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AAPL – Apple Computer (Last:261.74)


We hold eight Dec 13 280 calls with a cost basis of 0.28. We bought them anticipating a rally to a 283.97 Hidden Pivot target that has been solidly in play since March, when the stock was trading $90 lower. The target has served not only to guide us in trading AAPL, but to keep us properly bullish as the broad averages seemingly defied both common sense and gravity.  When we bought the calls our goal was to cover their cost 100% by rolling the 280 calendar spread on three successive Fridays. With the stock strongly on the rise, I’ll suggest an alternative strategy to simplify things: Offer four Dec 6 280 calls short for 0.55, good through Wednesday. If the order fills we’ll own the Dec 13 280 calls effectively for nothing. It would also give us a backspread position that would make us longer as AAPL rises. ______ UPDATE (Nov 26, 7:55 p.m.): I just noticed that AAPL triggered an rABC short last week. We’re a little late to the party, but I’d hate to let an opportunity go to waste. Accordingly, I’ll recommend bidding 0.31, day order,  for two Dec 6 250 puts. This is a speculative bet and will not affect our call strategy. _______ UPDATE (Nov 30):  We hold two Dec 6 250 puts for 0.31 and eight Dec 13 280 calls for 0.28. For now, offer four of the calls to close for 0.48, good through Tuesday. Check for updates before and after Monday’s opening in case AAPL moves significantly. _______ UPDATE (Dec 2, 9:34 p.m.): Our strangle position is inadvertent, but even so, I’d be surprised if this stock fails to put either end of it in play. For now, do nothing. _______ UPDATE (Dec 3, 8:52 a.m.): Offer the puts to close for 0.48, good till 10:00 a.m. ______ UPDATE (Dec 3, 11:16 p.m.): The puts traded as high as 1.38, but I’ll use the 0.89 sale reported by a subscriber in the trading room. The gain effectively reduces the cost basis for the eight Dec 13 calls still held to 0.14.  Offer half of them for 0.34, day order. And yes, this is more work than I’d intended. ______ UPDATE (Dec 4, 6:36 p.m.): Treat the calls as you would a scratch-off lottery ticket, since AAPL is going to have to step up the pace to budge them. They are keepers in any event.

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