Apple’s quarterly earnings are due out after the close on Tuesday and are expected to come in at around $3.22 per share on revenues of $77 billion. I’ve been dissing the company for about the last year, and so it wouldn’t come as any great surprise to me if the announcement fails to trigger a gusher of exuberance. If not, and the stock gets hit for no good reason, it could easily come down to the 115.30 midpoint pivot shown in the chart. This is what is called a ‘reverse’ ABC pattern, or rABC, in the chat room, and although I don’t often use it for forecasting, in this case it provides a reasonable set of benchmarks for predicting the course of a possible avalanche. Thus, a selloff could be expected to hit p=115.30 at a minimum, but possibly 108.16 if it turns out to be ‘one of those days’. Accordingly, I’ll recommend bidding 0.17, with three cents of discretion after the opening, for five Feb 3 112 puts. Don’t pay up, since the puts are liable to turn squirrelly if traders sniff a rout. This is a lottery ticket, and you should be prepared to lose it all. If, delight of all delights, the stock gets murdered, close out two of the puts for twice what you paid for them and have fun with the rest. _______ UPDATE (Jan 31, 8:26 p.m.): Apple soared after the close on news that the latest quarter’s earnings had achieved a new record high. Even so, our puts appear to have spiked very sharply at the final bell — to 2.22, which seems like an error — suggesting there were no news leaks ahead of the announcement. The puts could have been exited for no lower than 0.18, if exited at all, but I’ll wait to hear from subscribers before I determine how to score this one. Presumably, they will trade for close to zero when options open on Wednesday, making our $100 gamble a total loss.
