AAPL – Apple Computer (Last:284.30)

Apple Computer (AAPL) price chart with targetsAs detailed her earlier (see AAPL in archive), let’s try to leg on a butterfly spread — first by buying the Nov 300-310 call spread twice. We’ll look to do this if and when AAPL falls to a midpoint hidden Pivot support at 280.44.  I’ve reproduced a calculator (inset) that shows the spread to be worth about 2.30 with AAPL trading near the target.  However, the fair price is very tricky to predict for two reasons: 1) time decay can hit hard on Fridays just ahead of the weekend; and 2) a falling share price can push implied option volatilities up.  Under the circumstances, I’ll suggest monitoring the bid/asked spread on the Nov 300 and 310 series when the stock gets within 1.00 of the target.  One more thing: Do not attempt this trade if the target has not been reached by the final hour of the session.