Apple (NASDAQ:AAPL), perhaps one of the best known market darlings has been on a tear for the past few days. They are set to reveal their new product's in September, and if history repeats itself the price will soar to new highs.
Technically, the price is in a rising channel, and faces resistance at $644. While we are overbought in the short term, I think any correction will be relatively shallow due to the new product line coming out.
Taking a look at the chart below, I've marked the price resistance with the blue horizontal line, and applied a Fibonacci time study. The rising channel and this time study indicates further price appreciation until around September 24th, 2012.
My goal here is to take a fast, low risk trade that would benefit from the product announcement without having to take a directional stance. My requirement is the strike below a relevant major moving average, and offer a decent return.
For this trade I favor selling to open the September $595/$590 bull put spreads for a net credit of $.80 or better. Larger accounts may want to consider a wider spread, the September $595/$585 or a credit of $1.50 or better. The $595/$590 spread returns 16%, and the $595/$585 spread returns 13% for a 5 week holding.
This trade is actionable today, but you may choose to put on a partial position now and add too it on any significant weakness in the overall market to try for a higher premium. Please remember to use proper position sizing for prudent risk management.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.
Additional disclosure: Disclaimer: MSCM and/or I may or may not have a position in this stock which may or may not be exited without advance notice. Data is provided for informational and educational purposes only and is not offered as investment advice. Timing of transactions can be critical to the success of a position. MSCM, its employees or owners shall not be liable for any errors or delay in the content, or for any action taken in reliance on any content provided within. Opinions expressed here are the sole opinions of the author and not representative of any firm view.