Thursday, February 21, 2013
Not A Rotten $AAPL - My Simple Take
Lately, it seems like every expert is announcing the demise of Apple. Consensus is that it's doomed! So What's with Apple? is it a rotten fruit? Not by a long shot. This is a much beloved company for far too long to get a fair evaluation in the typical sense.
The 'evaluators' are most often people who have financially and emotionally invested in it for years. So, In order to properly evaluate Apple, I believe we first need to:
* Eliminate the emotions
* Erase the name
* Ignore the highs and the lows, including the high 1,111 and low 200 price targets
* Forget who bought it and who sold it and how many entities are left owning it too.
Only then that we can look at it from a fresh perspective like a company we've never seen before. So, if you tell me: 'psst I have an interesting company for you. Here are its facts:
* It has an excellent management pedigree
* It has highly regarded products that have a massive cult following
* It sells out of every widget it introduces in minutes and at a premium
* It controls the largest global music marketplace
* It has excellent profit margins that most companies would envy. (Here's an important note about a popular point of contention: often mavens point out the mounting "margin pressure" in Apple. Well, since monopolies are illegal 'margin pressure' is a fact of life for EVERY company!)
* Oh and by the way, this company has an insane cash position that would allow it to buy its way to the top of any industry it chooses
After hearing you tell me the aforementioned facts all I would ask you then: "how much of a premium would I have to pay for this company? What? Priced only under 10times? My answer is an emphatic: "deal me in; it's clear to me that there is more upside potential than downside risk from here."
THIS IS NOT A RECOMMENDATION TO BUY OR SELL STOCKS OR STOCK OPTIONS.
Wednesday, January 23, 2013
$AAPL $300? No Mr. & Mrs Maven
Can't put this in a 140 character post on twitter so here it is:
My simplified AAPL overview:
* MY BEEF: I keep hearing mavens saying 'if it weren't apple then no one would be surprised it's down that much.' Even one genius called it a broken company, etc.
* MY STATEMENT: My answer to the aforementioned mavens: "but it IS Apple Mr. or Mrs. maven. You can't just make believe it's not. It's still that same company that sells EVERY widget it makes and at a premium! It still has more cash that most countries. AND it still has most of the modern world as devout fans. AND it still owns the way we ALL buy music, etc."
* MY TAKE: Apple dooms-dayers now littering the media with forecast of 300/share for apple. Keep it simple: take a 2 year trend and add my trusty YELLOW MARKER trend line, you can draw a line (best fit to 2yrs ago performance-not the crazy run up it had) that gets you to about where it's trading after hours. So what? let's use the mavens words and say: 'take out the name Apple from this chart and you get just the normal medium growth company plugging along just fine!' This means that the $300 price forecasts for Apple are just as crazy as the infamous 1,111 call!
Disclosure: I have a small long Feb position (Credit puts spread) that is still way out-of-the money even at 480 AND I am long weekly puts that I will cash in tomorrow. So I am not biased based on any hurt long position.
My simplified AAPL overview:
* MY BEEF: I keep hearing mavens saying 'if it weren't apple then no one would be surprised it's down that much.' Even one genius called it a broken company, etc.
* MY STATEMENT: My answer to the aforementioned mavens: "but it IS Apple Mr. or Mrs. maven. You can't just make believe it's not. It's still that same company that sells EVERY widget it makes and at a premium! It still has more cash that most countries. AND it still has most of the modern world as devout fans. AND it still owns the way we ALL buy music, etc."
* MY TAKE: Apple dooms-dayers now littering the media with forecast of 300/share for apple. Keep it simple: take a 2 year trend and add my trusty YELLOW MARKER trend line, you can draw a line (best fit to 2yrs ago performance-not the crazy run up it had) that gets you to about where it's trading after hours. So what? let's use the mavens words and say: 'take out the name Apple from this chart and you get just the normal medium growth company plugging along just fine!' This means that the $300 price forecasts for Apple are just as crazy as the infamous 1,111 call!
Disclosure: I have a small long Feb position (Credit puts spread) that is still way out-of-the money even at 480 AND I am long weekly puts that I will cash in tomorrow. So I am not biased based on any hurt long position.
Tuesday, January 22, 2013
Rare $ISRG earnings trade
1/22/2012:
If you already follow me then you know that I like to sell option spreads. You also already know that I don't like to take positions into earnings because I can't foretell HOW the markets will react to the reports. All the homework in the world can't give me ANY insight on that reaction; I can have certainty in say the size of the move but as for the direction it's no better than a coin toss.
Here comes the shocker: Just before today's close, I tweeted that I initiated a long $ISRG position going into earnings.
THE THESIS:
Why break my rule? I felt that the recent drop in ISRG gave us a sneak peak at its LOW levels. On my chart, I marked those areas with the horizontal lines and hand-drawn rectangle (sorry too much coffee and hand jittery). I felt like the 'world had ended' for ISRG with a few really doomy headlines and dropped and popped around the hashed zone for a few days. So, if the world ended AND YET it held the 480's then it must be a really strong support going forward.
THE TRADE: Long ISRG via Credit put spread.
NOW WHAT? 1) if ISRG opens around 560ish (as I write this article it's at 566ish) then I will look to add an upper leg and turn this credit put spread into an Iron Condor. I will carefully look for a good level to take a credit call spread. or 2) if the premiums disappear on the CPS I already sold today then I may close it and cash in the ISRG play. or 3) same as #2 (close the CPS if cheap enough) and start looking for a cap on it. Whatever I do, I will make sure not to ruin a perfectly good trade.
NOTES: looking at the chart I see an earnings pop/gap that fizzled and proved to be a top (oval). This pop will guide me in finding upper levels (should I decide to cap it). The red x on the chart shows where it's trading after hours which coincides with recent resistance. Usually, when I try to cap the run of a fast runner I go much higher than price; likely about 600+ for ISRG as it's proven over and again that this sucker can run circles around Usain Bolt!
THIS IS NOT A RECOMMENDATION; STOCK OPTIONS CAN CAUSE HEAVY FINANCIAL AND SLEEP LOSSES. I ONLY TRADE WITH MONEY THAT I CAN AFFORD TO LOSE.
If you already follow me then you know that I like to sell option spreads. You also already know that I don't like to take positions into earnings because I can't foretell HOW the markets will react to the reports. All the homework in the world can't give me ANY insight on that reaction; I can have certainty in say the size of the move but as for the direction it's no better than a coin toss.
Here comes the shocker: Just before today's close, I tweeted that I initiated a long $ISRG position going into earnings.
THE THESIS:
Why break my rule? I felt that the recent drop in ISRG gave us a sneak peak at its LOW levels. On my chart, I marked those areas with the horizontal lines and hand-drawn rectangle (sorry too much coffee and hand jittery). I felt like the 'world had ended' for ISRG with a few really doomy headlines and dropped and popped around the hashed zone for a few days. So, if the world ended AND YET it held the 480's then it must be a really strong support going forward.
THE TRADE: Long ISRG via Credit put spread.
NOW WHAT? 1) if ISRG opens around 560ish (as I write this article it's at 566ish) then I will look to add an upper leg and turn this credit put spread into an Iron Condor. I will carefully look for a good level to take a credit call spread. or 2) if the premiums disappear on the CPS I already sold today then I may close it and cash in the ISRG play. or 3) same as #2 (close the CPS if cheap enough) and start looking for a cap on it. Whatever I do, I will make sure not to ruin a perfectly good trade.
NOTES: looking at the chart I see an earnings pop/gap that fizzled and proved to be a top (oval). This pop will guide me in finding upper levels (should I decide to cap it). The red x on the chart shows where it's trading after hours which coincides with recent resistance. Usually, when I try to cap the run of a fast runner I go much higher than price; likely about 600+ for ISRG as it's proven over and again that this sucker can run circles around Usain Bolt!
THIS IS NOT A RECOMMENDATION; STOCK OPTIONS CAN CAUSE HEAVY FINANCIAL AND SLEEP LOSSES. I ONLY TRADE WITH MONEY THAT I CAN AFFORD TO LOSE.
Tuesday, December 4, 2012
$NDX trade for a house payment using $AAPL as gauge
DATE: 12/4/2012 - this is NOT a trade recommendation of any kind. Selling options will lose you money!!! Don't try this at home.
SITUATION:Apple and other major tech names have retraced from recent highs and are showing relative resilience here.
ASSUMPTION: Fiscal cliff won't cause a complete selloff (10% or more). While $AAPL and other big NDX names are at recent low points I am comfortable assuming they provide me with an inherent put in $NDX.
THE TRADE: So I structure iron condors (Jan or feb or even longer) that are lob-sided to the upside. BUT with a very very tight leash.
Ex1: JAN $NDX iron condor 2550/2525-2875/2900. Today it pays $6.475 to open.
Theoreticals: chances of full profit: 89% for the upper leg; 80% for the lower leg; 70% overall trade.
Rew/risk=.35
Break evens=2540ish, 2880ish
Buffers: 4.1% downside and 8.1% run-up
Dollars at risk=$18.5each (max loss)
-----------
Ex2: JAN $NDX iron condor 2600/2575-2875/2900. Today it pays $8.475 to open.
Theoreticals: chances of full profit: 89% for the upper leg; 70% for the lower leg; 59% overall trade (pretty tight).
Rew/risk=.51 (better than Ex1 since much more aggressive trade)
Break evens=2590ish, 2880ish
Buffers: 2.3% downside and 8.1% run-up
Dollars at risk=$16.5each
-----------
If I am confident that Nasdaq will be between 2600 and 2900 by mar of 2013 then I would gamble on
Ex3: MAR $NDX iron condor 2600/2575-2900/2925. Today it pays $12 to open.
Theoreticals: chances of full profit: 80% for the upper leg; 66% for the lower leg; 49% overall trade (even tighter than Ex2).
Rew/risk=.91 (almost 1to1 since much most aggressive trade)
Break evens=2590ish, 2912ish
Buffers: 2.3% downside and 9% run-up
Dollars at risk=$13each
-----------
THE ABOVE EXAMPLES ARE NOT RECOMMENDATIONS; SELLING OPTIONS AND OPTION SPREADS WILL LOSE YOU MONEY. I ONLY TRADE WITH MONTY I CAN AFFORD TO LOSE. SELLING IRON CONDORS IS TRICKY BUSINESS AND WILL GET YOU IN FINANCIAL TROUBLE.
SITUATION:Apple and other major tech names have retraced from recent highs and are showing relative resilience here.
ASSUMPTION: Fiscal cliff won't cause a complete selloff (10% or more). While $AAPL and other big NDX names are at recent low points I am comfortable assuming they provide me with an inherent put in $NDX.
THE TRADE: So I structure iron condors (Jan or feb or even longer) that are lob-sided to the upside. BUT with a very very tight leash.
Ex1: JAN $NDX iron condor 2550/2525-2875/2900. Today it pays $6.475 to open.
Theoreticals: chances of full profit: 89% for the upper leg; 80% for the lower leg; 70% overall trade.
Rew/risk=.35
Break evens=2540ish, 2880ish
Buffers: 4.1% downside and 8.1% run-up
Dollars at risk=$18.5each (max loss)
-----------
Ex2: JAN $NDX iron condor 2600/2575-2875/2900. Today it pays $8.475 to open.
Theoreticals: chances of full profit: 89% for the upper leg; 70% for the lower leg; 59% overall trade (pretty tight).
Rew/risk=.51 (better than Ex1 since much more aggressive trade)
Break evens=2590ish, 2880ish
Buffers: 2.3% downside and 8.1% run-up
Dollars at risk=$16.5each
-----------
If I am confident that Nasdaq will be between 2600 and 2900 by mar of 2013 then I would gamble on
Ex3: MAR $NDX iron condor 2600/2575-2900/2925. Today it pays $12 to open.
Theoreticals: chances of full profit: 80% for the upper leg; 66% for the lower leg; 49% overall trade (even tighter than Ex2).
Rew/risk=.91 (almost 1to1 since much most aggressive trade)
Break evens=2590ish, 2912ish
Buffers: 2.3% downside and 9% run-up
Dollars at risk=$13each
-----------
THE ABOVE EXAMPLES ARE NOT RECOMMENDATIONS; SELLING OPTIONS AND OPTION SPREADS WILL LOSE YOU MONEY. I ONLY TRADE WITH MONTY I CAN AFFORD TO LOSE. SELLING IRON CONDORS IS TRICKY BUSINESS AND WILL GET YOU IN FINANCIAL TROUBLE.
Tuesday, November 13, 2012
Fiscal cliff is an $AAPL thief
This much talked about and self-inflicted fiscal cliff is the only thing keeping me from jumping into aapl with both feet. The case for long aapl has been very strong for the past couple of years. This is especially true on this recent pullback! I believe that we have seen the bottom in aapl. The market selloff was to reset aapl at the point when the johnny-come-late-lies piled in at around 525 in late May of 2012.
I think that the selloff down from the highs shook off all the weak hands and the fast money traders. What Steve Jobs left is a machine that has years worth of momentum and it would take a special kind of idiot to mess it up this fast. Regardless of what you think of the new leader of appl, an idiot he is not. The talk of aapl's demise is ludicrous. They have more money than most countries; they generate more money than most countries; they have products that people covet worldwide; all their products sell at a premium! what the f--- else do you want in a company? If you can't risk money on this dynamic then pack up your investing dollars and stick them in a .25% CD!
The only thing that could cause an aapl trade to sour from here is a stupid crisis caused by our beloved (NOT) politicians. I know that the media consensus seems to be that "They" will come to a deal of sorts but I AM NOT SO SURE. They said the same thing about the deadline that ended up causing the US to lose its credit rating yet they took us to the edge and threw us over with no regrets.
Fiscal cliff, you sir are a thief!
I think that the selloff down from the highs shook off all the weak hands and the fast money traders. What Steve Jobs left is a machine that has years worth of momentum and it would take a special kind of idiot to mess it up this fast. Regardless of what you think of the new leader of appl, an idiot he is not. The talk of aapl's demise is ludicrous. They have more money than most countries; they generate more money than most countries; they have products that people covet worldwide; all their products sell at a premium! what the f--- else do you want in a company? If you can't risk money on this dynamic then pack up your investing dollars and stick them in a .25% CD!
The only thing that could cause an aapl trade to sour from here is a stupid crisis caused by our beloved (NOT) politicians. I know that the media consensus seems to be that "They" will come to a deal of sorts but I AM NOT SO SURE. They said the same thing about the deadline that ended up causing the US to lose its credit rating yet they took us to the edge and threw us over with no regrets.
Fiscal cliff, you sir are a thief!
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