UPDATED: AAPL ($351) iPad2 Launch Today–Good News IS IN the Stock Near Term

by Dan March 2, 2011 11:33 am • Commentary

[private][private]UPDATED Mar 2 2:32 pm: Event came and went and I guess the most important thing was that Jobs was there and looked OK.  That said, he looked fairly thin and I am not sure that his presence had the reassuring affect the company may have hoped for (stock is basically unchanged from the start of the event)…..The new iPad looks fairly cool and has some nice and needed additions, but not a game changer, will just help them keep their lead among competitors….

MY VIEW: Nothing that I heard or saw leads me to change my view on the stock near term.  The street likely to come out very positive on the product update, because that’s all they know how to do.  In addition to my Mar wkly 350/345 put spread that I bought for 1.50 before the event (now worth 1.20) I bought a Mar regular 340/335 put spread for 1.00. I want to give myself a little time for this to play out and I like the risk reward of paying 1 to make 4 if stock is down 4.5% on Mar 18 expiration.

Mar 2, 11;33 am:

Mr. Jobs (or whoever is in charge) with all due respect…enough already, we get it, every March you are going to announce a new iPad (that will cannibalize future Macbook sales) and every June you will introduce a new iPhone (that will cannibalize future iPod sales) and there will be very uninteresting tweaks to existing iMacs, Macbooks throughout the year…..

BUT with out YOU in your cool black mock turtleneck, acid washed Levi’s and New Balance sneakers on the stage, I am not certain there is much need for all the theatrics……Just set the succession plan and outline to investors some reasonable way to achieve a decent return on your ever growing cash position and just try to keep innovating at the pace you have over the last 10 yrs…..cause the minute you guys fail on the innovation or mis-execute the story goes from caramel apple to sour apple for investors……

MY VIEW: SELL THE NEWS: Full disclosure, I am a fan of the company and their products, and how could you be unhappy with the stocks performance. That said i think the stock is un-investable at current levels without a little pullback…..As for today’s events, i actually only see potential negatives coming out of this event…..Jobs not there and we get a product that we are all expecting…..If Jobs is there and looks like he has at recent appearances I am not sure that will make investors feel any better.  Stock likely to sell off a few % over the next couple of days as the stock has rallied into this event (up 4% in the last week).

TRADE: want to use Mar weekly options to make a short term bearish bet…..


-Buy 1 Mar wkly 350 Put for 3.00 and

-Sell 1 Mar wkly 345 Put at 1.50

BREAK-EVEN on Expiration this Friday:

UPSIDE: Stock btw 348.50 and 350 lose up to 1.50 in premium you paid. Above 350 u lose all 1.50

DOWNSIDE: btw 348.50 and 345 make up to 3.50, below 345 (down less than 2%) make 3.50


-$5 wide put spread on a $350 stock and paying 30% of the spread is not usually the most optimal way to make a bearish bet, but the way i see it i have 2.5 days around an event for the stock to be down 2% to make $3.50 or 1%, i like the odds of this happening given my observance of the sell the news mentality int he past around similar events….[/private][/private]