dividend increase 29, iPhone 7 and AAPL Stock Price

Apple has an established history of releasing new iPhones every September. Next month should be the same for the iPhone 7. Although the behavior of AAPL shares around the release date of a new iPhone has been mixed, covered call investors could benefit from the increased hype and volatility.

First, let's look at the price action of AAPL around the last 5 iPhone release dates:

Launch
Date
3 Days
Before
2 Days
Before
1 Day
Before
Launch
Day
1 Day
After
10/4/201157.4255.3054.3453.5152.55
9/12/201297.2194.6894.3795.6897.57
9/10/201370.7571.1772.3170.6666.82
9/9/201498.1298.9798.3697.99101.00
9/9/2015110.37109.27112.31110.50112.57

And if we look at the absolute change in AAPL stock price on those days:

Launch
Date
3 Days
Before
2 Days
Before
1 Day
Before
Launch
Day
1 Day
After
10/4/20110.70-2.12-0.96-0.83-0.96
9/12/20120.60-2.53-0.311.311.89
9/10/2013-0.490.421.14-1.65-3.84
9/9/2014-0.820.85-0.61-0.373.01
9/9/2015-1.97-1.103.04-1.812.07

Change Over Several Days

If we look at the cumulative change in AAPL stock price for the 3 days around iPhone launch date (day before, day of, and day after) we get:

Launch
Date
Change Over
3 Days
10/4/2011-2.75
9/12/20122.89
9/10/2013-4.35
9/9/20142.03
9/9/20153.30

Unfortunately, no super clear pattern emerges (although in 4 out of 5 years the stock has dropped on iPhone launch day). However, there are also no massive (7%+) swings, either, and since volatility typically increases around launch date the price of options increases. This can be a good time to sell covered calls.

You will probably find that the annualized returns on AAPL covered calls that expire on the Friday after the release date (once the release date is announced) offer good returns. Based on historial iPhone release data, AAPL is unlikely to drop by more than 7% over the 3 day period that includes the day before, the day of, and the day after.

Example iPhone 7 Covered Call

For example, if the iPhone release date were next Thursday (It isn't! Well, it might be; the date hasn't been announced yet), with AAPL at 106.82 you could buy the stock and sell any of these weekly covered calls for next Friday:

iPhone 7 covered calls

(Note: these returns are probably low because the release date hasn't been announced yet; they should go up once we know the exact date.)

And for those of you who don't want to do covered calls and who just want to buy more AAPL on a dip, there may be an opportunity to buy on a dip on launch day.

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