.

And by Keene's chart work, despite the most recent decline, Apple's chart is still healthy. "We can draw a clear bullish channel on the daily chart which makes me think Apple has a date with 135 before this year is over," he said. That's an 8 percent rally from current levels and would put the stock at an all-time high.

So to make a bullish bet on the stock, Keene turned to the options market. Specifically, he looked to buy the December 130-strike calls for $6.10 and sell the December 120-strike puts for $6.10. This kind of trade known as a risk reversal is a bullish strategy where a trader will purchase a call and then sell a put of the same expiration to finance it.

"On this trade, if Apple is between $120 and $130 on December expiration I don't see any losses or profits—no harm no foul," said Keene, founder of Keene on the Market. If Apple shares rise above $130 or fall below $120, Keene sees profits and gets long the stock.

"This is a great way to play Apple to the long-term from now until the end of the year," he said.

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