What Options Say About 1-Year Forward Apple Price Levels

| About: Apple Inc. (AAPL)
This article is now exclusive for PRO subscribers.

Analyst 1-year price targets for Apple (NASDAQ:AAPL) are all over the lot. The highest target is $1,111 and the lowest is $270 (up 108% and down 49% from here).

January 2014 options see a 3% chance of the price expiring at the high target, and a 7% chance of closing at the low price.

One-year historical volatility predicts a 96% price probability range of $780 to $365. Jan '14 options see a 14% chance of expiring at $780, and a 23% chance of expiring at $365.

A best fit linear regression trend line from 2007, the year of the first iPhone, extends to $680 by 12/31/2013. Jan '14 options see a 22% chance of expiring at that level.

Whether you are involved in long or short Apple options, or long or short Apple stock, these price levels (and associated options probabilities) define the current thinking about boundaries and middle areas for Apple through 2012.

The linear regression trend line from the most recent peak is provided to show when the price might reach the bottom analyst level were the shape of the recent trend to continue. That date would be in mid-April 2013.

We think the $270 low price is unlikely to the point of being silly, but the chart invites the drawing of the lines.

In our own case, we are long Apple shares, and are intermittently in way out of the money short-term PUTs as an income source, and thereby committed to buy Apple at super discounts from the current price if our PUTs are assigned.

We just closed out Dec '12 $475 PUTs and are waiting for another couple of strong down days to initiate some Feb '13 short PUTs.

Disclosure: StopAlerts is part of QVM Group LLC. QVM has positions in AAPL as of the creation date of this article (December 18, 2012). We certify that except as cited herein, this is our work product. We received no compensation or other inducement from any party to produce this article, but are compensated retroactively by Seeking Alpha based on readership of this specific article.

General Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice. You are responsible for your own investment decisions. This article is presented subject to our full disclaimer found on the QVM site available here.