Hedge Apple Bets With This ETF

There was a time when betting against Apple stock was a dangerous pursuit — borderline heresy in the eyes of some. Those risks linger as highlighted by the fact that the stock gained nearly 8% for the month ending Oct. 3.

However, there are reasons tactical traders may want to make the Direxion Daily AAPL Bear 1X Shares (AAPD) part of their arsenals. Those factors include Apple’s middling 3.18% year-to-date gain (as of Oct. 3), making it a dog of the magnificent seven and a clear laggard of the Nasdaq-100 and S&P 500 indexes. AAPD isn’t a geared ETF, but it is designed to deliver the daily inverse performance of the iPhone maker’s stock.

Another reason AAPD may merit near-term consideration is because some analysts are turning tepid on Apple stock. For example, analysts led by Edison Lee on Friday cut their rating on the tech stock to “underperform” from “hold.” They cited frothy iPhone 18 expectations. That’s one of just ratings on the stock that are the equivalent of a “sell.”

“Better demand for iPhone 17, partly due to a price cut on the base model, is already in the price. That has led to excessive expectations on 18 Fold, and the replacement cycle,” according to the Jefferies report.

AAPD Angles

As experienced Apple investors know, the iPhone is a major part of the thesis for this stock and if newer versions of the product don’t excite consumers, market participants can get ornery. On a related note, AAPD opportunity could await.

“Without innovative features, price-driven replacement cycle may not be sustainable (could result in margin pressure). The thin form factor is fact is not popular, making any bullish view on fordable risky. We do not doubt AAPL will be able to make the most beautiful foldable phone in the market, but the question is the TAM of a US$2K phone,” added Jefferies.

As for AAPD bullish cousin, the Direxion Daily AAPL Bull 2X Shares (AAPU), which is designed to deliver 200% of Apple’s daily moves, there could be opportunities with that ETF as well because some sell-side analysts are more sanguine in their views on Apple.

“Seaport Research Partners was more optimistic on Apple stock. The firm initiated coverage on Apple shares earlier this week with a Buy rating and $310 price target, suggesting 20% upside to Friday’s price. While device sales have been flat to down over the past three years, Apple has gotten better at monetizing its user base, analyst Jay Goldberg wrote,” reported Barron’s.

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