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Apple Inc. (AAPL)’s 2.7% Slide On Monday Might Leave you Breathless: Dan Nathan’s Hedging Formula

There is a serious cause for concern for Apple Inc. (NASDAQ:AAPL) investors as we roll closer to the company’s Earnings Release for the Q4 on 20th October. This doesn’t necessarily mean that Apple will not fare well, but if it doesn’t, the current volatile market may rip the stock to shreds. Dan Nathan, the co-founder and editor of, explained on CNBC how this risk could be hedged.

Apple Store on 5th Avenue, New York City

Since Apple Inc. (NASDAQ:AAPL) released its new line of smart phones, both good news and bad news have come out from the Apple Camp, or the iCamp, to follow the linguistic standards set by the highest market cap company in the world. Moreover, the memories from the recent 20% drop of the Netflix stock are still fresh after its earnings report. Ladies and Gentlemen, if you ask me there has never been a better time to hedge for Apple Inc. (NASDAQ:AAPL) ‘s bullish investors as of now.

“[…] I would look to buy some weekly puts. I was just looking out today, when the stock was $98, the October 24th, the next Friday expiration, $96 puts costs about $1.40. When you think about that the breakeven is about 3.5% at 94.60, that is just below that really important support level on the chart and what this does is that you are really risking just about a 1.5% of the underlying stock price to basically tactfully hedge your portfolio,” explained Nathan.

Among the bearish reasons for Apple Inc. (NASDAQ:AAPL) investors is the lackluster presentation of the iPad on Friday, according to Nathan. That is of course besides the iOS 8.0.1 update and the BendGate controversies surrounding the new line of Apple’s smart phones. However, sales have been strong but Wall Street bets on the growth and it is uncertain how many more phones or tablets Apple will be able to sell going in the future.

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