Someone created a spread with 50,000 November $110 Calls $2.10 50,000 November $110 Puts $10.10 Is this a Individual Trader or Institutional Play? Can you see their logic, it's a big trade and I am wondering are they using the Calls to off set the $110 Puts? Apple is in uncharted waters, I have no idea how far Apple can move upwards, according to some Analysts it's still cheap. The Gang on Fast Money kept saying they were Short and this is the third week they have been wrong. Fast Money say Apple will tank after the i Phone 6 is released, what do you think?
Stop watching Fast Money, they are talking heads, with nothing of value. In reference to AAPL, bunch of countertrend traders in a massive bull market, if AAPL is going to tank after Iphone 6, why short it for 3 weeks in a row before the announcement? Sounds more like hoping than trading to me. My 02 cents.
I think it was a dividend trade. Stock traded along with it. It's a good trade if you fund at libor or better.
Dividend plays are normally referred to the attempt to get short the open interest of ITM call options vs stock, just before a large dividend, in hope of not getting assigned and getting away with the dividend, when the dividend is less than the put value on that strike.
"Stop watching Fast Money, they are talking heads, with nothing of value. In reference to AAPL, bunch of countertrend traders in a massive bull market, if AAPL is going to tank after Iphone 6, why short it for 3 weeks in a row before the announcement? Sounds more like hoping than trading to me. My 02 cents." Absolutely my friend! I think they are not being up front by pretending to have answers when some stocks move and nobody knows why it moved! Long ago, once upon a time when I was on the Motley Fool Message Boards on AOL, Jim Crammer use to come (1991-1995 range, I forget) with Dan Dorfman and post their ideas under aliases, we learned the hard way those stocks were getting unloaded by the Posters. The Gardner Brothers said Jim Crammer was using their forum because we had a large number of members complaining the Fool Brothers were allowing people post on Jim's name and Jim was not posting, he was very stealthy about his stock purchases and when he unloaded. You are right about putting these gals and guys opinions in the toilet, their paid to pretend they know the answers why the Market is doing what the Market is doing. I try my best to avoid hurting anyone on Elite Trader, only share ideas with stocks that look good and have excellent sponsorship. I appreciate members like you who are willing to speak their mind, thank you for telling us the truth friend! Fast Money Crew, I don't think they are actively trying to be dishonest, it's they desire to have answers about the movement of a stock instead of being honest and saying, Hey, I don't know!" or "Supply was Great than Demand" or "Demand was greater than Supply"! Do you remember when Jim Crammer could move stocks by 10% or more in After-Hours because he and Briefing.com were reporting his every syllable. You will be proud of me, I have been avoiding these "Talking Heads", I think Karen (pretty Jewish lady) is honest, she's not a Pumper and very conservative with her picks, still it's up to us to pick our own stocks and not rely on others! Thank you for considering this post and explaining what strategy the Spread is doing. I don't know much about Options except what I've learned on Elite Trader, I focus on the Delta and price movements like Darvas did in 1952.
I think in this case they got long the dividend by shorting the forward. They sold otm calls. Effectively a funding trade in this case: receive 40bps (in dividends) pay 6bps (if you fund at labor) over two months.
So they're long 5 million shares. What might costs be for a trade this size, if any? Not exactly free money, risk above 110 before ex-div.
They can't lose. They sold the forward for 35 cents. They are assured one dividend for 45 cents and will probably pay 8 cents in funding assuming they are funding at libor. People talk about having an edge. That's a real edge. Fund better than everyone else and you can find all sorta of creative ways to monetize it.