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  • Apple Inc. Shares Are Likely Dead Money For The Balance Of Its Fiscal Year  [View article]
    Dr. Blair: As early your second paragraph you state:

    "The stock moved a bit higher after hours, regaining the ground it had lost during the regular session and adding a couple of percent to a point just shy of $430."

    In after hours the stock jumped out of the gates going at one time over $440 to end the after-hours trading nearly 4% up (nearly twice a couple of percent) and $5.38 above $430 (not shy of it)

    If you cant even get a simple, indisputable fact correct (not talking about opinion) it drains all credibility from your article. Not surprisingly this early gaff set the tone for the many inaccuracies and illogical bearishness that many others have commented on.
    Jul 24, 2013. 03:27 AM | 12 Likes Like |Link to Comment
  • The Mysterious Case of Apple's Missing Growth  [View article]
    Good article. Balanced, informative and puts a measured perspective on things. As an aside: In my view the latest reaction is a shaking out of a number of weak holders. Note how the price jumped from just under $500 to $515 (circa) just prior to the announcement. These buyers had to be unloading big time because the bet went against them (joined by those teetering on the cliff from the above +$600 days). Once things settle and the ridiculously low valuation is realized we should see a wave of sanity return
    Jan 25, 2013. 07:38 AM | 7 Likes Like |Link to Comment
  • In Defense Of Herbalife: Arguments Against Ackman's Short Thesis  [View article]
    Here is my take-away:

    Revenue of $3 billion/ 3 million distributors = $1000 Revenue per distributor.

    $1000 --- seriously? And this is not a pyramid scheme!

    With HLF expansion to multi-numbered countries it is not inconceivable that their viable distributor audience is well over a billion. Therefore 3 million, 4 million, even up to 10 million target distributors on the HLF "model" is not inconceivable. Lets say 5 million three years down the line with the same miserable $1000 revenue per distributor. That means a revenue jump to $5 billion for HLF. Now when will this end (aka Ponzi scheme)? Maybe never because the difference between Madoff and HLF is that Madoff took on investors losing huge amounts of money. There is only so many of those and the space is relatively minute. Whereas, HLF plays in a huge arena where (as Ackman points out) distributors lose a couple of thousand dollars and move on. Very pertinent: They are not being promised a return as investors, only a possible but non-guaranteed profit as a distributor. Very clever if you think about it. Probably the real reason why these corporate pyramid programs endure for so long.

    As far as Insider equity ownership goes it is laughable. The salaries paid to the CEO and other directors make the whole part of this defense thesis irrelevant.
    Dec 23, 2012. 09:40 AM | 1 Like Like |Link to Comment
  • More Options For Options Traders  [View article]
    Hi djohnsonhot,

    Thanks for expanding on my comment. I found many of your tactics confirm the exact way I trade. In this regard I add the following:

    1. An analogy that describes weekly VERSUS longer expirations: Weekly is like a hurricane that can hit New York, turn around at an acute angle and hit Florida then go for New York again before it runs out of steam. Longer expirations are like watching traditional hurricanes forming in Africa and heading in a general direction towards us. More than enough time to work out where it is NOT GOING TO HIT, and if wrong then enough time to get out of the way (roll the trade). Most brokerages know this and are far stricter on margin allocations for weekly.
    2. Based on the above, like you, I feel far more comfortable establishing the complete IC on longer expirations based on your resistance/support analysis to collect the double premium. With the weekly expirations I believe leaving out the one leg (even though it may mean less premium) - the more risky leg - leaves you focused on insuring the one trade makes it through very volatile weather. Two positions in a highly volatile arena can be far more than double the risk.
    3. Everything you say on identifying the trend, resistance and support levels makes sound sense. However, no matter how much preparation PUT credit spreads (bull spreads) are way and far the most scary no matter how much analysis you do. That is because you travel an elevator on the way down and an escalator on the way up. Therefore, particularly if the trend suddenly changes (example: Apple after its recent ATH) your advice to get out or roll your PUT spreads emotionlessly is absolutely key. Deltas change rapidly no matter how vigilant your research has been so this is vital. Do you have any comment on the above?
    4. One thing both of us has left out: What stocks are suitable to this type of trading? There are not many that offer the comfort of good liquidity (moving in and out of trades in an instant), acceptable Implied Volatility (in my view ranging from 20% on low end to +- 50%), spreads that make sense commission-wise and continual interest to insure getting acceptable premiums for far OTM trades (at Deltas of .1 to .2). In my view I find APPL is THE ideal IC trading stock followed by GOOG (both mega tech stocks). GOOG less ideal because it tends to GAP and gapping is lethal to spreads (even those OTM). I have also traded stocks after they experience extraordinary events, thus creating a new trend (JPM recently). My quest is to add to this list. Any suggestions?
    Dec 21, 2012. 10:17 PM | Likes Like |Link to Comment
  • More Options For Options Traders  [View article]
    Many comments on this have been extremely astute in different ways. Thank you. for your input. I trade only by selling vertical spreads on both sides (iron condors on completed trades) and my preferred stock is AAPL. My rules are as follows:

    1. Always use probabilities and Implied Volatility calculations in making trades. My maximum risk is that trade has 20% probability that it will expire in the money but I like lower than this most of the time.
    2. The objective is always to be where the price is not going to be at expiration
    3. If the probability starts moving against you significantly then buy back your spread quickly. Usually you have the luxury of rolling it forward in time with hindsight and and better strikes. But if not take the loss (but not maximum loss) and be emotionless
    4. The ideal is creating iron condors but it doesn't always work out. Leg these in or leave out one leg (i.e. having the one side of the trade is OK if uncomfortable with other side of the trade). Obviously this involves looking at technicals to time the legs well. For example: If a stock has all the MAs above current price this is HUGE resistance. Call spreads above the MAS is a high probability trade. Not so the PUT spread side.
    5 Make sure that the OTM trades are outside any gapping potential the stock may have. You don't need a black swan or a white swan. A common tendency for the stock to gap means if it goes through your spreads it is enough to create maximum loss. AAPL for example is a minimum gap stock (seldom if ever 10%); GOOG a big one (often 10% - especially at ER)
    6. Finally: don't be greedy. High probability trades bring in relatively lower premiums. A profit is a profit.
    7. For those who commented on Options Trading = Gambling. You haven't a clue what they are talking about
    Dec 20, 2012. 06:59 AM | 2 Likes Like |Link to Comment
  • Apple Chart Flashes Bubble Crash Warning  [View article]
    Trendytrend: I agree with you fully. The tech bubble was characterized by PE's in the stratosphere and beyond. In essence the PEs crashed for the companies the author has selected for comparison. APPL is at less than a reasonable PE right now. Therefore the comparisons are flawed in my opinion
    Dec 11, 2012. 12:23 PM | Likes Like |Link to Comment
  • Profiting With Apple Weekly Options: Week 3  [View article]
    Hi Richard

    Over the week-end a key consideration hit me: Special dividends. This presents huge risk on the CALL side of short Iron Condors for AAPL on a weekly basis (as per your model). PUT side remains viable.

    Reason: If AAPL declares a $30 special dividend the CALLS will be adjusted down by $30 on the effective date. The Options Commission are clear on this. Assuming that the effective date is after the Weekly expiration then the weekly spreads will be untouched (I believe). But it is a serious catalyst and AAPL stock may bounce to $615 or $610 in one gap just like Costco (if received warmly) going right through otherwise safe spreads or at best threatening them. In my view while this special div thing is hot we can't really do Call spreads on weeklies. We were lucky not to get caught in last week.

    Anyone who has short call spreads starting at $650 for longer expirations should also be concerned as these will be adjusted down by the dividend value (likely $30 if AAPL declare a special div). Together with an increase in AAPL price on the news this could be an arbitrage disaster. What are your thoughts?
    Dec 2, 2012. 07:47 AM | Likes Like |Link to Comment
  • Apple's Institutional Slingshot: Rational Explanation Of Irrational Stock Action  [View article]
    To Jason;

    In your latest e mail (30th November 2012) posting to subscribers you state:

    "An Apple dividend announcement sometime over the next
    week could have a Costco-like effect and produce a one-day 5% stock jump. That would be a $30 up day for AAPL. This kind of risk-reward is favorable considering the market’s limited downside between now and December 10th."

    Considering that you are addressing an Equity Options audience this is misleading to put it in the kindest terms. When a special dividend is declared it is largely if not totally deducted on a set formula from the strike price (put or call) of existing positions. The reason being that the special dividend was not accounted for or foreseen and is dilution of AAPL intrinsic value. Therefore if, for example, the AAPL price happens to jump $30 with declaration of a $30 special dividend (arguable), then basically the Call option price will stay flat (or close to it) after Option Exchange. Commission has made adjustments (no Options advantage whatsoever). There may be a small difference on either side of the divide but not anywhere near to the $30 unless the price rises by nearly $60 as a result of the declaration. The logic (common sense) is that on the ex dividend date the AAPL share price will retract by the dividend amount. Either way, the Options investor whether in a PUT or a CALL will not find himself advantaged or disadvantaged by the special dividend declaration. The quoted statement above strongly implies that the advantage is HUGE - $30 HUGE. For any subscribers to this e mail service please do your due diligence before establishing positions for what is being presented as great upside for an AAPL call holder. In fact: If the APPL special dividend is declared and unfavorably received by the market the ex-div price may well revert to lower than current $585 or move up marginally or not at all (meaning that the CALL value drops after the adjustment).

    Mr. Schwartz should send out a posting before Monday to clear this matter up before Option traders unwind or wind into positions based on this misguided expectation. Please read the following extract from Mark sebastion at http://bit.ly/11ivAJS


    "A special one-time dividend will not change the value of an option. Why? Because the OCC changed the rules. Now, option strikes are adjusted to reflect the dividend value. The price threshold is $12.50 per contract (an eighth in the old fraction days). For more information read the OCC memo. This is colloquially known as the “Microsoft Rule”.

    The “Microsoft Rule” came about after the company did the unthinkable in 2004 and declared a $3.00 special dividend. When this occurred, the practice in place for handling dividends in the options market was option prices would be impacted, pertinent option holders exercised options, and cash changed hands. But some option investors were confused by this unusual case with MSFT, did not act accordingly, and missed out on the benefits of this special dividend. The OCC has since decided to adjust strike prices for options with special dividends, so there is no net effect on the option’s price."
    Dec 1, 2012. 09:02 PM | Likes Like |Link to Comment
  • Profiting With Apple Weekly Options: Week 3  [View article]
    Hi Richard

    Irrespective of upside movement in AAPL we are currently at $585 and it needs to get to $610 by Friday. On the way it needs to confirm break of the downward trend line, breach the 200 SMA (no mean feat, tried it a few times and failed) and then breach the 50MA. Only five trading days left and really no catalyst on the horizon. I have established positions on Thursday and Friday at 610/615 (Option values already falling) and 620/625 (practically a win already) on the call side and 555/550 on the put side. In my analysis at the time reflected Deltas of around .11 and lower for these positions (low probability). My discipline is if the trend starts seriously threatening I will exit with a roll-over and at same time tighten the other end of the trade to add to the initial Put or Call position (whichever applies). I personally believe AAPL is in a sideways channel with a slight upward bias so the Weekly trades are ideal. I would not do this close to ER.
    Dec 1, 2012. 06:11 PM | Likes Like |Link to Comment
  • Profiting With Apple Weekly Options: Week 3  [View article]
    Hi Richard

    If you recall I commented that I use Iron condor net credit spreads in the same way as you do but I have never traded weeklies. Well this last week I applied my strategy to week ending 30th Nov) and included your recommended spread. I don't need to tell you it worked out very well. FYI: I saw the opportunity to also include 600/605 (not ended until tomorrow but looking very good). My PUTS spreads: 550/555 and 560/565 (worked out well). For this coming week I like 610/615 and 620/625. Still thinking about PUT side. What are your thoughts for coming week?
    Nov 29, 2012. 06:17 PM | Likes Like |Link to Comment
  • Let Apple's Rally Fill Your Pockets: Weekly Options Part 2  [View article]

    You can't have it both ways. Slow moving and on vacation means poor/negiigible net credits on spreads. You need volatility to make the Iron Condors work for you. With AAPL you can position very wide of the cone of activity and still earn with good safety. Also easier to roll if you miscalculate - with some hindsight. Works well for me on AAPL (certainly not on vacation)
    Nov 24, 2012. 07:23 AM | Likes Like |Link to Comment
  • Let Apple's Rally Fill Your Pockets: Weekly Options Part 2  [View article]
    My entire strategy revolves around Iron Condors, always for credit spreads on both sides of the trade. Difference: I never take less than 2 month Expiration positions and can go out much further. My prime indicator is Implied volatility but keep in mind when the trend is motoring it can overshoot the IV indicated limits. Also watch out for IV that drops below average (normally means risk off that energizes an up trend). So earn less credit $ with less risk by widening the range even more. Even with huge moves (as AAPL just recently) there is room to roll over on longer expirations. Good idea by author to leg in Calls and Puts at appropriate times (if possible). Comment I read on Iron Condors being "clueless" and like going to Casino indicates lack of understanding of how to use this strategy.
    Nov 22, 2012. 03:40 PM | 1 Like Like |Link to Comment
  • Will History Repeat For Apple? Turning The Calendar Back A Year.  [View instapost]

    More information:

    It might feel like this is an abnormally deep and long sell-off for AAPL, but it’s not.

    The Apple sell-off three months ago lasted 18 days as the stock dropped 7.7%.
    The sell-off five months ago lasted 38 days as the stock dropped 19%.
    The sell-off one year ago lasted 31 days as the stock dropped 14.8%.
    If you take the average of those three sell-offs you end up with a 29 day sell-off and a stock drop of 13.8%.
    Current sell-off: As at Friday was Day 41 of a 18.3% sell-off

    This is simply AAPL, a fundamentally sound company, being APPL.
    Nov 3, 2012. 06:43 AM | Likes Like |Link to Comment
  • Apple Is Ripening And So Is Its Stock  [View article]
    St. Michael: I agree.

    I know it might feel like this is an abnormally deep and long sell-off for AAPL, but it’s not.

    1. The Apple sell-off three months ago lasted 18 days as the stock dropped 7.7%.
    2. The sell-off five months ago lasted 38 days as the stock dropped 19%.
    3. The sell-off one year ago lasted 31 days as the stock dropped 14.8%.
    4. If you take the average of those three sell-offs you end up with a 29 day sell-off and a stock drop of 13.8%.
    5. Current sell-off: Day 41 of an 18.3% sell-off

    Nothing unusual about this latest correction. This is simply AAPL, a fundamentally sound company, being APPL.
    Nov 2, 2012. 09:50 PM | 3 Likes Like |Link to Comment
  • Apple Is Sandbagging More Than You Think  [View article]
    I believe that the earnings "miss" in latest results has little to do with many of the analyst comments re supply constraints, iPad Mini etc., Go to http://bit.ly/S6yMT2 It is very interesting and enlightening.
    Oct 29, 2012. 10:53 AM | Likes Like |Link to Comment