Trader bets against Apple — here’s how low he thinks it will go

Apple is having its worst month since April 2016, and Todd Gordon of says the charts are hinting at even more downside ahead for the tech giant.

"Apple broke down pretty sharply here, and it looks like we want to go back and retest some lower levels," he said Thursday on CNBC's "Trading Nation."

The stock has fallen almost 3 percent in the last week, the drop spurred by poor reviews of the company's new iPhone 8 and Apple Watch products. But while Apple rallied to all-time highs at the beginning of the month, Gordon says the stock could actually give up all of its pre-earnings gains.

In other words, Gordon thinks Apple could sink another 3 percent and return to $148, its level right before a gap in the charts following the earnings surge.

"It looks like the market wants to go ahead and close that gap, so let's go ahead and put an options trade to work that will take advantage of that gap closure," he said.

Gordon is buying the Oct. 20 weekly 152.5-strike put and pairing that with the sale of the Oct. 20 weekly 148-strike put for about $1.54, or $154 per options spread. This means that if Apple closes below $148 on Oct. 20 expiration, then Gordon could make a maximum profit of about $296 on the trade.

But if Apple were to rally and close above $152.50 on Oct. 20 expiration, then Gordon would lose the $154 he paid to make the trade. Since Gordon wants to avoid such a loss, he establishes a point for him to exit the trade.

"If the premium we just outlaid, which is about $154 or $1.54 per spread, gets cut down in half, let's cut the trade and contain the risk," he said.

Despite the recent slip, Apple is still up over 32 percent year to date.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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