The post earnings “selloff”. Will you play it? How?

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    Posted: 17 July 2011 12:05 PM

    A tradition like Christmas, MBeach’s conservatism and the Sponge’s optimism (wait, do I have those two reversed?), is the Apple post-earnings selloff. 80 percent earnings growth is not enough to keep the momo guys in the game, and guidance, always conservative, gives a reason for some to exit.

    Maybe this year will be different.

    But if it is not and earnings of $6.67 and solid guidance result in a move back to 360 or lower….( we could be much higher than 365 by Tuesday’s close, so take that into account), what is your play? Calls? Spreads? Straight buy? Short term trade? Back up the truck? Sell?

    Or just incredulous observation that the stock could go down?

    Ladies and gentlemen, lay out your plans. No secrets here. Open the kimonos.

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  • Posted: 17 July 2011 12:34 PM #1

    Apple doesn’t always sell off after earnings. Among the issues to consider is the valuation prior to the earnings release. As much as the recent rise in the share price has been impressive, the shares have only retraced ground lost since the previous all-time high set in February and the share are now trading at multiples to earnings well below the historical trend. Please see the graphs in this Posts At Eventide article which details the reasoning for my $590 price target.

         
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    Posted: 17 July 2011 12:44 PM #2

    DawnTreader - 17 July 2011 03:34 PM

    Apple doesn’t always sell off after earnings. Among the issues to consider is the valuation prior to the earnings release. As much as the recent rise in the share price has been impressive, the shares have only retraced ground lost since the previous all-time high set in February and the share are now trading at multiples to earnings well below the historical trend. Please see the graphs in this Posts At Eventide article which details the reasoning for my $590 price target.

    So you would be a buyer on any weakness, DT.
    :wink:  LOL

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  • Posted: 17 July 2011 12:52 PM #3

    Im hoping for more rise on Monday and Tuesday.  If so Im pulling the short term options off the table and keeping the longer term ones.

         
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    Posted: 17 July 2011 12:55 PM #4

    I plan on buying a bunch bull put spreads day after earnings.

    Not sure what strikes or exp yet.  Loveipad? Blaze?

         
  • Posted: 17 July 2011 01:02 PM #5

    DawnTreader - 17 July 2011 03:34 PM

    Apple doesn’t always sell off after earnings. Among the issues to consider is the valuation prior to the earnings release. As much as the recent rise in the share price has been impressive, the shares have only retraced ground lost since the previous all-time high set in February and the share are now trading at multiples to earnings well below the historical trend. Please see the graphs in this Posts At Eventide article which details the reasoning for my $590 price target.

    I agree. Through good times and bad times, for the past 5 years AAPL has risen 2.79% from day after earnings high to the high 3 trading days later. At these levels that’s $10+.  After that AAPL can take a breather, but it isn’t consistent. The determining factor then is guidance.

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  • Posted: 17 July 2011 02:22 PM #6

    DawnTreader - 17 July 2011 03:34 PM

    Apple doesn’t always sell off after earnings. Among the issues to consider is the valuation prior to the earnings release. As much as the recent rise in the share price has been impressive, the shares have only retraced ground lost since the previous all-time high set in February and the share are now trading at multiples to earnings well below the historical trend. Please see the graphs in this Posts At Eventide article which details the reasoning for my $590 price target.


    I am sitting on big stash of cash waiting to see action :D
    Holding on 1000 Apple shares bought at 80 $ , holding plenty of Jan 12 calls with many different strikes , nothing in Jan 13 calls as I believe the big problems come in 2012 for Greece Europe China and co
    I sold plenty of Cash covered puts collecting premiums or getting more cute shares
    If apple tanks , I ll sell cash covered puts with high strikes like 360-370 Jan 12
    I ll finance even more calls jan 12 , oct 12 ITM or slightly out of the money
    Will buy even more apple shares on any weaknesses :D

    That’s my plan smile


    I believe they will raise the debt ceiling , they can’t allow USA To fail
    and we are nearing the end of the correction we needed , The earnings has started and I think Europe’s politicians will soon clear the pessimism providing a small relief rally ,
    In Europe Stocks are really cheap , I have plenty on my radar for long long term exposure ( “My holding period is ........ Forever “)

    To finish : A beautiful quote from Benjamin Graham ” when everyone is optimistic sell , when everyone is pessimistic , I think it is time to buy “

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    “The market can remain irrational long than you and I can remain solvent ... ” Keynes

         
  • Posted: 17 July 2011 02:26 PM #7

    Although I don’t believe Apple will tank on earnings so in any cases I sold a fair amount of Jan 12 360 puts to collect money in case of upside or get even more shares ...

    with that I financed apple Jan12 calls ITM

    Still keeping some good gunpowder cash smile

    Ps smile being 20 , i can think for the long term :D

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    “The market can remain irrational long than you and I can remain solvent ... ” Keynes

         
  • Posted: 17 July 2011 02:30 PM #8

    After earnings on Tuesday, let’s hope for a P/E of 16, which is another way of saying $385 per share. 

    New MacBook Airs and Lion are probably going to happen this week, potentially limiting sell-the-news action.  After that, the catalysts stretch out 3-4 weeks.

    Who knows?  Apple could actually hold ATH and regain a rational P/E and PEG.  After the last six months, it’s taken a lot of trading to make up for all the option rot.  I’ve done it and don’t want to repeat it.

         
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    Posted: 17 July 2011 02:34 PM #9

    I’m holding shares and ITM 2013 LEAPS going into this EC. I ‘expect’ a bit of a pop Wed-Fri depending on how the overall market and aapl trades on Mon/Tues. IF the market and aapl gets beat up on Mon/Tues I’ll probably purchase some slightly OTM Aug Calls for a bit of a gamble play. Otherwise I’m ‘standing pat’.

    The next 45 days should have an IP5 release and possibly an additional domestic and China carrier announcement. Should be a very productive period for aapl.

      cheers to the longs
        JohnG

         
  • Posted: 17 July 2011 02:52 PM #10

    I believe that by end of August , beginning of September we might see 400 $ , heading into earnings pretty confident smile

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    “The market can remain irrational long than you and I can remain solvent ... ” Keynes

         
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    Posted: 17 July 2011 04:15 PM #11

    Post-earnings selloffs are more the exception than the rule for AAPL _recently_, IIRC.  There was October 2010, of course, and last quarter the post-earnings ramp didn’t last more than a day or so.  Overall, I think market conditions would support AAPL doing well AH/the next trading day if the numbers work out.  $6.60ish EPS and solid guidance (no lower than $6.20ish EPS) should be enough IMHO.

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    Thanks, Steve.

         
  • Posted: 17 July 2011 04:25 PM #12

    Mercel - 17 July 2011 05:30 PM

    After earnings on Tuesday, let’s hope for a P/E of 16, which is another way of saying $385 per share. 

    New MacBook Airs and Lion are probably going to happen this week, potentially limiting sell-the-news action.  After that, the catalysts stretch out 3-4 weeks.

    Who knows?  Apple could actually hold ATH and regain a rational P/E and PEG.  After the last six months, it’s taken a lot of trading to make up for all the option rot.  I’ve done it and don’t want to repeat it.

    The AFB member consensus price target for 08/01 is $397 per share.

         
  • Posted: 17 July 2011 05:49 PM #13

    DawnTreader - 17 July 2011 07:25 PM
    Mercel - 17 July 2011 05:30 PM

    After earnings on Tuesday, let’s hope for a P/E of 16, which is another way of saying $385 per share. 

    New MacBook Airs and Lion are probably going to happen this week, potentially limiting sell-the-news action.  After that, the catalysts stretch out 3-4 weeks.

    Who knows?  Apple could actually hold ATH and regain a rational P/E and PEG.  After the last six months, it’s taken a lot of trading to make up for all the option rot.  I’ve done it and don’t want to repeat it.

    The AFB member consensus price target for 08/01 is $397 per share.

    And what was it the previous quarter?

    [ Edited: 17 July 2011 06:39 PM by roni ]      
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    Posted: 17 July 2011 06:46 PM #14

    roni - 17 July 2011 08:49 PM

    And what was it the previous quarter?

    party pooper ~~~~~~  $391   LOL
    http://www.postsateventide.com/2011/02/afb-aapl-price-target-index-february.html

      cheers to the longs
        JohnG

         
  • Posted: 17 July 2011 07:32 PM #15

    johnG - 17 July 2011 09:46 PM
    roni - 17 July 2011 08:49 PM

    And what was it the previous quarter?

    party pooper ~~~~~~  $391   LOL
    http://www.postsateventide.com/2011/02/afb-aapl-price-target-index-february.html

      cheers to the longs
        JohnG

    It shows there’s much room for continued share price appreciation.  grin