Tuesday, December 18, 2012

AAPL – Apple Computer (Last:520.50)

– Posted in: Current Touts Free Rick's Picks

So many institutional geniuses are so utterly dependent on the performance of this one stock that we should expect to see it trading at least 100 points higher by year's end.  However, yesterday's hysterical rally implied that we are not the only ones anticipating this.  In any case, the leverage we are about to seek lies in building a spread position near the 600 strike.  Vertical bull spreads will already have become a bit pricey due to the $18 whoopee-cushion bounce off yesterday's lows.  However, calendar spreads and butterflies should remain relative bargains for long enough that we can plan to buy a few even as the stock makes its way higher. For now, let's try to leg on the January (monthly) 590-600-610 call butterfly spread for 'even' or better.  This implies shorting two January 600 calls for as much as we have paid for a single January 590 call and a single January 610 call.  Since my intention is to make this trade accessible even to novices, we'll want to do the 'buy' side of the trade first, acquiring four January 590-600 call spreads on weakness.  Once we've done that, we'll be looking for a rally to get short four January 600-610 call spreads. Check out the table accompanying this tout if you want a picture of what we'll be doing.  Bottom line is that, when we're done, we'll be long four January 590 calls, four January 610 calls, and short eight January 600 calls. Trust me, I'm going to make this easier for you than it sounds. If you'd like to be alerted in real time to the opportunity, be sure you've checked 'E-Mail Notifications' on your My Account page.  If you don't subscribe to Rick's Picks but are eager to give this trade a shot, click here

DaBoyz Have Gained Control for the Remainder of 2012

– Posted in: Free Rick's Picks

With DaBoyz short-squeezing rumors of a fiscal-cliff agreement for all they're worth -- and then some -- I've recommended raising the stop-loss on our January 128 DIA puts to 0.80.  Those of you who hedged the original put purchase by shorting puts of a lower strike against them for more than 1.00 should sit back and enjoy the show, since you effectively hold a free lottery ticket. My gut feeling is that with yesterday's short-squeeze rally, bulls have gained working control of the broad averages for the remainder of the year. Moreover, they are in good position to put a vise grip on the testicles of bears who have enjoyed being short in Apple. Doesn't that imply that we should placing some leveraged bets in Apple shares right now?  Indeed it does! Check out today's tout to see the plan.  I've spelled out in detail a bullish butterfly spread that will be geared toward beginners with option accounts.  If you have only lost money trading options and think puts and calls suck, please do give this one a try.  Don't subscribe? No problem: CLICK HERE.

DIA – Dow Industrials ETF (Last:133.18)

– Posted in: Current Touts Free Rick's Picks

We hold four January 128 puts purchased for 1.00.  DaBoyz are obviously capable of squeezing quite a bit of yardage from the 'story' that Democrats and Republicans are getting 'closer' to an 'agreement'.  So that we do not find ourselves having to give such claptrap even a passing thought, I'll suggest raising the stop-loss on the puts to 0.80.  This means that if they trade at that price (or perhaps below it on a gap), you should sell them at-the-market.  Some subscribers have already shorted Jan 127 puts against the 128s for more than they paid.  That is what I should have recommended to you myself, since any profit on a put position, especially in December, is as rare as gorilla eggs. Those of you who have hedged the position in this way should simply forget about it and enjoy the show, since you've got a lottery ticket that cost you nothing. Technically speaking, the Diamonds look bound for at least the 133.35 mipdoint resistance shown.  We're jumping the gun to be plotting an exit before that threshold is reached, but my gut feeling is that strong impulsiveness of this move is sufficient to torment bears for the remainder of the year.  We'll plan on re-shorting this brick when a better  opportunity presents itself, but for now let's cut our theoretical position risk to $80 plus commissions.  _______ UPDATE (11:15 a.m. EST): With the short squeeze on the Dow continuing, we exited the puts at 0.80, booking a theoretical trading loss of $80.  We'll want to try getting short again (and again, and again), but for now do nothing further.