So clear and compelling was our rally target on the weekly chart that Apple’s ability to blow past it must be regarded as evidence that the bullish rampage will continue. Accordingly, we should use the 660.29 Hidden Pivot shown (see inset, a new chart) as a minimum upside target. Price action centered on p=620.31 has yet to develop sufficiently to validate the pattern, but the pivot can still be used to bottom-fish on pullbacks. Regardless, I’ll recommend bidding 4.20 for the June 650 call calendar spread, buying call of the June 27 expiration and shorting calls of the June 6 expiration. You should bid for four spreads or multiple thereof, but only with the stock trading 625 or higher.
This is a relatively cheap way to play a somewhat distant rally target. Stay tuned to the chat room, since it may be necessary to adjust the spread price on-the-fly. Ideally, the stock will move higher but at a rate that will allow us to cover the short calls for next to nothing and roll into the next expiration week. If everything goes more or less according to plan, we will be holding or June 27 650 calls when the stock reaches 660, but their cost basis will have been reduced to zero by premium received for calls we shorted against them on the way up. _______ UPDATE (May 29, 12:53 p.m. ET): A simple way to bet on a rally to 660 would entail buying the 655-660-665 butterfly. Going out to the June 20 expiration, this spread is currently do-able ‘on the marks’ for as little as 0.30. I’d suggest trying to buy it for 0.20 ($20) or less. It has the potential to go to $5.00 ($500) if the stock rises to 660 over the next three weeks. Would you lay 25-1 odds that Apple WON’T rally to $660 in three weeks? Those are the odds you’ll be getting if you can buy the butterfly for a 0.20 debit.