We hold four Jan 590-600-610 butterflies @ 0.20. Although total risk is only $80 plus commissions, the dirge that has gripped this stock for the last two weeks has made our bet a longshot. As you know, I’d been looking for a strong year-end surge, mainly because bonus-hungry portfolio managers stood to make a pile of money if AAPL had finished Q4 on a strong upswing. Their inability to make this happen is probably the single most compelling factor behind my very bearish outlook for January and beyond. If DaBoyz cannot in fact goose this stock — can’t even arrest its fall, actually — then they will be seriously on the ropes as 2013 begins. Accordingly, a target at 464.99 should be held in mind as a minimum downside objective for now (60m, A=635.38 on 10/22).
In any case, I’ll suggest offering the ‘fly to close for 0.25, a tad more than we paid for it. This order can stand as long as the stock is trading for $525 or less. The spread can certainly be sold for that much with a little work, but you’ll have to decide for yourself whether it’s worth it. You might also choose to hold the spread until stocks have had a chance to react to a fiscal-cliff agreement, assuming one comes. ______ UPDATE: Apple’s leap Monday above $530 has taken our spread off the table. For now, sit tight. Click here for information about the upcoming Hidden Pivot Webinar and a $50 discount.