Options Expert Recommends Bearish AAPL Trade

Warning that Apple (AAPL) is still facing multiple challenges, OptionPlay Chief Strategist Tony Zhang unveiled a bearish options strategy involving the tech giant today on The Schwab Network.

Why Zhang Is Bearish on AAPL

Sales of AAPL’s iPhone 16 devices have been “underwhelming,” and the company’s upgrade cycle is generally slowing, Zhang reported. Moreover, the company’s AI strategy has been ineffective, and the firm could be hurt by weakening consumer spending trends in the U.S., the analyst warned.

A wide view of an Apple store, showing the range of products the company offers.

And despite all of these issues, AAPL, which is not expected to grow faster than the S&P 500 as a whole,  has a relatively elevated price-earnings ratio of 30 times, Zhang noted.

Zhang’s Option Strategy

The analyst recommends buying the $220-$200 put verticals that expire in May and cost a little over $5.25. By doing so, investors will have a good risk-reward ratio of nearly 3 to 1, according to Zhang.

The Price Action of AAPL Stock

In the last month, the shares have dropped 6%, while they have slumped 14% in the last three months. However, AAPL is still up 30% over the last 12 months.

While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as AAPL but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.