• support@madhedgefundtrader.com
  • Member Login
Mad Hedge Fund Trader
  • Home
  • About
  • Store
  • Luncheons
  • Testimonials
  • Contact Us
  • Click to open the search input field Click to open the search input field Search
  • Menu Menu

Trade Alert - (AAPL) February, 16, 2013

Diary, Trade Alert

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

Buy the Apple (AAPL) March, 2012 $430-$460 call spread for a net cost of $26.75 or best

Opening Trade

2-16-2012

expiration date: 3-17-2012

Portfolio weighting: 10% when in the money

($10,000/100/$26.75) = 4 Contracts

To execute this trade you must open two positions simultaneously:

1) Buy The (AAPL) March, 2012 $430 calls at $65.25

2) Sell Short the (AAPL) March, 2012 $460 call at $38.50

The maximum profit occurs with Apple stock anywhere over $460 on March 17, 2012. Let?s assume that at expiration, Apple is at $460. Then the profit is:

March $430 call cost??????. $65.25
March $460 call premium earned?-$38.50

Initial net cost?????????. $26.75

total profit $30 - $26.75 = $3.25
($3.25 X 100 X 4) = $1,300, or 1.30% for a $100,000 model portfolio

Apple has had a great run here, and has just backed off $40, or 7.6% off its Thursday high. As much as I love the stock for the long term, I am not happy to buy it here.

What I am willing to do is bet that the shares will not fall below $456.75 over the next four weeks, a price just above where it was when it announced its blowout Q4 earnings three weeks ago. I can achieve this through putting on the deep in the money call spread outlined above.

If the stock keeps falling, I am happy to own it at $456.75. At that price, it will be selling for nine times earnings, with $100 in cash per share, which is rising at $25 per share per quarter. The shareholders meeting will be held next week where they could announce a 2% annual dividend, the first ever. After that, we see the launch of the Ipad 3 and the IPhone 5. There will be enough to keep this stock bubbling for a while.

Hedge funds do these kinds of trades all day long. It is somewhat sophisticated and requires a level three or four options compliance clearance. So if you don?t understand it, consider this an instructional trade only and don?t do it. Just watch and learn.

The other advantage of this trade is that it gives me a small ?RISK ON? presence to balance out the predominantly ?RISK OFF? portfolio that I have been running for the past month. If you do the trade, then run out and buy a new MacBook Pro at your local Apple store to assure that the share stay high. That is, if you can get in.

Share this entry
  • Share on Facebook
  • Share on X
  • Share on WhatsApp
  • Share on Pinterest
  • Share on LinkedIn
  • Share by Mail
0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2012-02-16 12:22:472012-02-16 12:22:47Trade Alert - (AAPL) February, 16, 2013

tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Mad Hedge Fund Trader (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade. 

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.

Copyright © 2025. Mad Hedge Fund Trader. All Rights Reserved. support@madhedgefundtrader.com
  • Privacy Policy
  • Disclaimer
  • FAQ
Link to: Use Apple Timing to Short Bank of America Stock Link to: Use Apple Timing to Short Bank of America Stock Use Apple Timing to Short Bank of America Stock Link to: Trade Alert - Double Up (AAPL), February 16, 2012 Link to: Trade Alert - Double Up (AAPL), February 16, 2012 Trade Alert - Double Up (AAPL), February 16, 2012
Scroll to top