Apple Earnings play

Discussion in 'Options' started by Optrader1, Apr 21, 2008.

  1. What do you think of this play?

    - Sell 10 May 185’s
    - Sell 10 May $140’s puts
    - Buy 12 Jan 09 200’s
    - Buy 10 Jul 150 puts.

    Profitable between 135 and 208 at may expiration. Max profit at 185. Takes advantage of IV crush.

  2. cszulc


    Is this what you mean?
  3. Thanks. Yes, that's what I mean and pretty much what I got in my simulation as well. Seems pretty good to me as $138-$200 is a pretty good range.
  4. cszulc


    Well, in essence, it seems okay, but that is a pretty high margin requirement ($40,000) to just make that small amount of money, although the range is pretty wide enough (although you never know).
  5. At expiration, between $150 and $190, profits vary between $4,000 and $9,000. That seems pretty decent on a $40,000 investment, no?
  6. Can i ask what software you use to produce the information. I really like the way its presented.

  7. cszulc


    Glad to pass it on. It is called OptionsOracle and is a freeware program from SamoaSky.

    Although it doesn't have the backtesting tools that OptionVue has (I wouldn't use it anyway), it is equal to the performance with saving the $1,000+ price tag of OptionVue.

    (Also note: The example I gave has Interactive Broker commissions imbedded in, which is why you might get a difference decimal difference than what you came up with.)
  8. Thanks for the speedy reply.

    I just dpwnloaded it and it looks superb.

    I will play around with it but really looks pretty much what i have been looking for at a great price!!!!

    Really appreciate it.
  9. esu2


    Here is another risk graph for this...
    Nice spread... lots of room for profit !
  10. Jan vol will drop 300 to 500 bp. You're modeling flat vols. You are long vega, a lot of vega. My guess is that the position will be marked to a loss when it begins trading after the report.

    Short gamma, long vega. I realize it's tempting to sell the duration-skew, but it's likely a better entry after the report.
    #10     Apr 22, 2008