Apple Computers (AAPL) Earning Trade +139%

Published on October 19, 2011

Apple Computers (AAPL) Earning Trade +139%

October 19, 2011

The big news today is Apple Computers’ (AAPL) miss on earnings. Who could have thought that they will miss. I certainly didn’t. Yesterday I shared a brief post on how we played Apple (AAPL) earnings in addition to a few other that I highlighted in that post.

Basically, for AAPL,  there were two scenarios we started with-

  1. Gap-up and then fade throughout the day or
  2. Gap down.

Since we were taking a contrary approach as mentioned in the post, we also wanted to maximize the yield without risking a lot of capital. Options were pricing a $20 move so we structured a butterfly  $400 strike. AAPL missed and stock dropped to $400. The Butterfly Spread gained +139%. A quick exit. If AAPL rebounded, all these gains would have vanished before I could have even realized.


I selected JNPR, CREE and BLK with bearish bias but since I couldn’t find good risk/reward ratio trades, I opened none. Howver, based on last check, all 3 are down. JNPR -1.2% (flat), CREE -8%, BLK -4.5%

Another earning play was- ISRG is a loss @ moment. The 340/350/420/430 condor was sold (paper trade) for $4.70. But right now it can be purchased to close for $5.30, thus a 10% loss.

Final trade I mentioned in the blog post was FCX. I structured FCX trade via bearish verticals and closed at the open for +3.6% gains. I exited FCX quickly as they announced good set of numbers.

Pls don’t be tempted by these spectacular returns. Even though these looks nice gains,it could very well be a 100% loss and therefore capital allocation is The key !!! Realizing that these are speculative trade with 50/50 chance of being successful, I invest only the amount that if lost 100% I can still sleep well. And of course, past success is no guarantee of future success when it comes to an uncertain environment like “earnings announcement”.

The earning season is just gearing-up, more to come.

Trade carefully, Trade profitably, OP

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