To paraphrase legendary investor Warren Buffett, a market participant should acquire shares of good companies that find themselves in temporarily bad circumstances.
Under this framework, consumer technology giant Apple Inc AAPL ought to rank as a tremendous buying opportunity amid the Wall Street bloodbath. Long-term data suggests that it is indeed an opportunity — but as a trader, timing matters.
Following the close of the midweek session, President Donald Trump announced sweeping new trade tariffs, an event he termed “Liberation Day.” The initiative is a symbolic push to tackle the ballooning U.S. trade deficit with major global partners. Unfortunately, the levies were steeper than analysts expected, sending shockwaves through global markets on Thursday.
Even as the Street digested the news and the broader implications, one day of extreme volatility wasn’t enough, with Friday being subjected to another crimson tide. Prominent experts voiced their displeasure at the tariffs, warning about severe consequences stemming from decelerated economic activity.
Still, amid the social media uproar, there was one point that stood out. Creative Planning Chief Market Strategist Charlie Bilello remarked that while the VIX or the so-called fear index reached its highest closing level since August 2024, the S&P 500 has historically delivered “higher than average” returns following significant surges in volatility.
Since Apple stock is a benchmark security — leveraging a tremendous influence on both the tech ecosystem and the wider equities space — it stands to reason that its present volatility is a long-term buying opportunity. After all, one wouldn’t naturally expect a giant like Apple to be permanently deflated.
From a patient investor’s perspective, the red ink serves as a potential time machine — a chance to hop on the train that was previously missed. But from a trader’s perspective, diving into Applr stock now may not be the most prudent decision.
To be sure, opportunistic traders will find it difficult to avoid reacting greedily to the hemorrhaging. Adding to the contrarian fervor, Apple stock is on the absolute cusp of printing the dreaded death cross — a technical sign when a security’s 50-day moving average crosses below its 200 DMA.
On paper, the death cross represents a warning, marking the beginning of a serious downcycle or even an outright bear market. For many investors, it may symbolize the last chance to exit shares or take protective measures through advanced options strategies before further volatility erupts.
On the other hand, there’s also the contrarian thought process that when the death cross flashes, much (if not most) of the bad news has already been baked in. Therefore, it’s possible, if not likely, that the technical indicator could be a buying signal.
Here’s the thing about Apple stock: while its death cross statistically represents a compelling buying opportunity, in the near term, the indicator should be interpreted at face value.
More specifically, over the past decade, Apple stock printed five death crosses. Sure enough, three months to one year removed from this negative intersection, Apple has swung higher across these time intervals four out of five times (or 80%). However, at the one-month mark following the death cross, Apple has only risen one time — meaning that the failure rate pops to 80%.
From a statistical wide angle, it’s difficult to analyze how Apple stock will respond given that extreme volatility is rare. Right now, the equity is on the verge of losing about 12% in the trailing five sessions. The last time Apple lost double-digit percentage points in a one-week period was in April 2016.
Pulling up a historical chart, one can see that the volatile event that took place a decade ago took several months to recover. And that’s the lesson the death cross is broadcasting: yes, it is a buying opportunity but not right now.
Being a successful trader requires not being married to a specific direction and that’s the opportunity available in Apple stock. With the current flashing of the death cross likely to result in near-term volatility, aggressive traders may first want to consider the 195/190 bear put spread for the options chain expiring May 2.
The above transaction involves buying the $195 put (at a time-of-writing ask of $1,225) and simultaneously selling the $190 put (at a bid of $970). Subsequently, the proceeds from the short put partially offset the debit paid for the long put, resulting in a net cash outlay of $255.
Should Apple fall to or below the short strike price at expiration, the maximum reward is the difference between the strike prices (multiplied by 100 shares) minus the cash outlay or $245 (a payout of 96%). This trade plays off the fact that the average one-month loss (assuming only the negative scenario) following the death cross is 1.06%.
For long-side traders, patience may be required. One compelling idea that stands out is the 215/220 bull call spread for the options chain expiring July 18. This trade plays on the rebound effect of the death cross while also respecting the time component. Executing this trade requires buying the $215 call and simultaneously selling the $220 call, with the aim that Apple will hit this latter price at expiration.
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