With a 2.5% gain, AAPL outpaced all of the lunatic stocks on Friday save AMZN, but it wasn’t quite enough to push the stock past a prior ‘external’ peak at 118.83. That would have created a bullish impulse leg and set the stock up for a certain test of supply that is thickest around 120. I’ll be looking to get short there via a tight rABC, even if it seems likely that AAPL will eventually punch through. The midpoint resistance at 127.53 would become our minimum upside objective at that point, but even before it reaches that threshold, the 140/150/160 Nov 20 call butterfly we own would start to come alive. We are sitting on 16 of them @0.36, offering half to close at 0.72, good-till-canceled. The spread has a delta value of 0.03, meaning it should gain 3 cents in value for each $1 move higher in the stock. _______ UPDATE (Oct 12, 3:25 p.m.): Subscribers reported cashing out half the position for as much as 0.73 with AAPL exploding to the upside. Officially, I am now tracking eight remaining spreads that effectively cost us nothing, so no loss is possible. I will leave you to manage the position as you see fit, but be sure to save 25% of it for a potential moonshot, since this butterfly spread has a maximum theoretical value of $10, which translates as $1,000 in your trading account. This price would obtain with AAPL sitting at $150 when the options expire on November 20, a little more than five weeks from now. A lot could happen between now and then, but the target will remain valid as long as the stock does not exceed C=103.11 to the downside. _______ UPDATE (Oct 15, 5:42 p.m.): Bid 0.28 for 16 more butterfly spreads, day order, good only if the stock is trading 119.50 or higher. This is a lowball bid ahead of the weekend.
AAPL – Apple Computer (Last:120.70)