Q3 Earnings:  Weekly GAMBLE?

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    Posted: 22 July 2012 08:51 PM #16

    Last minute bump, for fresh thoughts, ideas, plays, prior to Monday’s open?!?!?!?!?!  Very EXCITING!  Whers’s Gregg “Big Time” Thurman??

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    Posted: 22 July 2012 09:07 PM #17

    Here’s a non-actionable thought.

    Generally speaking, the highest theoretical return (when a stock goes up post-earnings) for a single transaction is found by getting the post-earnings high exactly right at exactly the right time, and then building the narrowest possible BCS around it.  So if you think AAPL will be at 650 by expiry, get a 645/650 and hang on.  Currently that’s a 7-8x or so play, but you have to buy quite a few if you want “big money”, and contract costs have to be considered.

    I, uh, wouldn’t advise that.

    [ Edited: 22 July 2012 09:11 PM by Mav ]

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
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    Thanks, Steve.

         
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    Posted: 22 July 2012 10:04 PM #18

    Mav - 23 July 2012 12:07 AM

    (...)
    So if you think AAPL will be at 650 by expiry, get a 645/650 and hang on.  Currently that’s a 7-8x or so play, but you have to buy quite a few if you want “big money”, and contract costs have to be considered.

    I, uh, wouldn’t advise that.

    Yeah, me neither.  Who on earth would do THAT?!  :oops:

    Now, if Mace was here, he would talk about butterflies…  I miss Mace!

         
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    Posted: 22 July 2012 10:08 PM #19

    He is…er…who is he?

    Well, the reverse iron butterfly wouldn’t seem to work.  I think the premium costs are too high. 

    What kind of butterfly would make sense if people are thinking a 5%+ move, anyway?

    [ Edited: 22 July 2012 10:14 PM by Mav ]

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 22 July 2012 11:00 PM #20

    Mav - 23 July 2012 01:08 AM

    He is…er…who is he?

    Well, the reverse iron butterfly wouldn’t seem to work.  I think the premium costs are too high. 

    What kind of butterfly would make sense if people are thinking a 5%+ move, anyway?

    I’ve been looking at simple strangles.

         
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    Posted: 23 July 2012 12:34 AM #21

    My inflated/deflated/reflated two cents: save some $$ for Tuesday between 3-4 PM.  Just in case we go to hell in a hand basket between now and then… in which case, HEIGHTENED probabilities of popping on earnings.

         
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    Posted: 23 July 2012 12:42 AM #22

    Mav - 23 July 2012 01:08 AM

    He is…er…who is he?

    Well, the reverse iron butterfly wouldn’t seem to work.  I think the premium costs are too high. 

    What kind of butterfly would make sense if people are thinking a 5%+ move, anyway?

    At 5% Mav,  you could go for 620/635/650s which are at about 2.35 or so. Might be had for $2.25 if we open much lower. Those would be a nice 5+X return. You could go skinnier with 625/635/645s for around $1.10.  Of course I’d probably wait until late Monday to see where we were at. I won’t risk much either way if I go for it. Quite often I try to take profits from a few day trades and then throw them at the dartboard with Butterflies. Of course, you could also go to the bear side with these as insurance for a “miss”.

    Best of luck.

         
  • Posted: 23 July 2012 08:47 PM #23

    A gamble on weeklies during earnings week eh?

    Well, last earnings, the 600 weekly calls closed at 3.35 on April 24, or there abouts.
    The share price was in the mid 560s if I recall.

    Those options reached a high in the 19.00s at the open. Thats 500+% gain in less than 24 hours.
    That’s a gamble with a high return, If you ask me.

    For the sake of simple math, lets just say the pps was 560 at the close on the 24th before earnings were announced.
    That makes the 600 strike 40 bucks out of the money.

    Assume tomorrows close at 600, that means 640 is the number to target this time around.
    Todays 640 weekly closed at 3.06 with the pps closing at ~604 on a rally.

    If we see a dip tomorrow like we did on April 24th, it might be a good idea to load the boat with unhedged calls 30-40 bucks out of the money.

    According to earningswhispers.com, the whisper number is 11.89, while the street consensus is 10.38.
    Many people here have their own number over 12.00.
    I personally believe that Iphone sales will blow everyone away. Given the huge demand in China, I really don’t see iphone sales slowing down and expect them to be at least in the range of 35M, but in any case unlike last Q, the number to watch isn’t the iphone sales, but ipad sales. I’m fairly confident those will break many records.

    Tomorrow should be really interesting and I’m planning on “gambling” 10-20k of my winnings from “gamble money” last quarter on a play similar to what I’ve outlined above.

    I’m personally hoping for a sell off of a couple percentage points tomorrow, so I can get in at a bargain.

    Thoughts?

         
  • Posted: 23 July 2012 09:14 PM #24

    LEAPfrog - 22 July 2012 11:51 PM

    Last minute bump, for fresh thoughts, ideas, plays, prior to Monday’s open?!?!?!?!?!  Very EXCITING!  Whers’s Gregg “Big Time” Thurman??

    Contemplating my navel.

    Had a short, but very nice, conversation with Omacvi this afternoon.  Thought I’d share my side of the conversation with the group. Omacvi can do his own talking)

    I see very little downside, near term, post earnings.  I think, after Apple’s earnings miss last October, the big boys have a miss baked into AAPL. this quarter (TC iPhone guidance last April)  Even if Apple doesn’t surprise, AAPL will pop about 8% - 10% from Tuesday intraday low to Wednesday intraday high.  The average reaction no matter what Apple reports is 7.5%.  With a miss baked in a good report will generate a greater pop than usual.  The pop after April earnings (a miss in my book) was 11.35%.  The only exception to the rule was last October.  At that time nobody foresaw an Apple miss, so it wasn’t priced in.

    Based on the above I’ll be looking for $645-$650 that could go as high as $660 as an intraday high on Wednesday.  Wednesday’s intraday high has never held through the subsequent Friday Close.

    I hold Weekly $620/$625 BCS at $1.93.  I expect to sell them Wednesday for about $4.10 with AAPL trading in the aforementioned range.  At that time, depending on guidance, I will be looking at just in the money Put Spreads ($645-$640s?) with a yield of approximately 75%.  I’m anticipating a Friday Close (depending on height of Wednesday’s intraday high) between $625-$630.

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    Posted: 24 July 2012 12:22 AM #25

    LEAPfrog - 22 July 2012 11:51 PM

    Last minute bump, for fresh thoughts, ideas, plays, prior to Monday’s open?!?!?!?!?!  Very EXCITING!  Whers’s Gregg “Big Time” Thurman??

    I have roughly $5K cash waiting for a potential drop below $600 tomorrow.  Still side-bet material, looking for a potential 2.5x to 3.x.  I also opened a few positions, a few 630/625 JUL12s today and 2 660/655 JUL12s last week.  Small allocations, but could pay out nicely. 

    If AAPL goes the wrong way, then I’m sure I’ll know by Wednesday morning, I’ll just take my losses and deploy what’s left in JAN13s.  Even if I bet the right way, unless it’s a $670+ blowout, I’ll probably just take my profits and run sometime during Wednesday.

    [ Edited: 24 July 2012 02:03 AM by mjuarez ]      
  • Posted: 24 July 2012 11:01 AM #26

    Entered July 615/620s @ 2.23. Waiting for the rest of the day to pan out before I make any more moves.