Jon Najarian Talks AAPL & META with Charles Payne on Fox Business

Jon Najarian is a master at explaining complex subject matter using easy to follow metaphors. You're not "selling puts", you're collecting insurance premium. And you're not "selling covered calls", you're a ritzy New York landlord.

Justin Nugent

This article was last updated on 10/26/2022.

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Market Rebellion Co-Founder Jon Najarian took over the airwaves once again on Wednesday, making his debut appearance on Fox Business’ Making Money with Charles Payne. Two rebels of the stock market world, known for being unafraid of sounding off on the Wall Street status quo. In January of 2021, when meme stock mania was at its height, Charles Payne was among the first and only finance-famous names to speak out in favor of the retail investor

“I didn’t hear one person on TV complaining about Wall Street trying to crush GameStop,” he said. “I told my subscribers: Buy this stock. And they made a fortune. […] I’m thrilled,” 

Payne went on, 

“If you’re going to try to destroy a company by shorting 140% of its stock, you have to accept that individual investors are playing the same game, and now you’re losing.”

Fighting for the individual investor is something Jon Najarian knows all too well. When Gamestop was at its height, Jon made waves when he announced he would be donating the profit from his Gamestop trades to charity.

Needless to say, the uniting of these two stock market insurgents was highly anticipated.

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Jon Najarian Uses Volatility to Plan His Next Trade

When shares of GME were at their height, Jon used long options to take advantage of crazy price action. But options are good for more than just making outsized bets on massive market momentum. They can also be used to take advantage of outsized volatility, not by buying options, but by selling options. When the stock market gets nervous, investors look to hedge their positions with options, and as a result, prices (or premiums) go up. 

As Jon Najarian puts it:

“Volatility works like this: when people are nervous, volatility premiums go up. Just like when Hurricane Ian was barreling toward the coast of Florida, you really didn’t want to be a forced buyer of insurance at that point because it would have been crazy expensive.”

Jon continued, relating the concept of high insurance premiums to high options premiums.

“Similarly, you’ve got Meta, which reports earnings tonight. The weekly options that expire in just two days have suddenly become . Why is that? We both know — it’s because Meta could make a big move up or down.”

Rather than joining the party and buying those overpriced options, Jon is taking a different approach. Jon is taking the role of the insurance company, selling far out of the money options to hungry buyers who are willing to pay-up for a last-minute hedge to protect themselves from a potentially outsized move. 

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Jon Najarian’s Meta Earnings Trade: Short $116 Puts

“What I did today was I sold the $116 puts that expire in two days, because that’s where we think support is. I’m thinking because of Snap and Google, and also because of what Apple has done with privacy and data, we’re likely to see a negative reaction to those earnings.”

But for Jon’s trade to work, he doesn’t need Meta to go down or up — just like the insurance company, he’ll collect his premium either way. Jon continued:

“So I like the idea of buying on the dip, but this way I get paid for basically being Warren Buffett. I get paid for being the insurance company. And if I’m wrong, I’ll be buying the stock at basically under $114 (because the premium I collected was over $2.00), for a stock that’s currently trading at $129.”

So that’s one way Jon is looking to take advantage of sky-high volatility… but it isn’t the only way. Jon has his sights set on another set on another mega cap tech stock that will report earnings this week: Apple.

Jon Najarian’s Apple Trade: Sell Covered Calls

In response to this Twitter user, Jon highlighted his covered call strategy in stock market heavyweight, Apple.

“I love Apple, I’ve loved it for basically a decade now. I buy that one and sell calls against it all the time. I can pull about 22% a year out of that trade.”

No stranger to coming up with creative ways to explain complex stock market concepts, Jon relates being a covered call seller in Apple to being a landlord of a luxury piece of property (without all the upkeep).

“It’s like having a premium apartment in New York and just collecting that rent. I can collect it weekly or monthly or quarterly. I love that. I never have to put a new toilet in, I never have to put a new roof on the house. All the things that landlords have to worry about otherwise, I don’t have to worry about with a covered call in Apple.

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Options Trading Doesn’t Have to be Complicated

Albert Einstein once said, 

“If you can’t explain it simply, you don’t understand it well enough.”
That’s probably why Jon Najarian is so good at using colorful metaphors to describe concepts like selling options. You’re not selling a covered call — you’re a landlord in New York! You’re not collecting option premium — you’re collecting insurance premium.  That’s where Market Rebellion excels. While others lean on complex industry jargon (a language that was only invented to keep “normal people” out while the Wall Street elite profit), Jon is a master of using storytelling to teach individual investors about the ins and outs of trading smarter.   Judging by the reaction to today’s appearance on Making Money with Charles Payne, it seems like he did a pretty great job.

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