Trade Alert – (AAPL) June 21, 2012

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.

Trade Alert – (AAPL)

Sell the (AAPL) August $400-$450 Call Spread at $49.15 or best

Closing Trade


expiration date: 8-17-2012

Portfolio weighting: 25%

($25,000/100/$49.15) = 6 Contracts

I still love Apple as a company. I still think that the shares are going to $1,000. I am ready to pounce when the iPhone 5 is released in October.

But we have squeezed about as much juice as we can from the August, 2012 $400-$450 call spread. By coming out here, we can harvest $5.15 of the $6.00 maximum possible profit without having to wait two more months to capture the balance. It doesn’t make sense from a risk/reward basis to tie up 25% of our capital to boost our performance by a mere 41 basis points.

On top of that, we have had a great 100 point rally in the (SPX). Given the Federal Reserve’s disappointing decision yesterday, it’s time to cut back “RISK ON” positions generally and move to the sidelines. That will give me additional dry powder to take advantage of the bargains during the next sell off. I might even put this exact same trade back on if Apple shares give up the $50 they just gained.

Only execute with a limit day order for the spread in the middle market. If your order doesn’t get done, then increase your limit bid in 5 cent increments until you get filled. Prices are all over the map today. Don’t enter market orders on pain of death. You’ll lose your whole profit.

Here are the specific trades you need to execute this profitable position:

Sell 6 X August, 2012 $400 Calls at…………………………. $187.00
Buy to cover 6 X August, 2012 $450 calls at…….………….-$137.85

Net Proceeds…………………………………………………. $49.15

Profit = $49.15 – $44.00 = $5.15

($5.15 X 100 X 6) = $3,090, or 3.09% for the notional $100,000 model portfolio.

Thanks Again Steve!