Long term investors are far more excited about Apple’s stock right now than they have been in a long time. Apple was the largest company in the world until very recently, when Alphabet surpassed it. However, not much has changed with Apple’s balance sheet except for the fact that their rate of profit decreased for the first time in over a decade. This, plus some reports indicating that their sales numbers had dropped, led to Apple’s stock price sitting where it is right now, close to the bottom of their 52 week trading range.
A long term value investor can get a decent idea of a company by taking the price of the stock and multiplying it by the number of existing shares. If you take this number, and then subtract that from the company’s net worth, you should get an idea if a company is fundamentally undervalued—or overvalued. The closer to zero this is, the better. An ideal situation would return a negative number. Next, if that’s compared to the price to earnings ratio, you can get a strong feeling for where that company is headed. A low P-E plus a low number in the previous example is a great long term buy in most cases.
In Apple’s case, the stock is currently priced at $97.30 and there are a total of 5.54 billion shares of it. That’s a value of $539 billion in worth just through the stock. Their latest balance sheet prices the company with a worth of $300 billion. That’s huge difference in many books–$239 billion. However, when it comes to a ratio, it’s a very healthy ratio. Then, combine this with their ultra low price to earnings ratio of 10.36 and the fact that there is a new iPhone coming out pretty soon, which is an almost guaranteed factor when it comes to increasing sales, and Apple is set to improve upon these numbers. That leaves plenty of opportunity for the stock to once again take off in price. Many analysts have already pointed to the fact that Apple needs to extend its P-E multiple if it wants to remain competitive, and this is definitely possible. While many companies sit around 20 or so, Apple has been very low, indicating that there is a ton of room for this stock to go up without overvaluing the company at all. As soon as sales go up, you should expect stock prices to jump up close to or past where they were when Apple was the biggest in the world.
As you put together your binary options strategy, this can allow for you to add an element of safety. Taking out a yearlong call option on Apple is a valid choice at many brokers, and although yearlong trades are not always popular because they tie your money up for long periods of time, they have a certain appeal because they can increase your chances of a successful trade when a situation like what Apple is currently seeing comes up. It’s not the most lucrative trade you will see, but it does add extra safety to your portfolio, and this should be an integral part of your overall strategy. Cranking out frequent trades with high returns is great, but everyone inevitably goes through spells where they are losing money. Having a few well researched long term trades can help offset this risk and supplement your portfolio from time to time. So, while it doesn’t have the same appeal and excitement that short term options have, it can help you be even more profitable as it addresses that factor that ends up breaking so many traders: risk management.