The next big AAPL investment

Apple Inc. options by expiration – Google Finance.

I am tempted once again to invest seriously in AAPL leaps. So I found the following for January 2016:

– AAPL Call 100: $12.90 – great way to bet that Tim Cook and team will blow everybody’s minds off with their „best pipeline of products in the last 25 years” on Sept. 9 – and establish a new lucrative market

– Bull Call Spread 100/120: $6.75 – better way to bet on a moderate growth, with a break even at 106.75 in 16 months.

Also I would like to play a little amount on Oct out of the money calls just in case the pop is immediate after the announcement. But this is very risky, lotto style.

What do you think?

3 comments

  1. 2016 100 leaps on aapl are far better than a bull spread. I owned both types for Jan 2015, and both the profit and the possibility to sell beforehand are much better. If aapl pops in April-June 2015 (considering the beginning of iwatch sales and record number of iphone 6 sales), the naked leaps will offer a direct profit, while for the spread, given the time constraint, it would be difficult to sell. A slowdown in the summer quarter until the next cycle and the obvious ‘s-line’ odd-years product refresh will likely contribute to a sell-off, hence the spread might end up worthless. However, the profits from the naked leaps will have already been in your pocket, and you might use them in other investments. For a riskier, but more profitable outcome, i would buy the June 2015 calls. No point in waiting for a great end of the year in 2015.
    As for this October, I would rather be neutral into the announcement. The market expects 2 types of iphones, some type of wearable, and even a new ipad air. For the past 2 years all rumors about new products have been correct, so unless tim cook made the iphone a hologram, or is wearing an iwatch as we enters the stage while driving an icar, or if the iphone will ship immediately and cost 400 dollars, i do not see any reason for a big pop.

    1. Respect bro! Very good analysis and smart ideas.

      I guess I’ll wait to see the iWatch before investing into the 2016 call, as the July 2015 AAPL 100 call is too expensive at $10.40 (vs $12.90 for Jan 2016) and it will have zero time value in July, versus some time value for the 2016 call.

      But following your advice I will strongly consider selling the call, or at least closing the spread by selling another higher call, by next spring.

      As for the short term gamble on a Sep 9 surprise, I really hope and somehow believe that the iWatch would be much more interesting than the Pebbles and Gears of late, and since there was no leak of it whatsoever, I hope that the market would be really impressed and start valueing AAPL at a higher multiple, at least closer to the market. So I’ll play the profits I’ll take from my current Sep 5 103/104 bull call spread into another high risk bet that the stock will pop by 4-5% a couple of weeks after the announcement.

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