Continue to bid for Nov 20 140/150/160 call butterfly spreads, since the ambitious rally target at 151.94 remains valid despite last week’s punk performance. (Officially, we hold the spread eight times, effectively for free.) Although the target may seem remote at the moment, bulls could cover half of the white space on the chart in mere days if Trump wins, as I have given you to expect. The spread traded down to 0.32 on Friday, four cents above our niggardly bid, but you can lower it to 0.24 on Monday, subject to possible adjustment intraday. Be sure to tune to the chat room and keep “Notifications” switched on in your account page, since it may be possible to leg into the spread for free. That would entail buying Nov 20 140 calls when the stock is at a downside target, presumably bottoming; and then shorting two 150 calls on any subsequent rally while buying a 160 call. Please note that the one-hour lesson on butterfly spreading that I recorded a short while ago can be found linked on your account page. You should review it before participating in this trade. _______ UPDATE (Oct 19, 2:13 p.m. ET): Cancel the bid for the butterfly. It has traded down to 0.26 today, but we may be able to do much better by legging it on in the way described above. _______ UPDATE (Oct 20, 6:04 p.m.): For detailed tips on how to leg into the spread, check out the recording of today’s online ‘requests’ session. It should be posted to your account page by mid-day Wednesday if not sooner. _______ UPDATE (Oct 21, 11:20 p.m.): Few investors share my confidence that Trump will be re-elected, and that will seriously impair the ability of AAPL to rise by the usual leaps and bounds before the election. We’ll look to do the spread just before Nov. 3, when the stock will be better positioned to explode. In the meantime, you can cash out any butterflies you still hold at will. They are currently quoted at around 0.25, implying a $200 profit on the trade. That is a paltry sum compared to what we could still make, but it underscores the value of selling half of any option position that has doubled in value. We did this earlier, leaving ourselves a position that is effectively risk free and easy to manage.
AAPL – Apple Computer (Last:116.39)