New Trade $AAPL

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OurAAPLWebinaryesterdayranthroughourindepththoughtsaheadofearnings。

Mypersonalthoughtswhenthinkingaboutatradestructureareasfollows?

Ithinkweareclosetoalonger-termbottominthestock,basedonbothfundamentalsandtechnicals。

Giventhenatureofthedeclineoverthepast6months,Iexpectthattheprocessofbottomingwilltakesometimeasstockshiftshandsfromweakholderstostrongholders。

Impliedvolatilityislikelyasalebasedonbothtechnicalsandfundamentals?

The350to500rangeiswhatImwatchingtechnically,andfundamentally,thestockhasdiscountedalotofthebadnews,buttherearefewnewcatalystsonthehorizontogetittorisequickly。

Withallofthatinmind,IamgoingtoputonatradesimilartotheonewediscussedyesterdayontheWebinar,butwithafewadjustments?

OnequickcaveatthoughDanisnotdoinganytradepriortoearnings,andhewouldlikelygetinvolvedonacapitulationsituationinthestockifithasahighvolumesellofftonewlowsafterearnings?

IamgoingtodothistradeaheadofearningsbecauseIwanttotakeadvantageofhighvolatility,butevenmytradeisnotmuchofadirectionalbetintheshort-term?

ItwillnotappreciateordepreciatesignificantlynomatterwhatAAPLstockdoestomorrow?

Butthedefaultcaseisaslightappreciation,ifthestockisunchanged。

Also,giventhelargeamountofpremiumforonetrade,youcanalsotradeAAPLminioptions,whichdesignatea10sharepositionasopposedtoa100shareposition?

Pleasebeverycarefulthatyouaretradingthecorrectline(itshouldbedenotedAAPL7asopposedtojustAAPL),asImadeamistakeoncemyself,tradingtheincorrectline。

TRADE:AAPL(~$405)BuyJune385/435/485CallFlyfor$14。

75

Buy1AAPLJune385Callfor32。

47

Sell2AAPLJune435Callsat10。

03eachforatotalof20。

06

Buy1AAPLJune485Callfor2。

34

Break-EvenonJuneExpiration:

Profitsofupto35。

25btwn399。

75and470。

25,maximumgainof35and435

Lossesofupto14。

75btwn385and399。

75andbtwn470。

25and485,withmaxlossof14。

75atorbelow385andatorabove485

TradeRationale?

Thisisastructurethatisprimarilyashortvolatilitytraderatherthanapurelydirectionalplay?

Itisonlya0。

10deltastructure,meaningthevalueofthestructurewillchangebyapproximately0。

10invalueforeach$1moveinAAPL’sstockprice,allelseequal?

However,itwillmoveapproximately0。

30foreach1pointchangeintheJuneimpliedvolatilityofAAPL?

Sointheshortrun,thevolatilityimpactwillbemoresignificantthanthedirectionalimpact,forsmallchangesinthestockprice?

IfIexpectedthestocktomovemorethanthe7。

5%impliedmove,thenthisisprobablynottherightstructure?

ButsinceIviewthestock’sdownsideaslimitedbyitsfundamentalvalueandlong-termsupport,anditsupsidelimitedbyallthepreviousbuyerswhoarewaitingtounloadtheirstockonarally,Ilikeplayingforarangeboundsituationoverthenext2months。

Thistrade’srealappreciation,though,wouldoccurasweapproachexpiration,closertoJune?