AAPL - Earnings this Monday October 20. Buy OTM Oct24 calls on Monday

Discussion in 'Options' started by FXforex, Oct 16, 2014.

  1. FXforex

    FXforex

    90% chance I buy some OTM AAPL Oct24 calls on Monday October 20. I will update if I go through with this trade with exact strike - probably 100.00.


    EDIT: I'm watching GOOG's earnings today. I might get cold feet with the AAPL trade if GOOG tanks.


    :)
     
    Last edited: Oct 16, 2014
  2. Scaleout.Scalper

    Scaleout.Scalper Guest

    Here's a little tip, if I can't shy you away from gambling, which is all earnings are, you want to predict upside on AAPLs 4th quarter report, not the 3rd, 3rd has always been the worst for AAPL.
     
  3. If they perform well IV will get smashed so no matter what, to me it does not really make sense to buy calls on earnings. Would it not be better to sell a put spread. Then you will be long the stock and long IV
     
  4. Actually, the OCT 24 option wont be very sensitive to change in IV anyway...
     
  5. FXforex

    FXforex


    Typical ET canned-generic reply without checking the facts.



    [​IMG]
    Screenshot from investor.apple.com



    :)
     
  6. Scaleout.Scalper

    Scaleout.Scalper Guest

    Fourth quarter calendar not fourth fiscal EINSTEIN!
     
  7. FXforex

    FXforex

    UPDATE

    I have decide to enter 1 day early and catch any Monday pre-earnings rally (if there is one), and news over the weekend could also have an affect. My plan is to close the position on Tuesday October 21.




    :)
     
  8. FXforex

    FXforex


    I don't like credit spreads because of the poor risk/reward ratio, what strikes do you have in mind? The spread below has about the same risk as my long position, but the reward sucks.


    • AAPL at $97.67
    • Sell 1 AAPL Oct24 98.00 Put at $2.27
    • Buy 1 AAPL Oct24 94.00 Put at $0.99
    • Maximum gain $128.00 (commissions not included)
    • Maximum loss $272.00 (commissions not included)




    Even with high IV the risk/reward ratio for credit spreads sucks.


    :)
     
    Last edited: Oct 17, 2014
  9. How does your long option do when the underlying doesn't move? What if it moves against you? Please compare to the same long option in a vertical.
     
  10. Scaleout.Scalper

    Scaleout.Scalper Guest

    The correct play here is to hope for a report sell off and buy calls on weakness with a feb expiration.
     
    #10     Oct 18, 2014
    Georgi90 likes this.