As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.
expiration date: 11-18-2013
Portfolio weighting: 10%
Number of Contracts = 4 contracts.
Wow! Did you see the new iPad Air released last Friday? After fighting my way through a crowd at the San Francisco store, I actually managed to get my hands on one. It was so light that I almost dropped it. Compared to the last iPad I bought only three months ago it weighs a third less but has double the speed. That’s my Apple!
I have since heard that new iPad registrations are proceeding at a rate 200% higher than a year ago. This can only presage blockbuster numbers in the coming quarter.
Everyone is trying to get into these shares in the run-up to the Christmas selling season, which always generates the company’s biggest quarter. As much as I love this stock I am going to have to bail on the position. We have already grabbed 90% of the potential profit, and there is an unusually squirrely nonfarm payroll coming out in two days. Never pass on a chance to get paid to de-risk.
Give me another $20 dip in the price and I’ll be jumping back in here with both feet.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous. Don’t execute the legs individually or you will end up losing much of your profit.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months further out.
Here are the specific trades you need to execute this position:
Sell 4 November, 2013 (AAPL) $480 calls at………….$44.65
Buy to cover short 4 November, 2013 (AAPL) $510 calls a…$15.20
Profit: $29.45 – $26.45 = $3.00
($3.00 X 100 X 4) = $1,200 – 1.20% for the notional $100,000 model portfolio.