Can Apple's Stock Price Go to the Moon? An Introductory Guide to Options Trading in the AI Wave
Recently, $Apple (AAPL.US)$'s Apple Intelligence stole the spotlight at this year's Worldwide Developers Conference.
Leveraging OpenAI's GPT-4o API, users can now have conversations with Siri, opening up new possibilities for mobile AI.
Personalized AI, trained on user data, can enhance everything from messaging to photo management, creating a more seamless user experience.![]()
Many investors also believe this is a positive signal for Apple and AI stocks.![]()
Following the announcement, Apple's stock price soared, breaking the $200 mark.![]()
If you think Apple's stock will keep climbing but missed out on the recent surge, don’t worry.
I’ve got a straightforward and effective options strategy for you: the Long Call Option.![]()
1. What is a call option?
When the stock price rises, you can exercise this right to gain a profit.
This kind of contract gives the buyer the right to purchase an asset (such as stocks, ETFs, indices, currencies, commodities, etc.) at a fixed price on or before a specific date.
Is it a bit tricky to grasp? Let me break it down with an example:
Imagine I offer you the chance to buy up to 100 shares of Apple's stocks at $215 per share anytime before or on June 21.
The catch? You pay me $1.69 per share upfront. If you choose not to buy the shares later, the $1.69 isn’t refundable.
At this point, what would you do?![]()
You check the current price of Apple stock, which is $212.49.
You believe Apple’s future looks bright, and you're confident the stock will surpass $215 by June 21.
(Convinced this is a good deal, you pay me $1.69 per share for 100 shares, totaling $169.)
If the stock price climbs to $215 before the option expires, you can exercise your right to buy the shares at $215 each, plus the $1.69 per share premium.
If the stock price goes above $216.69, you start making a profit.
2. Long Call vs. Buy Stock
You might be wondering: if I expect the stock to rise, why not just buy the stock directly to make money? What are the benefits of buying options instead?![]()
One obvious benefit is that, compared to stocks that can often cost hundreds of dollars, the price of options is much more affordable.
For example, at the close of June 14 (U.S. time), Apple's stock price was $212.490. However, a call option expiring on June 14 with a strike price of $215 costs only $1.69.
Even though you have to trade one contract (which covers 100 shares), it would only cost you $169—putting much less pressure on your cash reserves.
Therefore, compared to buying stocks, the potential loss from buying options is smaller.
Although the potential losses from both buying stocks and call options are limited (lose your entire principal), in the case of a significant drop in stock price, the loss of a large amount of principal with stocks can be substantial.
In contrast, with call options, you would only lose the relatively smaller premium paid for the options, allowing you to limit your losses compared to buying stocks.
In addition, the relatively smaller premium paid for options can "control" a larger asset position, which is commonly referred to as the leverage effect.
Generally speaking, the price trend of a call option mirrors the price trend of the underlying stock.
The magnitude of the price change depends on the option's Delta coefficient. When the stock price increases by $1, the call option increases by Delta dollars.
Although the Delta coefficient is typically less than 1, buying call options when the stock price rises generally yields a higher return than directly buying stocks because of the smaller principal (option premium).
For example, you invested from the market open on June 12th to the market close on June 12th.
You bought Apple stock at $207.370 per share at the market open on June 12th and sold it at $213.070 per share at the market close on the same day. The return would be (213.070 - 207.370) / 207.370 = 2.75%.
You bought a call option with an expiration date of June 21st and a strike price of $215 at $1.18 per share at the market open on June 12th and sold it at $3.00 per share at the market close on the same day, the return would be (3.00 - 1.18) / 1.18 = 154.24%.
The power of options is apparently substantial!![]()
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Note: This example is for illustrative purposes only and does not take into account transaction fees or other potential costs. Actual trading outcomes may vary based on real market conditions and individual circumstances.
3.How to Long Call on moomoo？
Similar to buying stocks, by following step-by-step guidance, we can easily buy call options on the moomoo App.
Step 1: Tap on an Individual Stock> Options> Single Option> Select the specific Expiration Date and Strike Price> Trade
Step 2: On the Trade page, set Trading Direction, Trading Price, Contract Quantity, and Order Type> Click Buy
Step 3: Successfully purchased option contracts can be found in Positions. You can Trade, Rollover or Exercise the contract.
4.What's next for a Long Call？
Notes:
A. If you believe that the movement of the underlying stock is unfavorable to you, you can close the option position at an appropriate time before expiration to take profit or stop loss. This helps avoid the loss of the option's time value. Otherwise, it may expire worthless.
B. In some cases, investors may choose to exercise the option early. However, doing so will result in the loss of the option's time value, so careful consideration is needed before deciding to exercise early. (Exercising out-of-the-money options early requires selecting the "Allow Mandatory Exercise" option; otherwise, the exercise request for out-of-the-money options will be rejected.)
To forfeit the exercise: Go to Positions> Click Exercise> Select Forfeit Exercise. Enter the number of option contracts you wish to forfeit exercise.
C. Be sure to monitor the status of your account funds to avoid unnecessary losses due to insufficient purchasing power. Click Account> Risk Control Status to check your account status.
Alright, that wraps up today's sharing.
Today's shared strategy of Long Call Options is mainly applicable to the expectation of a large upward movement in Apple's stock price.
Please note that once the specified date is exceeded, options that cannot be exercised will lose their value.
Therefore, it is important to pay attention to the option's strike price and expiration date when trading.
Options are essentially a trading tool that you can flexibly use based on your judgment of the future market.
For more strategies, click here to learn:Making Options Trading Work for You: A Real-Life Case Study
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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James Ferris : So if I pay 1.28 per share and buy 100 shares for strike price of 215 and the price goes up to this.or lower does that mean I am selling 100 shares of apple at 215 a share. ? if so thats thousands of dollars. what ami missing?
74349332 : Thank you for this. It was informative for the new person (me) to options.
whqqq OP James Ferris : If you buy 100 shares of call option at strike price of 215, it means that you have the right to buy 100 share of apple at 215 a share.
As stock price goes up, call option's value also goes up too. So you can sell this call option to another person and get profit without thousands of dollars for exercising the options.
Laine Ford : $
Laine Ford : $
Laine Ford Laine Ford : 219