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, Blockdesk (1,461 clicks)
ETF investing, CFA, portfolio strategy, long/short equity
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With a market cap at 90% of half a trillion dollars, and daily trading values of $6 billion, an institutional round-lot cost of 5 million bucks takes this king of the hill out of the likelihood of any individual investor moving its price much without a lot of company from big-money institutional investors.

One individual is trying hard to win that support. There's lots of controversy, pro and con. But what do the market professionals think is possible?

They need to have more than just an opinion, since a lot of that $6 billion daily volume moves in blocks that require their help. And frequently, the help includes temporary support of MM firm capital.

That capital never gets put out at risk without solid hedging protection. Hedging that is based on the outer ranges of price held by them as possible to be encountered. In this highest-of-stakes game, real money is being bet on what those price frontiers are.

We can and do translate their hedging footprints, left in price-insurance markets, that tell where the insurance is worth buying, for some 2500+ stocks, ETFs, and market indexes. Here is what the market-making community, bidding against one another, has come to project for Apple Inc. (NASDAQ:AAPL) each day of the last half-year:

(used with permission)

Their current collective outlook has an upside price potential of +19½%, with only 7 bps (less than 1%) of downside exposure. But, as can be seen, the outlook is dynamic and will move as attitudes of those with sufficient capital may shift.

During the past five years (1260 market days) a forecast with this extreme an upside to downside balance has occurred previously 56 times. Not unbelievably rare. When it has, it has been followed by higher prices in 80% of the next 3 months. Higher by enough to reach the tops of those forecasts with sufficient frequency to offset the other negative 20%, and net capital gains of +8%. By doing that in only 10-11 weeks, profits at an annual rate of 45% could be had.

This past behavior of some of the best-informed, best-resourced players in the game, reinforced by real BIG money, has been measured live as it occurred.

No guarantees, of course. But should that recur, is it enticing enough for you?

Source: Apple's Stock Price: What Do Market-Makers Think It Can Sell For?