Today is Jan’07 options expiration day. Those who would like to trade the whole day, options may offer great opportunity. All the theta gains as most will have zero time value by the end of the day. High theta ATM options may offer dramatic percentage gains. The option will move in tandem with the stock, so for those technical charts lovers who are looking for rebound or sell-off, maybe a great day to leverage. Other thing to note is the “pinning action”. So look for stocks that you might think will be pinned down to nearest strike. Not a list to recommend, some great names to start are Google (GOOG), IBM (reported earning last night so you may advantage of the movement it is about to offer), Apple, Goldman Sach(GS), etc. Watch out : Before placing any trades, I would suggest please run a complete risk/reward analysis. The whole investment may also be lost without understanding well on how to take advantage of options expiration. Till then, profitable Friday folks,
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Apple Earnings – Closed for 7 % Profit
Well, despite the great show, apple didn’t turn out a great show in the stock performance. Since I played non-direction on the earnings, I covered my short 95 call leg for $0.20. This resulted in $95 profit on $1365 investment i.e. 7% in one night. Though apple continue to fall as of this writing, I didn’t want to give my profits back to the market, so clsoed it for 7% profit. This closes my earlier posting about apple which were posted here and here. Not to forget though, I still have 7 Jan 100 calls. Should apple decide to make a comeback tonight or tomorrow, that will be a lottery ticket.
Again as I mentioned Y’day, these speculative trades are only a fraction on portfolio.
The search is on for tonight’s play, stay tuned!
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AAPL earnings -Update
It is an update to my apple’s earning’s play that I had posted here and here. A mix bag of reaction from the analysts on the apple’s earning announcement. Everyone has his or her own point of view. Let the market open and see what does market decides, who is right who is wrong?
- 7:23am 01/18/07 UBS ups Apple price target to $124 from $118
- 7:21am 01/18/07 Piper Jaffray ups Apple price target to $124 from $99
- 7:21am 01/18/07 Prudential ups Apple price target to $100 from $90
- 7:20am 01/18/07 Bear Stearns ups Apple price target to $130 from $125
- 7:18am 01/18/07 Goldman ups Apple price target to $110 from $102
- 7:14am 01/18/07 Soleil ups Apple price target to $115 from $100
- 5:46am 01/18/07 Apple cut at J.P. Morgan on Mac shipments, iPod concerns
- 5:24am 01/18/07 Apple cut to neutral at J.P. Morgan
All the above from marketwatch.
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FUL Earnings : Closed Profit – 29.8% profit
Without waiting for any further fall in the stock, I bought back my short leg of the back spread that I opend last night. As mentioned in the last post here, i had received $2.65 credit. I bot back my sold leg for $1.95 and I have 2 call legs ($30). This might serve as lottery ticket in case the stock decide to come back. With this, it resulted in 29.8% proift for holding for 1 night. Please do note this is a speculative trade, which is not my bread and butter strategy. It is only for accelerating the returns at “certain” time. This is high risk/high reward/loss kind of play.
Here is the transaction detail:
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My play for AAPL Tonight
Today was very hectic day, so not a lot of analyis. I don’t want to bet on direction and hence I am opening a backspread for $1.35 credit. I sold 3 AAPL 95 calls and funded 7, 100 calls. My total risk on this trade is $1365/backspread. The breakeven points are 95.5 and 103.4. There is about 30points IV difference between Jan/feb ATM so expect IV crush which will hurt me. I am slightly bullish on AAPL and therefore opening with the calls. The same can be opened with the Puts as well. Here is the r/R charts :
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AAPL Earnings!
Tonight after market close, Apple (AAPL) is going to announce earnings. Probably the most awaited announcement (except Google) that will set the tone for the tech companies. Once I close my FUL positions, I shall try to capture “my” thoughts and hopefully how to play. As a privilege to registered users, It will go to registered users first though. Stay tuned ! (Posted already, if you are registered, you will be able to view it).
Till then, profitable trading