AAPL: Playing for a Near-Term Pullback to Fill In a Part of the Earnings Gap By Feb Expiration

by Dan February 7, 2012 9:48 am • Commentary

With AAPL now up 15% ytd and seemingly making new all time highs every day, As a trader I have been dying to short the stock….that said I was also dying to do so prior to their fiscal Q1 report, but abstained, luckily.

The chart below shows a an uptrend that has been intact since last spring, but now touching the upper end, this seems as good as time as any to get in an attempt to short (with defined risk) a name that everyone loves.  Also helping me to this decision is that I feel the market is a bit overbought at current levels and we are due for a pullback.

1 YR AAPL chart from Bloomberg LP


TRADE: AAPL ($466.30) Bought the Feb18th 460 Puts for 2.73

-Looking to leg into a put spread when the stock starts to go my way.

Break-Even On Feb18th Expiration:

Profits below $457.27

Losses of up to 2.73 btw 457.27 and 460 with max loss of 2.73 460 or higher (less than 1% of the underlying).