AAPL iPad3 Event: iFade the Launch

by Dan March 7, 2012 12:51 pm • Commentary

Ok, the all important iPad3 launch is just minutes away and while I can think of nothing else, I want to make a trade that would benefit from a short term Pull back to the 200 day moving average which happens to be about yesterday’s low of about $516.

I want to define my risk and look for a relatively low premium, low risk, high reward way to isolate this event.  To do this I am going to trade the weekly options that expire Friday.  Here’s the trade:

AAPL $535 Bought March 9th weekly 525/510/495 Put Fly for 1.70

-Bought 1 March9th 525 Put for 3.30

-Sold 2 March9th 510 Puts at 2.06 (1.03 each)

-Bought 1 March9th 495 Put for .46

Break-Even On Friday’s Close:

Profits btwn 523.30 and 510 of o up to 13.30, with max gain of 13.30 at 510.  Payout trails off btwn 510 and 496.70.

Losses of up to 1.70 btwn 523.30 and 525 and btwn 496.70 and 495, with max loss of 1.70 above 525 and below 495.


I think there is a very low probability that we get any big surprises with the announcement and think there is a good chance we get a “sell on the news” reaction.

Any disappointment and the first place the stock goes to is yesterday’s lows and then who know, but I would expect near term that $500 should serve as decent support.

[caption id="attachment_9342" align="aligncenter" width="300" caption="2 day Intra-day Chart from Bloomberg"][/caption]