NEW TRADE: I took off half of the March weekly Put Fly for a double and will let the other half ride (read below). But I want to highlight another much longer term trade that i just put on….It is def a bit of a long shot, but I love the risk reward (9 to 1). This trade is an outright bearish bet that AAPL will continue to introduce “resolutionary” products for the balance of the year, like the “New iPad” released today. All I got to say is that MAC refreshes and iPhone 5 better knock it out of the Park or the way forward for Tim Cook may be a bit sideways, unlike his predecessor.
But I don’t expect anyone to follow me in this trade as I am the only person on the planet who feels that AAPL could be much lower in a year. This trade structure could also be used as some cheap protection against a long
New Trade: AAPL $528.50 Bought the Jan13 450/400/350 Put fly for $5.00
-Bought 1 Jan13 450 Put for 29.17
-Sold 2 Jan13 400 Puts for a total of 32.62 ( 16.31each)
-Bought 1 Jan13 350 Put for 8.45
Break-Even On Friday’s Close:
Profits btwn 445 and 400 of o up to 45.00, with max gain of 45.00 at 400. Payout trails off btwn 400 and 355.
Losses of up to 5.00 btwn 445 and 450 and btwn 355 and 350, with max loss o 5.00 above 450 and below 350.
Trade Update at 2:55pm: SO the we have it, the “New iPad”, really oh man, that name sucks. And this device rather than being “Revolutionary” as we have come to expect under deceased founder and CEO Steve Jobs, it is being dubbed “Resolutionary”. Analysts are obviously going to love the device and the positive implications for every metric they look at, and I can’t argue, nice product, but clearly clearly “Evolutionary” and definitely NOT a a game changer.
The stock is barely down on the day and the knee jerk reaction since the end of the presentation was for investors to take some profits. I am going to stick with this trade with the hope that the stock closes down on the day and near its lows of the day. I am going to offer out half of my Put Fly that I bought for 1.70 at 3.40 to take my cost off of the table. Currently the stock is $526.90 and the fly can be sold for 2.70, $1 gain…..I am gonna try to stick this out with 2 days to expiration, sell half when i have a double and then let the other half ride with no risk.
*AT 3:02pm eastern I sold half at 3.50 for a 1.80 gain.
Original Post March 7th, 2012 at 12:51pm: AAPL iPad3 Event: iFade the Launch
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 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]