The fact that they have pretty much a monopoly and usually have the best product should help them keep growing.
Is Google headed towards $1000?
- Thread starter 20figures
- Start date
The fact that they have pretty much a monopoly and usually have the best product should help them keep growing.
Ok, I will try to explain the best I can. Let me quote the chart again.
This chart helps us understand how our profit/loss will look like.
The numbers on the Y axis represent the actual $$$ and the numbers on the X axis represent the stock movement.
The red line on the chart shows us how our profit/loss would look like on Friday's expiration. Even though you cannot see the number there, the actual breakeven level is $421.38. Easiest way to figure that out without a chart is to look at your BTO (Buy to Open) leg, and you will see a $420 strike price. Well add the cost of the spread ($1.38) to it, and we get $421.38. So as long as Apple is at that level or higher on Friday's closing we are finishing in the green.
If it goes below, then anything below $420.00 on expiration is a complete loss. In this scenario, it is a loss of $552.
Since this is a spread, we have LIMITED GAINS AND LOSSES. This is a must going into such a large catalyst (earnings) since right after earning release the implied volatility on the options will drop. This will send vega tumbling down. By us selling a leg too, we will take a smaller impact from vega getting hit.
What you see at the botom under positions is the actual position. We are buying the MAY1 13 expiration leg, which is a $420 call. At the same time we are selling the MAY1 13 expiration leg, which is a $425 call.
* Vega is a greek and a component when it comes to option pricing. On a long position (buying options, not writing), we will always be long vega. Meaning if vega goes up, so will our option premium. The same works vice versa. If Apple might be at $400 right now and the option contract is $1.38. Lets say Apple does not move at all after earnings, well the price of the contract can drop to 50c just because vega dropped.
These are all APR4 13 expirations.
Calls:
BTO 430
SELL 435
Puts:
BTO 350
STO 345
I have a larger position in calls than I do in puts. I did open those puts up as a hedge and quite far OTM but definitely possible to pick up solid gains on a bad report. I should be fine in either direction really. If it misses, I should walk away with minor losses, if it beats then close to 300% return.
Keep in mind that I opened these positions with very little capital. Speculating on earning reports is a total gamble so its best to use an insignificant amount of money if you just want to partake in the action.
Earnings decent, buyback OK, forecast garbage and the usual CNBC bashing begins. Investing in aapl is a huge gamble until Tim Cook is gone and better guidance steps in.
May see a little green in the morning but I think it's down hill from there. Up to 426 AH and now in the red.
