AAPL Analysis

Apple Inc. (AAPL)

Update 5/3/2017: AAPL declined rapidly after earnings were published and then, just as rapidly, reclaimed most of the loss, ending up shortly below the short-option strike options. A sharp drop in implied volatility broad the position to my target price, and I exited at 25% of maximum potential profit.

Shares showed a net decline of 1.4% over one day, or a -493% annual rate. The options position produced a 33.4% yield on debit for a +12,197% annual rate.


AAPL publishes earnings on Tuesday after the closing bell.

I shall use the series of weekly options that trade for the last time 10 days hence, on May 12.

Implied volatility stands at 21%, which is 2.1 times the VIX, a measure of the volatility of the S&P 500 index.

AAPL’s IV stands in the 59th percentile of its annual range and the 89th percentile of its most recent broad movement.

The price used for analysis was $147.27.

Premium: $5.27 Expire OTM  
AAPL-iron fly Strike Odds Delta
Long 157.50 92.0% 9
Break-even 153.27
Short 148.00 55.1% 57
Short 148.00 53.0% 45.3
Break-even 143.27
Long 138.00 90.0% 9

The premium is 54% of the width of the position’s wings.

The risk/reward ratio is 0.9:1.

Decision for My Account

I have entered a position on AAPL as described above. The stock at the time of entry was priced at $147.34.

By Tim Bovee, Portland, Oregon, May 2, 2017

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