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Pre-Market and Apple Update

Published on July 23, 2008

Pre-Market and Apple Update

July 23, 2008

Even though the markets have been rallying recently I am not yet convinced. But I don’t fight with the markets and cautiously follow the turning points. Oil is down, Gold is down, financials are up and so is the transport. REITs are also starting to show signs of strength. Whatever you make out of it, be a little more cautious on every rally.

Here are some names for pre-market activity-

Gapping Up: NIHD, ISRG PHLY, CNH, WYE, GD, ILMN, WHR, WLP, and MCD

Gapping Down: COST, CHRW, ZMH, VMW, BJ, ABFS, ADCT

Apple had quite an amazing show. Before markets opened, here is what I mentioned to OPN subscribers for a bullish speculative scenario-

AAPL- A Bullish trade. This is not for everyone. This is purely speculative and you my lose all your investments and hence capital allocation is extremely important. Nothing more than 2-3%.

AAPL is down nearly $16 in the pre-market activity. Overall market futures are down as well, so expect it to be a bearish day…(except something interesting surfaces). I have generally observed that AAPL is good in guiding very conservatively and beat those nicely when the actual reports are shared. There is nothing majorly wrong in the results they have reported except the outlook and some concerns on margins. Which is what taking the stock down with it.

I however think, $148-$150 area will prove to be a support area and within a few days it should recover some grounds and don’t be surprised if it fills the gap. (It may not results this way and that’s why I call it speculative).

so a call diagonal, or a bull put spread or a bull call debit spread or bullish calendar maybe something good to look so that the risk is contained. BUT don’t do anything especially in the initial 30mins as you wouldn’t know if you are paying the right price (unless you are very very clear on the price you are paying is correct one). IV will also be tricky, it will be down but I don’t know when and how, specially for initial 30mins. Logic wouldn’t apply.

So here we go, look for a bullish opportunity once AAPL finds a bottom today. And if you do make profits, book it, don’t leave for next day …profit taking never hurts.

And rest is history now. After hitting a low of $146.5, it closed at $162. If you are an OPNewsletter subscriber, check out the “Directional (Non-OPN)” thread for my current holding on Apple. This was not part of OPN but a bonus one as part of speculative alerts. I shall update it when I close it today. We shall reapply similar strategy for some underlying in the up-coming days.

Profitable trading, OP

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