4th Trade Update: AAPL, Rolling Up A Bit and Now Out to March

by Dan February 10, 2012 3:16 pm • Commentary

Here is a quick preview of what I will be discussing tonight on Options Action on CNBC at 5pm:

I have been active trying to short AAPL this week through the purchase of short dated puts…..This has been an expensive and futile proposition….I want to now look out to March which will have a fairly significant event which will likely be the launch of the iPad 3.  This will be Tim Cook’s first new product launch since Steve Jobs’ death.   If the product is unexciting from an innovation standpoint the stock should pull back to the launching point post earnings of about $460 to where it was trading just last Friday!

I want to look for a low premium defined risk way to isolate that $460 level……

TRADE: AAPL $493 Bought the March 480/460/440 Put Fly for 3.00

-Bought 1 March 480 Put for 11.50

-Sold 2 March 460 Puts for a total of 10.80 (5.40 each)

-Bought 1 Match 440 Put for 2.30

Break-Even on March Expiration:

Profits btwn 477.00 and 460 make up to 17.00, payout trails off from 460 to 443

Losses of up to 3.00 btwn 477 and 480 and btwn 463 and 460

Max Loss of 3.00 above 480 and below 460

I am still long Half of my position in the Feb 480 Puts and actually bought some Feb 490s too…..



TRADE UPDATE Feb 9th, 2012 at 11;13am:  Well this turned out to be a disaster….I can honestly say I have never seen anything like it, or at least not since 1999/2000.  The stock is clearly going to 500 today. I am going to cut my losses and sell half the Feb 480 puts I just bought at 4.00, my avg was 4.40.   I suck in this name this week, but it will break soon enough……

Trade Update Feb 9th, 2012 at 10;06am:   I was early in the AAPL Feb purchase (obviously)….since Tuesday the stock is up 20 points, or 4%.   I sold half my position in the Feb 460 Puts, (avg of 2.50) at 1.50 yest and the second half this am at .90 with stock $486.

But as many of you know I can be stubborn, which sometimes equates to stupid….but I think we are very close to the fever breaking in AAPL.

[private]  With stock $486, I just bought the Feb $480 Puts for 4.60….will look to turn into a put spread when/if the stock starts going my way…..


Update: 3:40, Feb 8th.

Well clearly I was early on this one. AAPL continues to scream higher. Currently at 476, I’m going to lick my wounds and dump half this trade at 1.50. Will try to get a better fell for the stock and either re-enter or bail entirely. Stay tuned.


Original Post

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.

[caption id="attachment_8646" align="aligncenter" width="300" caption="1 YR AAPL chart from Bloomberg LP"][/caption]


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).