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  • Apple's Valuation: The One Article Every Investor Should Read [View article]
    Maybe the reason why they are not splitting is because Steve Jobs is not planning for the future, for obvious reasons. I know that he was able to walk onto the stage yesterday and look sort of sprightly for a couple of minutes, but we don't know how much that took out of him. When people are terminally ill, they may not necessarily think rationally in terms of what the survivors believe is rational, because their priorities and perspective may be quite different. We really do not know and cannot know what is going on in Steve Jobs' mind at this time. I wish him the best.
    Jun 7, 2011. 12:50 PM | Likes Like |Link to Comment
  • Max Pain Theory: Apple Options Should Be Sold, Not Bought [View article]
    Looks like selling weekly condors might be a good play when there is no big news or earnings scheduled.
    Jun 3, 2011. 09:43 AM | 1 Like Like |Link to Comment
  • Apple: Trust the Stock Market as Far as You Can Throw It [View article]
    Good article! Apple would not have to do the cloud thing very well to improve on the pathetic effort by Amazon to do cloud music, which I recently tried out.

    The idea of a program that scans your computer for your music files, then matches them with music files already seated on the clouds and makes them available for you to play anywhere you have a device to decode them and a pair of earphones or an amp and speakers to play them.

    But will retail people actually pay money for this?

    I'm probably an average kind of music fan. I have been collecting music mostly since CDs became available, since they were clearly much more portable than the heavy old LPs they replaced.

    I have about 500 CD albums (every so often I have a clear out and only keep the creme de la creme), plus a couple thousand tracks of downloaded mp3, plus about 200 hours of my favorite radio shows downloaded or just recorded from the Internet.

    Most of this stuff is sitting on my desktop hard drive coded either as FLAC (a lossless format) or high-grade mp3. My desktop computer has a second, hard drive that I clone the primary hard drive to every now and again, for back up. As a backup, it is all also on a small Toshiba USB drive.

    So I have my music collection on:

    1. CDs
    2. Hard drive #1
    3. Hard drive #2
    4. Toshiba USB hard drive
    5. SD chips that I put in my mp3 player with this week's play lists.

    Now the question becomes this: How much is it worth to me to pay to subscribe to a cloud music service, where, presumably, if I fall on hard times and cannot continue to subscribe, I will lose my cloud music collection and have to fall back on my terrestrial collection?

    Answer: Not much. I already have the means to pass my digital music collection on to the next generation of my family--not too soon, I hope.

    As a consumer of music it seems to me that the iPlayer has the following features:

    1. A device to store music--a hard drive or a flash memory chip.
    2. A battery to power the device or the means to get external power.
    3. Software to arrange and catalog the music.
    4. Software to decode the music and emit a signal.

    What it doesn't have is any way of listening to the music other than earphones. The biggest vulnerability is that if you drop your device in the toilet, you may lose your music collection.

    What would be really useful would be a modular decoder, probably with a high speed USB port and chip slots that could read various different forms of memory, whether on a hard drive or a memory chip, and convert them into a signal.

    Of course a PC or laptop can do this, and a cell phone could do this, but only from the cloud, but I don't think there are any dedicated portable music players that can access different kinds of memory.

    Anyway, just to reiterate, the question always becomes: Is this service something that people will pay for? Would they pay as much or more or less than they would pay for satellite radio?

    My suspicion is no, but it seems to me that the iCloud would be much more valuable for offering services to multinational corporations

    Disclosure: Long/short AAPL
    Jun 1, 2011. 10:22 AM | Likes Like |Link to Comment
  • Apple: The Most Undervalued Equity in Techdom [View article]
    Ah, yes, the Cloud of Unknowing as the medieval Christian mystic called it--a state of switching off the intellect and giving the soul over to the power of the Almighty.

    Actually, you don't have to be a mystic to understand the cloud. In computer-talk the cloud just means a remote server or storage facility that you connect to via the Internet or a cell phone.

    I actually invented the cloud long before it had a name. When I wanted access to a document like a pdf or photo or something that I had written, I would (and still do) just attach it to an email or paste it into an e-mail and mail it from one e-mail account to another, so that it would be stored in my Sent folder and I could access it from any computer anywhere in the world. Big deal.

    Now The Cloud has been invented as a way to get your money. Wanting to know what The Cloud was all about, I signed up last week for the Amazon Cloud, so that I could store some music there. It sounded great in theory according to the blurb. Maybe I could upload my entire music collection and never have to look at a CD or hard drive again?

    Fat chance! You could load up music files, but only in mp3 and not in a lossless format, and there was a strict limit after which you had to pay for more space. The indexing system didn't seem much good either. Overall impression--just a con trick to impress kids.

    Of course, if businesses or the military want to upload their data to someone else's servers so as not to have to bother with running their own or paying IT guys overtime to come out and fix the network whenever there is a storm in the area, then good for them, but its nothing to get excited about.

    Meanwhile, how long do I have to wait for an app that will take my dog for a walk?
    May 31, 2011. 08:58 PM | Likes Like |Link to Comment
  • Apple: The Most Undervalued Equity in Techdom [View article]
    Perhaps Mr. Jobs, being the charitable soul that he is, will remember that Apple might not have survived without an injection of new capital from Microsoft in 1997
    May 31, 2011. 07:53 AM | Likes Like |Link to Comment
  • Apple: The Most Undervalued Equity in Techdom [View article]
    Oh, yes, I agree 100% with this. A round lot of 100 Apple shares will set you back well over $33,000 so that is the price of admission to play with this stock.

    I am all for a 10 for 1 split, as I think that would lead to the stock doubling within a year.

    I just don't know how many small retail investors there are these days who are investing out of a paycheck. I imagine a lot of people with retail accounts are playing with inherited money or retirement accounts, or are wealthy persons such as NFL stars or Wall St. bankers. A lot of small business people have money to invest, but don't trust the stock market as they see it as a form of gambling (which it is).

    As the moniker I am using implies my primary focus is on people trading in retirement accounts, which may include large sums that have been rolled over from other retirement accounts, pension funds, etc.

    Apple has only 29,000 shareholders which is much less than a company like MSFT and I am sure one of the reasons is that the high price of shares makes it impossible for smaller accounts to buy enough shares to be able to trade options.

    Then again, buying a LEAP is cheaper than buying the stock. You could buy a $260 strike Jan '13 LEAP for $100 per share, which is $10,000.

    Of course Apple consumer products appeal more to the affluent person, so it would be nice to see the 10:1 split leading to thousands of iPhone buyers buying shares next month with their spare changed instead of buying a different colored cover for their iPad!
    May 30, 2011. 11:58 AM | Likes Like |Link to Comment
  • Apple: The Most Undervalued Equity in Techdom [View article]
    That shows his dad is making lots of jam selling Blackberries for his bread and butter.
    May 29, 2011. 11:02 PM | 1 Like Like |Link to Comment
  • Apple: The Most Undervalued Equity in Techdom [View article]
    You can create your own dividend by buying in-the-money LEAPS and then selling covered calls and/or puts against your position. For example buy the January '13 $265 LEAP call for $100 and sell the June $345 call for $3 to get a return of 3% per month, or if the stock is called away, then sell your LEAP, buy the stock and hand it over for a profit of about 11% for the (partial) month (or roll it over to a higher strike the next month).

    Alternatively you could also use options to buy synthetic stock--buy a call and sell a put--which would cost you almost nothing and given you the up- or down-side of the Apple stock without tying up much cash, which you could then invest in something that does pay a nice dividend, like ATT or Verizon, which are selling the iPhones.

    Or, if you are really, really bullish on Apple, why not sell the Jan '13 $400 strike put for $90 and use the proceeds to buy 3 $400 strike Jan '13 calls at $30 each. That way if the stock goes over $400 you are on a double free ride and the cost of admission is zero. Stock hits $500 and you have made $200 per share for no outlay.

    Or you could just sell covered calls against the stock.

    When life gives you apples, make cider.
    May 29, 2011. 10:15 PM | 2 Likes Like |Link to Comment
  • Apple: The Most Undervalued Equity in Techdom [View article]
    "My dinner was brought... In the first course, there was a shoulder of mutton cut into an equilateral triangle, a piece of beef into a rhomboid, and a pudding into a cycloid... The servants cut our bread into cones, cylinders, parallelograms, and several other mathematical figures."

    [Gulliver's Travels]
    May 29, 2011. 09:40 AM | 1 Like Like |Link to Comment
  • Using Apple Weekly Options if You're Bullish or Bearish [View article]
    $340 may have been the Max Pain figure for AAPL this week, but there were a pretty large number of $335 calls, but relatively few lower calls, so nearly all the open calls expired worthless. As I recall there weren't nearly so many open puts higher than $335, so even if $335 was not Max Pain, it was still extremely achey-breaky for all out of the money, at the money, and slightly in the money call holders.
    May 22, 2011. 10:46 PM | 1 Like Like |Link to Comment
  • Digging Deeper: Options Expert Discusses Pinning, Max Pain and Apple (Part Two) [View article]
    OK,here is something interesting. Goldman Sachs today issued a note advising their clients to sell Intel which recently announced a breakthrough in new chip technology. It is fairly unusual for brokerages to give a stock a sell rating.

    seekingalpha.com/artic...

    Now, INTC opened at $23.88 this morning, and there is MASSIVE open interest in the June $24 strike calls (60,000 contracts--much more than any other open contract on this stock). If Goldman is right in its "prediction" and Intel tanks, then all those option contracts will expire worthless, which would be great for whomever is short those contracts.

    It would be really interesting to find out who is short those contracts and who is long those contracts and how they feel about Goldman issuing this sell advice.

    The cynical part of me says that Goldman must be short those $24 calls, but it would refresh my faith in human nature if it was shown not to be so.
    May 19, 2011. 02:12 PM | 1 Like Like |Link to Comment
  • Digging Deeper: Options Expert Discusses Pinning, Max Pain and Apple (Part Two) [View article]
    Interesting, though, to note that Meyer Lansky introduced a stunning innovation--the idea that it was more profitable to run honest games with a built-in mathematical margin of profit than to run bent games, a lesson that may not have been completely taken on board by his heir Lloyd Blankfein.

    Lansky's second innovation was to use mob connections to ensure legal and physical security of his establishments from other crime figures, and law enforcement (through payoffs). Goldman Sachs seem to have gone much further, in actually securing many top positions in government for their "alumni" so that they are actually in a position to print money to bail out the company, bankrupt rivals, and so on, which is a considerable advance. Blankfein would never have ordered a hit on Bugsy Siegel, he would have bailed him out to salvage the Mob's credit default swaps.

    I think the legislation quoted by Tom makes it clear enough that you can, for example, short a company if you predict that the stock will fall in value, but you can't short a company on a grand scale with the intention of forcing the value to fall, otherwise we would see companies shorting each other's stocks to soften them up for acquisition, or to make their rivals' exective's stock options expire worthless.

    But ultimately the decision whether to bring prosecutions is a political one. Clearly Madoff and Rajaratnam did not have the political connections necessary to obtain "diplomatic" immunity, but many probably do. [Also there can now be little doubt that Eliot Spitzer was brought down to earth because he was seen as a threat by too many powerful figures on Wall St.]

    Anyway, the broader point I am making is that bringing prosecutions in such cases tends to be a political decision
    May 19, 2011. 09:12 AM | 1 Like Like |Link to Comment
  • Digging Deeper: Options Expert Discusses Pinning, Max Pain and Apple (Part Two) [View article]
    I agree, and it merits further study, for example to see if there are any identifiable patterns in the future. Of course to some extent any really proportionally large trade will have a manipulative component to it, because a purchaser or seller of huge blocks of stock will always be aware that they cannot just be sold at market without affecting the bid/ask prices. I'm not suggesting that any crime took place, just what I said, that if we knew what drove that burst of trading, we would understand the behavior of the stock better.
    May 17, 2011. 09:03 PM | 1 Like Like |Link to Comment
  • Digging Deeper: Options Expert Discusses Pinning, Max Pain and Apple (Part Two) [View article]
    Thanks, this is an excellent article that probably explains a great deal of the tendency of casual traders to suffer at the hands of Mr. Max Payne.

    However, it would certainly be interesting to find out who was responsible for the changing of hands of 500,000 AAPL shares in 5 minutes last Friday that drove AAPL down nearly $3 to the Max Pain point. That is $170 million dollars worth of shares, which is not chickefeed.

    Maybe there is someone reading this who knows more?
    May 17, 2011. 08:29 PM | 2 Likes Like |Link to Comment
  • Digging Deeper: Clustering and Maximum Pain in the Options Market [View article]
    Philip Elmer-DeWitt is to be congratulated for spotting an incredibly easy and foolproof route to riches.

    All you have to do is sell the most popular in-the-money AAPL weekly calls and puts on Friday mornings and you will be laughing all the way to the bank on Mondays.

    I will give it a try before anyone else catches on.

    P.S. If you are reading this post, please keep it confidential and out of the hands of market makers.
    May 16, 2011. 10:31 AM | 1 Like Like |Link to Comment
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