AAPL Analysis

Apple Inc. (AAPL)

Update Feb. 8, 2017: AAPL gapped upward after earnings were published, putting it beyond the profit zone of my position. It continued to rise, more moderately, thereafter. I exited the position to avoid the likelihood of assignment when shares went ex-dividend on Feb. 9.

Shares rose by 8.9% over eight days, or a +408% annual rate. The options position produced a 35.5% loss on debit for a -1,620% annual rate.


AAPL publishes earnings on Tuesday after the closing bell.

I shall use the MAR series of options, which trades for the last time 45 days hence, on March 17.

Implied volatility stands at 23%, which is  1.8 times the VIX, a measure of the volatility of the S&P 500 index.

AAPL’s IV stands in the 42nd percentile of its annual range and the 96th percentile of its most recent broad movement.

The price used for analysis was $120.75.

Premium: $5.61 MAR iron fly
AAPL   Odds Delta
Long 130.00 89.7% 11
Break-even 125.61
Short 120.00 49.0% 54
Short 120.00 51.0% 46
Break-even 114.39
Long 110.00 85.8% 12

The premium is 56% of the width of the position’s wings.

The risk/reward ratio is 0.8:1.

Decision for My Account

I have entered a position on AAPL as described above. The stock at the time of entry was priced at $120.76.

By Tim Bovee, Portland, Oregon, Jan. 31, 2017

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