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Here is the gus Apple pre-earnings trade, a reverse condor.
It must be closed before the earnings are released.
He says he made 14% on Google using the same structures.
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Apple Beats Or Misses? I Don't Care
For AAPL pre-earnings trade I'm going to buy a Reverse Iron Condor using weekly options expiring few days after the announcement. With the stock currently trading around $425, the trade is:
Sell AAPL January 2012 Week4 410 put
Buy AAPL January 2012 Week4 415 put
Buy AAPL January 2012 Week4 435 call
Sell AAPL January 2012 Week4 440 call
I'm planning on placing the trade on Thursday when the weekly options become available. The stock price might be different by then, so the strikes might change. In general, I prefer to use long options with deltas in the 25-30 range. The trade will benefit from rising IV and/or movement of the stock. It has to be closed before earnings. Apple Beats Or Misses? I Don't Care - Seeking Alpha
I own the March $635 put and the March $620 call.
I am not sure if I am a proud owner, though.
My best case would be the stock goes up $100, or down $100.
From what I've read the average post earnings move, is about 6-7% which would be $36-$43, up or down.
I guess up would be better for all of us.
Google crashing would not help the overall market, if their numbers show a weakening in advertising, and other metrics.
I own the March $635 put and the March $620 call.
I am not sure if I am a proud owner, though.
My best case would be the stock goes up $100, or down $100.
From what I've read the average post earnings move, is about 6-7% which would be $36-$43, up or down.
I guess up would be better for all of us.
Google crashing would not help the overall market, if their numbers show a weakening in advertising, and other metrics.
Yeah, I bought Apple into earnings last quarter. Of course, they missed. I was shocked but the stock has been doing well since then. I think if Google misses, it will come back. Good luck. I just received an alert that Ebay beat earnings. Tech is so unpredictable, especially in the short term.
AAPL continue to beat 52 weeks high. Lets see how it pares just before the earnings. I haven't bought any CALLS yet.
I'm going to buy-sell the condor on Apple, tomorrow, and see how it comes out.
The stock is no longer $425 (in their example), it is now $429, so the strike prices may need to be moved up $5.00.
(Google options, according to a news story, suggested a new high on good earnings, and downside to $575 on an earnings miss)
I opened this position today, and will close it before earnings the 24th.
Sell AAPL January 2012 Week4 415 put for $5.51
Buy AAPL January 2012 Week4 420 put for $7.11
Buy AAPL January 2012 Week4 440 call for $7.05
Sell AAPL January 2012 Week4 445 call for ?? (I have not been able to sell this with the stock at $430 like it was for the other 3 legs. The stock is down a $1.00)
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The guy that recommended the condor has a critic from the same website:
APPLE: Date Previous Day's Close Next Day's Close Close, 1 Year Later (Unless otherwise noted) Oct 18, 2011 $422.24 $398.62 XXXX Jul 19, 2011 $376.85 $386.90 $382.21 (5 months later) Apr 20, 2011 $342.41 $350.70 $395.31 (6 months later) Jan 18, 2011 $340.65 $338.84 $424.70 (1/17/12 close) Oct 18, 2010 $318.00 $309.49 $398.62 July 20, 2010 $251.89 $254.24 $387.29 Apr 20, 2010 $244.59 $259.22 $350.70 Jan 25, 2010 $203.07 $205.94 $341.40
If you purchased 10 shares of AAPL at its closing price on the day of the company's last eight earnings reports, you would have spent $24,997 on 80 shares. As of Tuesday's close, those 80 shares carry a value of $33,976. That's a 36% pop.
If you think history continues to repeat itself, there's only one way to go ahead of Apple's earnings next week. Buy the stock.* Buy Apple Stock Before Earnings (Under One Condition) - Seeking Alpha
I finally got the 4th leg of the Apple condor, ahead of their product event today, as well as their earnings the 24th.
The guy who said he made 14% last time, on Google, had suggested this condor for Apple.
So, let's see what % I make or lose on this structure.
Bought Apple Jan. 27th $440 call for $7.05
Sold $445 call for $5.40
Bought $420 put for $7.11
Sold $415 put for $5.51
So, - $14.16 and + $10.91 or a net debit for this call/put strangle condor is -$3.15 per contract. Fairly cheap way to control 100 shares of a $430 stock if it will move big.
I splurged and went for 1 contract to see how the structure works with the move of the stock, pre-earnings.
If the stock stays around $430 the next 2-3 business days, well, I lose most the $315.00, though my long legs ($440 call and $420 put) will hold value since the eanrings will not have been released.
They have an event today that should move the stock.
I'll look at the structure before 4pm the 24th, and decide whether to close it, as the guy on SA suggested he was going to do, or consider leaving it open through the earnings.
Max profit would be $500 if the stock crashed, and $500 if it goes to the moon. The only other way to get profits on both the call and put side, would be to close each leg as the stock price move, warrants a closure.
If the unthinkable can happen to GOOG, why not AAPL.
These tech stocks are on steroids and one of these quarters is going to hit them hard.
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