APP is in a technical downtrend with high IV but is fundamentally undervalued (fair value $390 vs current ~$277), presenting a contrarian buying or premium-selling opportunity.

So, we're going to look at app lo 11. Uh you're watching it from Cancun and uh an app. Yeah. Okay. Let's look let's look at app 11. We'll take a look right now and we will I will give you my assessment.

I don't have it here in my list. So, the first thing I'm going to do is let's uh let's add that symbol to the list. We're going to pull this up. It's funny. I I use Trading View a lot.

I I I just kind of look at Trading View most mostly. I don't interact with it very much until we're actually in um Did we get it in there? Until I'm in a live stream. So, I feel like I fumble around a little bit, but um I do use it quite a bit.

So, AppLoving from a chart, from a technical perspective, if we look at this, we're looking at the daily. There's a couple of things that my eye goes to right away, which is obviously earnings.

We're past earnings here, which is a beat. It's in green. We saw past earnings here which is a beat in green. We have an upcoming earnings in about middle of November. We can see the specific date if we hover over it's going to be the November 11th.

This is the key portion for me. This is one of the factors that I look at. So earnings are always a volatility crush event which means that when earnings occur, volatility is going to be high and it's going to move down.

Now it's that's unre unrelated to stock price. All that is is volatility crush. So we have two different things that are occurring at the same time. We have potential direction and we have a a certain amount of IV crush.

If the the direction is large to the downside, we can actually see an IV crush that is not very big. We could see the IV increase or sorry decrease but not very much because the stock price moves down.

If the stock price moves up, we can see that stock the IV decrease as well as the directional move pushing it up, which also decreases the IV. So when we look at a chart like this, we typically see when a stock is trending down, we tend to see that it is in an elevated form of implied volatility.

Elevated forms of implied volatility are great for premium sellers. This is a time where we want to consider being contrarian and we want to say can we make money uh if the stock goes up if we are correct because we know that when the stock is down and we're down below the 200 day moving average and we've been in a downtrend that typically we have heightened IV.

Now, one of the things that we used to have to calculate by hand, we would have to say what is a fair market value for HAP, you know. So, let's let's scroll back a little bit in time and just to get a bigger perspective of what exactly is happening with the stock and where it's been and what it's done.

So, you're going to see one of the things that we see on this particular chart. We're going to see this head and shoulders pattern. And when we see this, this can result in a in a move to the downside.

You're also going to note that when we see this large, large candle down here, and the point of control is actually well under the current value. I'm going to turn myself off for a second.

And we can see that point of control is at $24. stocks trading at $277 right now was as high as $740.

So depending on on where you're looking depending on where you're looking at the at the time frame um we can say well it comparatively to its highs it is very very inexpensive but what I want to know is how expensive is it relative to its income that's more important to me because the talk this the chart only tells part of the story

another thing that I might do is I might zoom out and look at just the range where this was trading. and say, you know, how where is the point of control if we were to look at it capture kind of this visual area of of time?

And what I did I I've got the wrong key there. Um I've got a setting on trading view. I have these this is a paid uh histogram that is basically showing me where the the volume price action is and it's marking a white line that gives me that that um the what's called the point of control.

So, it's where the bulk of the trading occurred. And we can see that this histogram is quite centered on this this area. And that is going to potentially change if we zoom in a little bit further.

So, I'm going to zoom in a little bit further and say, okay, you know, we're we're we're this is five earnings ago. Like there's a lot of data that's come out. So, where is a more realistic price action?

What's more current? Because I think that that's what's important when we're looking at a stock like this. And here we can see that this point of control is actually above. So around that 450 level.

But what I actually want to know is what's the fair value. So the easiest way that I know of to to calculate is to use paid services. Now I have discount codes right in the description of of all of my videos.

And if you guys are interested in any of these apps that I use and you things that you see, always try to use creators discount codes. Whether it's mine or somebody else's, if you're watching videos, be financially educated and know that if you use somebody's link, you are going to get a better deal than going to the website directly and signing up on your own.

They pay us. They give us a little stipend for promoting their product and they encourage us to promote their product by giving you guys a discount. So, you win, I win, everybody wins.

And I will not promote products that I don't actually use. So, I only have links. You can go to my website. You can go to job drawbridgefinance.ca. Links of all of the different discount codes.

These are things that you see me using on a regular basis. Sometimes the sales are extremely good, so worth checking out. Um, what are we getting into? So, one of the ones I'm using is investing pro.

Now, they show this fair value at $390. So, this is a calculated quant quantitative analysis and and I have found that this fair value is a quite a good number. you know, I don't anymore.

I don't go through the financial uh statements and I don't look for uh positions where I I'm I'm calculating out these numbers anymore. I have gotten lazy admittedly because I make enough money trading with these services and that I don't need to spend that extra time because I have these available to me.

So, it's one of those things. It's a cost of doing business. It's like I'm paying for for this calculation either with my time and and doing my own research which could be typing that into Gemini or ChatGpt and finding out what a fair value is.

There's multiple ways to do it. Um, or doing the old school way, which is to fill uh, pull up the financial reports, go through, learn the calculations, and calculate it out.

How much, what is their earnings per share? What do they what do they make? Like price to earnings forward ratio right here, the PE 16.92. This is this is a cheap company. When we see valuations that are under 20, this is cheap.

We also see that short interest is 3.9 or 3.5%. So there's not a lot of people shorting this. We have a market cap of 89 billion. Like this is massive.

One of the things that uh that Seeking Alpha shows is it shows its valuation not in a number format but in this in this rating system where it shows like a C minus. And the cool thing that I love about Seeking Alpha and this is why I use both of these kind of headto-head is when I look back at the ratings I can actually see historical ratings.

So I can see the valuation and they were rating it a D minus when it was at 328 and now that it's at 277 it has a C minus. So, it's still not a great valuation, but it's certainly not a bad valuation.

Um, whereas when it was a a D here, it was a 339 and was kind of fluctuating, but we get these ranges. Now, there's also the on the other side, but they were showing this still as a buy at 398, which and at 500, it was showing this as a buy rating.

And obviously, that was not that great a time, even a strong buy when it was at 558. Now, this was because the stock was coming down. And if we look historically we'll we'll we can see that it was at a higher price point and then these strong buy these dark green lines actually put were uh they predetermined one of these moves up whereas this one was not this was like a hold strong buy and then it dropped to a buy and then a hold.

So, but it's not like the beall end all, but I am also not this type of trader where I'm looking for straight up potential valuation increase. Uh, you know, I'm not just buying and holding a company like Applov1.

Uh, so one of the things that I can look at is this 390 and and I can say, okay, so the have two different services that are both kind of saying these are fine. The profitability is an A+, which I love.

Um if we look at this profitability health here on investing.com also a five rating which is really great. Um there there's good cash flow and there's good growth. Um then gross uh gross profit margins.

Now it also says stock has taken a big hit over the last week. So is there opportunity here to to potentially purchase something?

Look, I've got some stuff already built here. Uh what do I have? I've got a 16. Let's go to the simulator. You guys can read through that. You can see what I have. I'm short the 400 call.

These are all October 16th, which is 10 days away from now. So, I was obviously looking at this and one of the things that I like about Mumu is that uh it it saves my my previous trade.

I I can have this sitting here waiting for me. So, selling the 400 uh buying the 390, selling or sorry, buying the 460 and selling the 450. And what does that look like? Let's just look at how that's structured.

So, this is a what is considered a very very inexpensive call condor. Now, in order to make money over the off of this, the stock would have to go from 277 up to 390, which is pretty unrealistic at this point.

If we were to look at the let's go to the strategy lab and and say, you know, where is a neutral trade here, you're going to see a short straddle. Uh and that will show us the expected move.

So the expected move right right now, if we were to short the 277 put and short the 277 call, it's going to show the expected move is between 257 and 297. And this is based on uh I don't want to learn more about the strategy.

I want to see the dates. Oh, we're at October 16th. Yeah. So, that's October 16th. So, that's the expected move. So, plus or minus uh and we and that that's that's it. It's it's a great little way to see where we could we could end up.

So, there's two factors here. we have something that's saying the stock price is below its current value and so we could see a potential move to the upside and um here's an expected range between 297 and 257.

So let's go back to the chains. Let's go back to the simulator and what we'll what we'll do is we'll play with this type of trade. This is a very simple simple trade. It's a type of condor.

This is all it calls. And what if we were to just move everything over here? How can we build something out that has uh some some potential? Interesting here how this is coming up.

This is actually showing me I could open this for a credit. This is uh pretty unlikely because the spreads it's just where we're we're showing but this is actually showing 100% probability of profit.

Now it is possible this is this is sometimes this kind of stuff does come up. Sometimes you can get into a trade for so such a little amount of money that you can actually have a a potential of having very very cheap not free but very very cheap potential.

Now again stock would have to move to 350. There would have to be a cataclysmic event for this to happen. So I doubt that that's where we want to play. um that expected range around that 293 297 like what if we were to just bump up to 300, you know, that might be something I might be more interested in playing.

And so what I may do is come over here and see if I can buy something that is that is inexpensive. What I want to do is get into this for a cheap price. Uh buying the 290, selling the 300.

Uh these are we're looking all at October 16th. Sometimes it's not very easy to get this in for a credit. You know, like these are wide spreads. I don't love the the width of the spreads on here.

Uh but we are in a situation where we could buy spend 370 bucks and the max profit is 1,600. So depending on the the what we thought was going to happen with the account.

Now, one of the things that that a lot of people are going to look at and say, "Well, FP limit is 277. If it's worth 390, why aren't we buying?" And the obvious easiest thing to do is to just sell a put to below.

That's the a bullish strategy. So, if we were to change this to a put, um, can we get into a situation where we're financing a trade um with either a a bull put credit spread or with just a short put?

And can we buy this 290 and then sell the the 300 or the 310 above and give ourselves some extra potential? Let's let's eliminate this this one off of here. We'll go to a simpler style of trade.

So we're selling a put down below. This is going to give us a credit. And this is the 230. So you can see the max loss is going to be 23,000, but we have a max profit of 1,600.

This is because I have I have simultaneously purchased a long call and then sold a a a call as well. Now I can do this with I can add more in here if I wanted. I could actually add another short call in here.

I could say uh sell another call above. Say I didn't think it was going to rise. And this would give me a situation where I'm I'm getting uh what how do I want to set this up? Say I was quite bullish and I want a profit tent above.

What I'm trying to do is get in a position where if I thought the stock was going to rally over the next 10 days, uh if the market continues to push up and this stock recovers, can we go into the profit tent?

because winning in one of these trades can be way more lucrative than just selling a single put. You know, for years I've done it. You sell a put, you make some money. Um, but really the move is to the upside.

What you want is to like be able to capture a larger potential. So, in this case, I can make $2,300 if the stock goes up. So, we can we can get into that uh potential position.

This is that selling that 270. This break even down in here is 267. So if we went back to that strategy lab for a seven, where where was this expected move? The expected move is 257 and then 297.

Well, we have the we have the 297 covered in spades here. So how can I bring this down? Well, let's just move this down one. And what I'm trying to do is get a credit. I'm trying to get myself in a position where I'm getting some sort of credit for this.

And that's kind of how you'd ek it out. This is a pretty tiny credit, 20 cents. So if the stock stays between 260 and 290, which is where it's expected to then I only make 22. But if it goes up, there's a potential of making $2,000.

Now, let's just go to the short put all just by itself. Let's just delete off everything else but the the the put and just look at that just by itself. In this case, we're getting $300.

So, what I want people to think about is from a riskreward standpoint, when I put this trade on, the maximum I can make is 300, but I'm taking this risk of $25,000 of capital tied up and

And we've already watched this stock drop from 700 down to the level it's at at 277. So, there is a a very good chance that it could continue to drop further.

The stock was at $700 though. So, it's another factor to take account into like is it going to move $700 in the next 10 days? Pretty unlikely, but um there's no earnings reports or anything. I mean, it could.

So let's look at another idea. Let's look at another trade. But this is kind of how I would look at uh a trade like apploving.

So this is a different type of situation comparatively to uh what we were looking at with um app 11.