Apple Inc. (AAPL)

[Aman A.K.A. Ahamburger]

I hear you about over-doing it.. There was a price upgrade to $710 today. Good jobs numbers and the announcement of the ipad3 might get the market jumping again. Still have 10 days to hit the cherry..

[rovo]

I did pick up some additional contracts on AAPL yesterday. I am now holding

50 .... AAPL Mar 17 2012 $550 Call .... at $4.40

So my average cost has been lowered by about $0.80. At yesterday's close the Bid was $4.60 and Ask at $4.80. They should jump to well over $5 on today's open. My sell order is at $19.90 but I don't think it will reach this sell point. $12 - $15 is much more likely. I expect to sell these options some time this week.

[Aman A.K.A. Ahamburger]

I like how they are keeping the Ipad2 and just lowering the price, that will show up in their earnings that is for sure. When the Ipad3 is there is most likely a good chance it will pop. With all of the court cases being brought up, have you considered an AAPL backlash? More of a, news, driven cycle on the stock?

[rovo]

The AAPL options closed at $4.70 today so I am just a tad over the break-even point. Five days till expiration and it is getting a bit hairy on this play.

[Aman A.K.A. Ahamburger]

Shit.. Well the Ipad3 is already selling out. The next five days in the market could be interesting.

[usaone]

Stocks are normally forward looking. That's why I sold into the rally over the last 2 weeks. Great IPad 3 sales are already factored in.

Only way we get a rally from here is if sales greatly exceed expectations.

In my opinion......

[Aman A.K.A. Ahamburger]

Are options directly linked to the price of the stock? It would seem this is not the case. They are bets on their own that ppl have to buy to go up??

Interesting point USAwon. The other thing over the next bit is going to be lawsuits.. AAPL has been hit pretty hard in the news. Rovo has some great points about AAPLs cash and P/E though, so the analyst calls for $700+ still could happen over the next couple of years... What do you think?

[rovo]

My estimate for the year end price of AAPL is somewhere between $650 and $2,000 per share but this assumes we do not have a significant decline in the general economy. AAPL is still a deep value stock at the current price.

The price of the Options are not directly linked to the price of the stock. They are linked because the option represents the ability to acquire or a stock at a fixed price.

The option I'm playing now is the "AAPL March 17 $550 Call" and since I bought this option it gives me the right to buy AAPL shares at $550 per share until the end of trading on March 17.

AAPL closed Friday at $545.17 and the option is "out of the money", meaning the share price is less than the option strike price of $550. Therefore, if the share price remains constant until the 17th, then the option will expire with no value.

The option is currently at Bid $4.65 / Ask $4.75 so it currently has a value based upon the expectation (hope) of an AAPL share price of greater than $550 before the expiration date. As each day passes without the share price changing then the option will be worth less and less each day as the expectation (hope) diminishes.

If during the coming week the share price gets closer to $550, then the Call option will rise in price. So we have two factors working against each other ... time will degrade the option price but an increasing share price will increase the option price.

Once the share price exceeds the $550 Strike price, then the option will increase in value at nearly 1 to 1 with the share price. On expiration, if the share price is $560 then the option price will be nearly $10. << $560 - $550 = $10 >>

We should expect a volatile week in stock prices as the big option holders try to manipulate the share prices to make their options more valuable.

[usaone]

Mar 11, 2012 2:35:49 GMT -5 Aman A.K.A. Ahamburger said:

Are options directly linked to the price of the stock? It would seem this is not the case. They are bets on their own that ppl have to buy to go up??

Interesting point USAwon. The other thing over the next bit is going to be lawsuits.. AAPL has been hit pretty hard in the news. Rovo has some great points about AAPLs cash and P/E though, so the analyst calls for $700+ still could happen over the next couple of years... What do you think?

It depends on what's next in the pipeline for Apple. I don't have enough info yet to comment.

I agree Rovo, another volatile week for Apple.

[Aman A.K.A. Ahamburger]

Rovo, ok so the price of the option is based on what ppl are willing to pay on the bet that a stock will be a certain price.

Looks like you hit the cherry and were in the money yesterday Rovo.

[rovo]

Aham, You are correct in that the $550 Apple Call option is now "in the money" as the share price at $552 is above the option price. The option closed yesterday at $6.70 and since this is well above the intrinsic value of $2.00, there is $4.70 of time value still in the option price. If AAPL shares do nothing today, then the option will decline in value based upon the decay in the "time value of money".

AAPL is trading up in pre-market activity, $556.80 +$4.80, so the option will show a significant gain at the open. It will not increase by $4.80 because of the time decay. Most likely the option will open around $10.

[Aman A.K.A. Ahamburger]

As of right now $562... Is that you Rovo?

[rovo]

I closed out the option trade today as follows.


Bought 50 contracts at $4.40 per share including comms.
Sold 50 contracts at $15.06 per share average including comms.

Net is $10.66 per share or +243% in about 2 weeks.

For sure an excellent play (at least in my book).

Read more: investorsforum.proboards.com/index.cgi?action=display&board=main&thread=31&page=23#ixzz1p1iCIykH

[Aman A.K.A. Ahamburger]

LOL... Sweet! Congrats Rovo.. Looks like both you and USAwon have made some sweet cash off AAPL in the last little bit. That's what I like to see.. Profit, profit, profit.

[Virgil Showlion]

Bought 50 contracts at $4.40 per share including comms.
Sold 50 contracts at $15.06 per share average including comms.

Net is $10.66 per share or +243% in about 2 weeks.

*whistle*

Don't spend it all in one place.

An interesting factoid: Apple's market cap is a stone's throw away (14 billion) of eclipsing the entire US retail sector.

[Deleted]

Mar 13, 2012 14:26:32 GMT -5 rovo said:

I closed out the option trade today as follows.


Bought 50 contracts at $4.40 per share including comms.
Sold 50 contracts at $15.06 per share average including comms.

Net is $10.66 per share or +243% in about 2 weeks.

For sure an excellent play (at least in my book).

Read more: investorsforum.proboards.com/index.cgi?action=display&board=main&thread=31&page=23#ixzz1p1iCIykH

Nice gamble!

[rovo]

That critter I sold yesterday is worth an additional $75K today. Bad rovo, bad.

[Virgil Showlion]

That critter I sold yesterday is worth an additional $75K today. Bad rovo, bad.

Money can't buy happiness, evidently.

[usaone]

Nice job Rovo. I wonder what happened to Small Biz. Hope he got out of his shorts!!

If we hit $600 I'll be selling again. Thought we would have had more of a pull back.

[rovo]

Mar 14, 2012 10:29:51 GMT -5 Virgil Showlion said:

That critter I sold yesterday is worth an additional $75K today. Bad rovo, bad.

Money can't buy happiness, evidently.

It isn't about money or happiness. It is about trying to make the best possible trade. Anyone can make money in THIS market but to me it is more like a game and I try for the best possible outcome. Yup, the $50K I made on this trade was sweet but I should have done better. Just some room for improvement. ;D

[Aman A.K.A. Ahamburger]

Mar 14, 2012 9:00:14 GMT -5 rovo said:

That critter I sold yesterday is worth an additional $75K today. Bad rovo, bad.

NO WAY! 243% UP in a week. You cant kick yourself about that, especially when at the start of the week you were out of the money..

[Deleted]

Isn't there a saying "pigs get fat, hogs get slaughtered"?

[rovo]

The option i sold earlier in the week hit a price of $51 yesterday before backing off a bit. The 50 contracts I sold would have been worth $255,000 if I had not sold out earlier. This is exactly why I find options interesting. ;D

[Aman A.K.A. Ahamburger]

That is one hell of a payout regardless Rovo. It's interesting how it works. Really it's not like gambling if your basing your plays off of fundamentals. It's not like your really just plugging the quarter in and spinning. The only real similarities are either you win or you lose. At least you have a pretty good idea if your going to win "gambling" this way.

Mar 15, 2012 8:58:09 GMT -5 ArchietheDragon said:

Isn't there a saying "pigs get fat, hogs get slaughtered"?

[usaone]

Dividend?!

I guess Apple wants me to stop selling their stock.

[rovo]

Yup. Dividend for AAPL of $2.65 per quarter and a $10B share buy back.

[TD2K]

Mar 16, 2012 9:48:50 GMT -5 rovo said:

The option i sold earlier in the week hit a price of $51 yesterday before backing off a bit. The 50 contracts I sold would have been worth $255,000 if I had not sold out earlier. This is exactly why I find options interesting. ;D

That would be a hell of a return.

[rovo]

I guess I'm just a sucker for what I see as a decent play. I bought some, 5 contracts, of AAPL Apr 21, 2012 $600 Call at $22.63 including all fees. This is planned to be a very, very, short term trade and they are now for sale at $27.10. Current bid is $24.00.

AAPL is down today but I expect it will recover to at least break-even for the day.

[rovo]

I got out of the day trade in the previous post and cleared 14%. I'll take it.

[usaone]

A good couple weeks all the way around Rovo.