Applied Digital has seen a remarkable year so far in 2025. The stock struggled below $10 for the majority of the first half of the year, but then experienced a significant surge, reaching $40.20 in intraday trading on October 16 before settling around $33 at the close. Overall, the stock has soared over 337% year-to-date and 306% in the last 52 weeks.
In August, Wall Street set a high target price of $24 for APLD. However, today, that target has been revised to $56, backed by a Strong Buy consensus. This indicates that the market is incredibly bullish on Applied Digital’s future prospects.
For investors looking to capitalize on this bullish trend without directly holding the stock, there are two option strategies to consider. The first strategy involves a long call, which is an options contract that gives the buyer the right to buy the underlying asset at a specific strike price on or before a specified expiration date. By utilizing deep in-the-money (ITM) LEAPS long calls, traders can benefit from stock-like upside exposure, more time for the trade to mature, and unlimited potential upside. However, it’s important to note that deep ITM LEAPS calls can be costly and tie up a significant amount of capital upfront.
On the other hand, a bull put spread strategy, also known as a put credit spread, involves selling an out-of-the-money (OTM) put option while simultaneously buying a put option with a lower strike price on the same underlying asset and expiration date. This strategy offers a net credit and sets a floor on the trade, with profits capped at the credit received.
Both strategies cater to different risk appetites, with deep ITM LEAPS long calls offering unlimited upside potential but requiring more capital, making them suitable for risk-tolerant traders. On the other hand, bull put spreads provide limited losses and capped profits, making them ideal for more conservative investors.
Ultimately, the choice between these strategies will depend on individual risk preferences, market outlook, time horizon, theta decay, and market volatility. It’s crucial to conduct thorough research and due diligence to avoid getting caught up in hype cycles and FOMO.
It’s important to note that the information provided in this article is for informational purposes only, and it’s always advisable to consult with a financial advisor before making any investment decisions.
