Analysts and traders are extremely far apart on shares of Apple. Over the past six months, shares of the tech giant have fallen more than 25 percent, badly underperforming the S&P 500. And on Tuesday, Apple shares dipped below $96.
Meanwhile, analysts’ average price target on shares of the stock is $140, according to data provider FactSet.
Some, like Goldman Sachs, see the stock even higher; that bank’s analyst has a price target of $155. And Piper Jaffray’s well-regarded Gene Munster says the stock is going to $179, which would almost be a clean double from current levels.
Nothing in that ballpark is seen as particularly likely right now, as a check on the options market tells us.
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One benefit of examining options is that the derivatives contracts hold a great deal of information about traders’ expectations.
In this case, we can get a rough estimate of the implied probability of Apple rising to $140 within the next year by looking at the “delta” of the 140-strike call options expiring next January. This is a measure that tells us how much the price of the option tends to rise for every dollar that Apple shares rise.