How to make your money back in Apple

These numbers are staggering — and painful — for Apple shareholders.

Since hitting a high of $133 in late February 2015, shares of Apple have fallen 26 percent, amounting to a market cap loss of more than $225 billion. That's more than the total market cap of 98 percent of companies in the S&P 500.

"It's pretty incredible that the $225 billion lost is more than the market cap for companies like Disney, Bank of America and JPMorgan Chase," Optimize Advisors co-founder Mike Khouw told CNBC's "Options Action."

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For those who lost money on Apple's fall, Khouw offered a simple options strategy to make some of it back: Buy a 1x2 call spread.

"One of the first things you are going to do when you are going to recover some of the money that you've lost is try to do it at little to no cost," Khouw said. "The next thing to consider is this is something you want to do in the short term, I typically try to look out about four months or less," he said Friday. "The last thing you want to do with this kind of strategy is choose an upper strike that is below where its previous highs were."

The specific trade that Khouw recommended was buying the March 97.5/105 1x2 call spread for 50 cents. In this strategy a trader will buy a lower strike call and sell 2 higher strike calls to offset the cost against a long position in Apple.

"The idea is that I'm going to capture all the gains from the 97.5-strike call and up to the 105-strike call and also capture those gains on my stock," Khouw said. "I'm essentially doubling the amount of money I otherwise would have made," he added. "If the stock does not get to its prior highs, I'm going to double my money in this short distance."

Apple shares were trading higher on Monday. The stock was up 1 percent and trading just under $98 a share.

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Host Bio

  • Melissa Lee

    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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