Apple Inc. (NASDAQ:AAPL) closed at $500.00 per share on Friday, January 18th, 2013. This was options expiration. If you think this was a random coincidence, please crawl back in your hole and continue drinking the cool-aid. You are beyond help and will continue to lose your hard earned money.
The third Friday of every month is options expiration. To truly understand this scam you must understand the each side of the options trade. First, who sells options? Institutions are the primary sellers of options. They sell puts and calls and charge a premium for each one sold. Now, who buys puts and calls? The small investor buys options in hopes of scoring big gains. They look at it as a way to use minimal amounts of money (because they do not have a lot of money) to possibly double or triple their 'investment' in a short amount of time. This is almost always a suckers bet and almost all of these average investors who play options, lose most if not all their money.
Next, you need to understand how the institutions maximize profit on these options they sell. As I said before, they charge a premium for each options sold. Whether a call or a put, they all have a strike price they are sold at. The strike is the value the buyer is betting the price will be above for a call and below for a put. In the case of Apple Inc. should a call be bought with a strike price of $500.00, the buyer would only make money if the call closes above $500.00. The more above $500.00, the more profitable the option becomes on options expiration day. The same thing occurs with puts. If puts are bought with a strike of $500.00, the buyer makes money the lower it goes below that key $500.00 level. Lastly. an option will expire 100% worthless if it closes at the strike price. If this happens, the institutions maximize profit by taking the entire premium. Each options expiration, this means millions of Dollars to institutions as pure profit.
The scam concludes when institutions analyze and isolate where a stock MUST close to maximize profit. They push a stock to that level using their billions of Dollars and rape the average investor who plays the options in hopes of hitting a home run.
Apple Inc. saw a close of $500.00 per share. This was not a coincidence on options expiration Friday. Apple is also one of the most highly optioned stocks by the average investor because few can afford to buy 100 shares or more at its current price. Therefore, they gravitate towards options as a cheaper method to play the stock. This means the ultimate screwing will occur and it did occur. The institutions isolated where they needed to close Apple to maximize profit and took care of business. The little investor always loses and this shows it once again.
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Chief Market Strategist