Obviously today Apple was the big topic of discussion, here's what Phil had to say to Members throughout the day (keep in mind that Phil predicted that if AAPL couldn't justify a $300Bn market cap, up 10%, then the Nas would fall 5% over the next 3 days):
From the Morning Alert:
11:05 positioning idea for Member with an in-the-money spread:
Any of our downside Q-family plays are nice and I don’t like any thing to the upside but that tune will change tomorrow if AAPL justifies their move.
Even though it’s just one stock, the fact that one company can grow like that indicates that others can do it to. To some extent, we’ll be cynical to see what AAPL cannibalizes from other tech earnings but, so far, it’s a good growth story so we have to respect it.
AAPL - I think that not taking the money and running at $320 heading into earnings is nuts. Hows that for clear?
Your 2013 $300s are fine positions but if you made a lot of money on them then lighten up.
Those are $78 and have a .65 delta vs .72 on the Jan $290s but you can roll the $37.70 Jan $290s to 2x the Nov $310s ($19) which have a delta of 59 and you can cover that with 2x the Apr $340s at $21.75 with a delta of .44. So 2x .15 behind on delta but half your money is off the table and your caller is in $36 of premium rather than being $30 in the money so much less damage to the upside because of your theta advantage and plenty of cash on the side to add more calls and roll if AAPL does get over $330.
11:24 Note on AAPL looking toppy:
1:09 Another adjustment idea:AAPL is up about 50% for the year here, an interesting spot.
AAPL - Same idea though, push the callers into premium that will expire no matter which way things go. See you made $20 on Jan calls that have a .72 delta so if AAPL drops $20, you lose about $15. You caller made $12 and has a lower delta than you (.60) so he’s not even really protecting you to the downside.
There’s really no point to not taking your net off the table ahead of earnings as you have risk but small chance of reward. You can move your $38 calls to 1.4x the Apri $340s at $21.90 and roll the callers up to 1.4x the Nov $320s if you are bullish or just roll 1/2 up to 1.4 and then you only need to buy 1.2x the Apr $340s.
That’s taking $10 of your profit off the table and leaving yourself with a fairly delta neutral position with a huge time advantage.
1:09 on playing RIMM short into AAPL earnings:
1:09 Trade Idea for Members to play a ratio backspread on AAPL:RIMM - Well maybe AAPL sales will be so good that RIMM investors will panic! Seriously, I don’t see RIMM getting a big pop from AAPL earnings outside of an overall boost from the Nas, which is just under some very serious resistance. Sell some puts to cover if you are worried.
Comments on earnings outlook for AAPL to Members at 3:11:AAPL - I’m just looking at AAPL as a stock that jumped 17% in a month and thinking that earnings could easily disappoint so, IF YOU MUST PLAY A RISKY STOCK, I’d sell 4 Nov $330 calls for $10 ($4,000) and buy 3 Apr $360s for $15.30 ($4,590) and, obviously, if they don’t take $330 by Nov expirations, you just keep whatever is more than $590 on the longs ($1.97 per share) and, if they go over, you DD on the Apr $360s to make 6 at whatever and then you can roll the callers up to 1.5x Jan whatevers (right now the $370s are $6.30) so you end up in a bullish spread that’s in the money if AAPL goes up and very, VERY happy you weren’t so bullish if they go down.
Needless to say our Members are thrilled with the earnings results!AAPL- Whisper is $4.75, a good .70 over consensus. Last year was $2.70 and this should put them on track for just about $15 for the Year, this being the last Q for them in their strange reporting cycle. So $330 is a current p/e of 22 and forward, even if we assume they do $20 next year, that’s 16.5 vs 8.5 forward for HPQ, 7.75 forward for RIMM and 19.55 for GOOG. AMZN and BIDU are in the 40s but we’re short both of them!
AAPL - I assume that was before the backspread I put up for Amatta above. That’s about the only way I can see being comfortable right now. No to the buy/write - they are just too darned high. AFTER earnings, you’ll at least have a better idea but, either way, not to be goulish but if Jobs dies, where are you with that stock?
Disclosure: Long-Term long and short-term short on AAPL