Apple shares are trading at a premium multiple relative to historical averages, prompting analysts to explore options strategies that can reduce the cost of maintaining a long position. The company recently crossed the $5 trillion market capitalization threshold, positioning it as the second most valuable firm globally behind Nvidia. This valuation growth follows a series of product announcements, including the foldable iPhone Duo and new Mac hardware, which generated significant pre-order demand and pushed estimated delivery times to late January.
The primary concern for investors is that much of this positive momentum is already priced into the stock. Apple is trading at nearly 36 times its fiscal year 2027 estimated earnings per share, a multiple well above its long-term average. Despite this rich valuation, the company maintains a strong financial profile with anticipated fiscal year 2027 revenues exceeding $500 billion and expected EBITDA over $180 billion. Its capital expenditure is projected at only $13.5 billion, resulting in anticipated free cash flow of $156 billion. The company also reported approximately $62 billion in net cash as of the quarter ended June 27.
A contributing factor to Apple’s attractive positioning is its approach to artificial intelligence. Unlike peers such as Amazon and Alphabet, which are using organic cash flow for AI development, or Oracle, which is spending substantially more than their organic cash flow, Apple has not engaged in the massive capital expenditure that has raised concerns about froth in the AI trade. Instead, the company is integrating AI features like upgraded Siri and Visual Intelligence into its existing ecosystem without the associated infrastructure costs.
To address the high valuation while retaining upside potential, Tidal proposes a call spread risk reversal strategy. This involves selling shorter-dated December options, specifically 310 puts and 375 calls, to offset the cost of buying longer-dated February calls. The strategy relies on Apple shares remaining between the short strikes by December expiration and rising above $360 by February expiration. If the stock chops sideways as it digests its valuation, the short strangle portion of the trade would expire worthless, effectively lowering the cost basis of the long position.
However, the strategy carries specific risks. Selling the downside put ties up margin and creates an obligation to buy the stock at the put’s strike price if it expires in the money. Tidal holds all securities mentioned in the analysis. The content is provided for informational purposes only and does not constitute financial advice or a recommendation to buy any security.