AAPL Analysis

Apple Inc. (AAPL)

Update 8/4/2017: AAPL rose by $12 after earnings were published, and the worked its way down by nearly $4 over the next three days. I exited for a loss at a $7.20 premium with shares at $156.22 as expiration approached.

The short call breakeven strike delimiting the losing side of the trade had a 76% chance at entry of expiring out of the money, By exit that had dropped to an 37% chance, well within the one standard deviation range.

Shares showed a net rise of 4.7% over my three-day holding period, or a +568% annual rate. The options position produced a -22.8% loss on debit for a -2,771% annual rate.

AAPL publishes earnings on Tuesday after the closing bell.

I shall use options that trade for the last time 10 days hence, on Aug. 11.

Implied volatility stands at 27%, which is 2.6 times the VIX, a measure of the volatility of the S&P 500 index.

AAPL’s IV stands in the 88th percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $148.25.

Premium: $5.56 Expire OTM  
AAPL-iron fly Strike Odds Delta
Long 160.00 91.6% 9
Break-even 309.00
Short 149.00 50.2% 52
Short 149.00 49.7% 48
Break-even 143.56
Long 138.00 90.0% 9

The premium is 51% of the width of the position’s wings.

The risk/reward ratio is 1:1.

Decision for My Account

I have entered an order on AAPL as described above. The stock at the time of entry was priced at $149.26.

By Tim Bovee, Fukuoka, Japan, Aug. 1, 2017


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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