Buy This FAANG Stock Before October

Apple shares tend to shine in the final quarter of the year

Sep 24, 2018 at 2:36 PM
facebook twitter linkedin


Although most U.S. stocks are lower today, the S&P 500 Index (SPX) is set to wrap up September with a sixth straight monthly gain. What's more, the index is on track for a quarterly gain of more than 7%, which would mark its strongest quarter since late 2013. Looking ahead, several S&P stocks could climb in October and the fourth quarter, if history is any indicator, including FAANG stock and Dow component Apple Inc. (NASDAQ:AAPL).

Below are the 25 best stocks to own in October and the fourth quarter, respectively, looking back 10 years. Per Schaeffer's Senior Quantitative Analyst Rocky White, Apple stock has ended the month higher 80% of the time, with an average gain of 3.31%. Meanwhile, AAPL shares have gained 6.36%, on average, in the fourth quarter, again with a win rate of 80%. It's the only FAANG stock to make either list.

best stocks october

best stocks Q4

Despite touching a record high of $229.67 on Sept. 5 -- not to mention the company's highly anticipated new product reveal -- it's been a bumpy September for Apple shares, which are on pace to end the month 3.3% lower. Nevertheless, AAPL is set to end the third quarter with a gain of 18.8%, which would mark its best since the first quarter of 2017. At last check, the shares were 1% higher to trade at $219.88.

apple stock chart sept 24

While Apple calls purchased to open have outnumbered puts on an absolute basis in the past two weeks, data indicates traders' appetite for bullish bets is easing. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AAPL's 10-day call/put volume ratio of 1.78 is in just the 39th percentile of its annual range.

Echoing that, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.22 is in the 86th percentile of its annual range. This indicates that AAPL put open interest outweighs call open interest by a greater-than-usual margin, looking at options expiring in the next three months.

In the newly front-month October series of options, the out-of-the-money 190 and 210 strikes are home to peak put open interest, followed closely by the deeper out-of-the-money October 175 put. Should Apple stock once again shine in October and the fourth quarter, an unwinding of the hedges related to these bets could help keep the wind at AAPL's back in the short term.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners