There’S a lot of news that has come out on apple recently, and i want to go into all that before we do, though, if you guys can just like subscribe. That would mean a ton to me and we will jump right into this video first off. Let’S start off with my positions in apple um they’re, currently not as much as i had initially um. I had to sell some to put into some other positions that were down like baba, but we still have a ton of apple. We sold the 130 put on it, so that’s about 13 000.. We have five of these put credit spreads 10 of these put credit spreads. Two of these put credit spreads and 12 of these put credit spreads it’s about 20 000 in total on apple. I really like apple – and here is exactly why apple has had a ton of big news come out recently. This came out just this morning four hours ago. That apple is using tesla’s batteries to build a new energy storage facility for its giant solar farm in california. Just another expansion of apple another way that they can cut cost and increase profits. You know big development from apple using their lithium batteries. Another big thing is apple, got another price target upgrade yesterday, not that that means too much, but it just shows that the street is still very bullish on apple and really likes it. Apple now has an average price target of 151.
96, which is about a 23.18 upside from where it is now street high being 175 street low being 83. I think that 83 is absolutely ridiculous. I don’t know how anyone could say that apple’s only worth 83 but again they’re, analysts and that’s what they do. So i want to break down apple’s earnings, because apple’s earnings were just absolutely phenomenal last quarter and i don’t think it got the recognition that it deserved, because the stock actually went down after they reported earnings after this just incredible earnings quarter, so let’s break it down Into each section, first, off revenue apple had revenue of a hundred and eleven point. Four four billion dollars for q4, which is a 21 year over year, change net income, which is probably the thing i am looking forward to most and most impressed about this quarter. 28.76 billion that’s a 29.3 year over year, growth, diluted, earnings per share was a dollar 68 again another 34.4 year over year growth and another amazing thing we have to look at companies like this is their profit margins. How much of that revenue? Are they actually keeping? Well, look: profit margins are up six point five, two percent year over year, which doesn’t seem like a big percent when you’re talking on revenue of 111 billion, that is significant. Significantly higher 25.8 percent net profit margin, cash on hand, they still have 36 billion dollars cash on hand, so they can do things like acquisitions and upgrades, and you know different innovative um workings that can affect their company in a positive way.
So i wanted to break down the revenue from each one on that earnings quarter now per share here of a buck. 68 street was looking for a dollar 41. revenue. Also better than expected up 21 to 111.4 billion street was closer to 103 billion gross margins. ‘.8 percent iphone revenue up 17 to a better than expected: 65.6 billion in the quarter, services revenue better than expected, as well: 15.8 billion wearables home and accessories 13 billion mac, 8.7 billion and ipad comes in at 8.4 billion. I would also call out greater china revenue here up nearly 60 percent to 21.3 billion dollars in the quarter, no formal guidance from apple at this time. But we know what apple executives have been doing, providing more color and commentary on the call that call kicks off at 5, 00 pm eastern back to you. You know the two parts of this narrative think about it. One is this is inherently gon na keep becoming less about how many iphone units is apple selling, but really how we gon na monetize, this 1.6 billion iphones that are out in the wild right now in the install base, right um and on the services side. The way we kind of frame this is listen. The average iphone user is spending about 62 dollars a year on iphone services right. Compare that metric to what you spend on in netflix and peloton and amazon. Prime all these other things. This number could easily keep growing and as long as it keeps going through, install based growth and from new services being offered, we think services alone can grow mid teens for the next four or five years variables really quickly.
I think the narrative there is airpods, despite the fact that you know we see them fairly. Often it has a less than ten percent attach rate to iphone. Users, same is true for watch by the way to extend that number can get to about 20 of tax rate. You should see these businesses grow high teens as you go forward and that’s kind of a big theme of less about iphones, more about monetization of install base. Another amazing thing about apple is its absolute loyal fan, base. America loves apple, and a poll back in 2017 found that the average household owns more than two apple products. The average american reported owning 2.6 apple products and the wealthiest americans owning 4.7 products per household people. Love apple and there’s, a reason for that the simplicity of the design makes it so easy to use and so easy to keep coming back for the compatibility between the macs, the ipods, the apples, the the airpods, the watches they all synchronize well together and that’s. Why apple has such a stranglehold on the market of the wearables? Now the phones, the services, everything people they make it so simple for people to use and so simple for people to keep coming back that’s. Why apple has been a consistent winner over the past couple years, that’s why their stock’s up 364 percent in the past five years – and i plan on this just continuing to go more and more apple is not slowing down on the slightest if anything, it’s growing much More than we anticipated much more than wall street anticipated when it absolutely blew out expectations last quarter and the stock continues to be a juggernaut over the past year over 104 percent.
Yes, this is from march, but if you look on the grand scheme of things, it is still growing at a very high rate and there are a lot of catalysts, including revolutionary catalyst that people aren’t even pricing into the stock price that can make the stock go. Much much higher, such as the apple car, the amount of impact that this can have on the ev market and different things, such as government tax credits that apple can receive for selling an electric vehicle it’s. Just another thing that will increase profit margins and increase members and loyalty between the customers. I see apple going much higher over the past couple years, i’m, not worried about this company in the slightest. It has made its impact and it is made here to stay, and i don’t see anything getting in apple’s way. It owns the phone space, it owns the service space and now they’re, trying to make a dent in the car space. They’Ve had a big impact recently on the wearable space and have made the ipad so much bigger than people thought. People thought the ipad was dying out and the ipad just continues to destroy estimates. Every single quarter, they’re really making an impact, and i think that they’re just going to continue to innovate and get bigger and bigger over the years. If you want you own this stock and you hold it, i wouldn’t really recommend trading it. If you are going to trade, it here’s, how i would, though i would go over to the trade options category if you’re on robin hood, you can do it here.
If you have another broker, you can go to a different one, but essentially what i would be doing is i’d be selling puts on apple and i’d own shares as well and sell covered calls. The mixture of this is really good because you can go out far. You can go out to uh june of next year, so a little over a year, and i actually sold this one on my youtube account. I sold the 130, put collect two thousand dollars up front. Your break even point is a hundred and nine dollars a share. You can also do things like selling covered calls weekly, so you have that exposure long term, and then you can also hedge yourself with calls um, and i would do calls bi weekly, so i’d sell like an april 16 covered call. You 100 shares you can go here, uh sell a 125 or 126 call and get paid pretty well as well. I mean you’re getting paid 146 dollars to potentially lose your shares at 125.. You know your breakeven price is over 126.46. So anything under that which is you know, the odds of that happening are pretty high, that you’re going to make profit on that you got about a 73 chance. Obviously the higher you go up. I’D probably pick something like the 126 to be safe, make a little bit less, but you have 127 breakeven port price rather than a 126. um, so that’s a great way to hedge yourself, get paid weekly plus, if you notice, if you look at these uh options, That theta is huge, you’re gaining 71 dollars a day on these um or seven dollars a day on these contracts, which is pretty huge if you want to be um, get a little paid a little bit less but get more theta impact.
You go to one of these. You sell a sell the 125 price up here and your theta is significantly more on this option. Contract is losing eight bucks a day which percent wise on only 61 cents is a lot um, so that’s, basically, what i’d be doing. I’D be doing bi weekly i’d be getting paid. You know. A couple hundred bucks per contract and i’d also have those long puts as well, and you can also do a strategy of buying leap calls if you really want to have that exposure of apple it’s to cost you a lot less you go out here. You go to like june 2022 and you buy uh in the money. Like 120 call it’s gon na cost you seventeen hundred dollars, but this in the money call will that allow you to sell covered calls as well in a poor, man’s covered call, and if you want, i have a video about poor man’s covered call. You guys can check out on my channel um but that’s another way, or you know you can always buy an out of the money one for significantly cheaper and have your upside on. That call be greater but that’s, just what i’d be doing. If i was at apple, obviously staying super bullish, i wouldn’t be bearish on apple in the slightest um. The only some somewhat bearish position i’d have is just hedging yourself with covered calls, but even that it can be seen as bullish.
If you have it significantly farther out of the strike price it’s, currently at so that’s how you do with apple, i love apple i’m, gon na hold it for a while um and you know, continue to continue to profit from apple apple’s success.